A mortgage represents a loan or lien on a property/house that has to be paid over a specified period of time. Think of it as your personal guarantee that you'll repay the money you've borrowed to buy your home.
Mortgages come in many different shapes and sizes, each with its own advantages and disadvantages. Make sure you select the mortgage that is right for you, your future plans, and your financial picture.
Just in time for the big jump in interest rates seen after yesterday's Fed announcement, the latest Existing Home Sales data from the National Association of Realtors (NAR) shows sales at the highest seasonally adjusted pace since March. Compared to the same time last year, sales are up 6.1%--the best year over year improvement since June 2021. To be fair to the data, it is definitely looking better than most of the past year and a half. It's also true that adding 1 to 1 is a 100% increase while adding 1 to 100 is only a 1% increase. In other words, it's great that we're up 6.1% year over year--no objections there--but in broader context, we're really just muddling through home sales purgatory. Much like our assessment of things like mortgage applications, this sideways grind at long-term lows could also be seen as a "can't get any worse" moment. Therefore, it can only get better. NAR's Yun agrees, saying "Home sales momentum is building. More buyers have entered the market as the economy continues to add jobs, housing inventory grows compared to a year ago, and consumers get used to a new normal of mortgage rates between 6% and 7%." It remains to be seen how home sales will react now that rates are back over 7%--a development is perhaps too recent to have been considered in Yun's assessment.
Heading into the first part of December, mortgage rates were at their lowest levels in a month and a half. Much of the improvement from the recent highs occurred in a single week (the last week of November). That made for an obvious and logical uptick in refinance applications the following week, according to the Mortgage Bankers Association's (MBA) application survey. In the latest numbers reported this morning, the refinance index didn't change much after that, which is "good" at face value because it means refi activity remained at the modestly elevated levels reported last week. But things start looking less than good when we add context from the September mini-refi-surge. As has been and continues to be the case, none of the recent activity amounts to much when compared to the true refi booms of the past. Unfortunately, that line will have an even harder time moving up in the coming weeks. This afternoon's Fed announcement was not well received by the rate market. Mortgage rates are moving up quickly even though the Fed cut its policy rate. The average lender is already back up to the recent highs seen in early November. Movement in purchase applications has been less interesting and less eventful by comparison. Simply put, there hasn't been much movement for at least a year. Other highlights from today's data: Refi apps accounted for 46.7% of the total vs 46.8 last time FHA share of total apps increased to 17.6 from 16.5 VA share declined to 15.3 from 16.3 Rates rose to 6.75 from 6.67 (note: that refers to MBA's survey rate for last week. Average daily rates are back over 7% as of this afternoon)
The Census Bureau releases its report on New Residential Construction each month which offers 3 key metrics: building permits, housing starts, and housing completions. Of those, the first two are most closely watched. There is typically a solid buffer between permits and starts. After all, housing construction cannot "start" unless it is "permitted." Oftentimes, there's a divergence between housing starts and building permits on any given month. This is one of them. This data series has been fairly unremarkable recently. Construction continues running above pre-pandemic levels, but new homes have been started at a slower and slower pace. That might sound problematic until one considers that 2024 has seen the highest pace of completions since 2006. Bottom line, housing definitely surged in 2021 and early 2022, and it has definitely cooled off since then, but the cooling has been very orderly compared to some past episodes. One last nuance to consider in today's data (and in general, for this data series) is the divergence between single and multifamily housing starts. Single fam has been doing much better recently--still easily holding above pre-pandemic levels. Multifamily starts, however, are near their lowest levels in a decade.