June 22 (Bloomberg) — Sales of U.S. previously owned homes unexpectedly fell 2.2 percent in May to a 5.66 million annual rate, a sign demand was probably pulled into prior months before a June tax-credit deadline. Bloomberg’s Mike McKee reports.
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The average rate on 30-year, fixed mortgages is near a record low again, but that may not be enough to bring lots of buyers into the market.
Mortgage finance giant Freddie Mac says the average for a 30-year mortgage is 4.72%, down from 4.79% a week ago and just a shade above the record low of 4.71% reached early last December.
Despite low rates, the Mortgage Bankers Association reported this week that the volume of new mortgage applications for buying homes fell to a 13-year low.
Refinance applications dropped this past week for the first time in a month. Factors behind the drop-off in activity include the fact that many homeowners have already refinanced, limiting the pool of potential applicants.
Millions can’t refinance because they are underwater on their mortgages.
Just over 11.2 million, or 24%, of all homes with a mortgage were worth less than the outstanding loan balance at the end of March, according to CoreLogic.
Still others can’t refinance because their credit has been damaged by missing payments due to lost income as a result of the recession.
“We’re not attracting a lot of new refinance customers at this level because customers have refinanced and they don’t have a lot of equity,” says Michael Fratantoni, vice president of research and economics at MBA.
The volume of mortgage applications for purchasing homes is now 35% lower than four weeks ago, because many buyers left the market after a home buyer tax credit expired at the end of April.
The federal tax credit provided up to $6,500 for repeat buyers and up to $8,000 for first-time home buyers.
“We’re on the backside of the tax credit,” says Mark Zandi of Moody’s Economy.com . “With the expiration of the credit, now the markets are weakening. I was surprised by the strength of the credit (on the market), so we’ll be surprised by the strength of the weakening.”
The tax credit did boost sales. Pending home sales have risen for three consecutive months. April’s were up 6% from March and 22.4% higher than April 2009, according to the National Association of Realtors (NAR). That follows month-over-month gains of 7.1% in March and 8.3% in February.
Existing-home sales jumped 7.6% in April and were 22.8% higher than in April 2009.
“It’s still not easy to get a mortgage,” says Joel Naroff of Naroff Economic Advisors. “I don’t know why people think this housing market is going to bust out. . . . It’s going to be a long process.”
By Stephanie Armour USA TODAY
It sounded like a great idea three months ago: Hand homeowners a $6,500 tax credit to find a new place to live, giving a thrust of energy to the housing market’s recovery. Read more
FHA home loans are federal assistance mortgages made by lenders, and backed by the government. The FHA doesn’t make loans to homeowners — it insures loans made to homeowners by federally-qualified lenders.
By all accounts, FHA home loans are surging in popularity.
A major reason for the increase can be tied to guidelines.
As compared to its conforming mortgage cousins Fannie Mae and Freddie Mac, FHA home loans have lower downpayment requirements and looser credit standards. The FHA allows downpayments of 3.5 percent and Fannie Mae and Freddie Mac do not, as an example.
Another reason is that FHA home loans aren’t subject to credit score fees the way that conforming mortgages are. Through Fannie or Freddie, a home buyer with a 650 FICO and 20% down is subject to 3% in risk fees. Via the FHA, the fee is zero, making FHA the better “deal”.
The FHA published its 2010 loan limits. There’s no change from 2009.
The base 2010 FHA loan limits are:
We say “base” because these loan limits don’t apply to all areas equally. Higher-cost regions get higher loan limits, based on typical home values. Homes in Los Angeles County, for example, can be FHA-insured up to $729,750 in 2010, and there are special exceptions made for Alaska and Hawaii.
The official FHA announcement included a complete, county-by-county FHA loan limit list. The first spreadsheet shows each county at or above the $729,750 maximum; the second list is everyone else.
If your home’s county is on neither list, use the “base” numbers above.
Both mortgage rates and home affordability took a turn for the better Wednesday after the Federal Reserve released its December 15-16, 2009 meeting minutes.
The Fed Minutes is a follow-up piece to the post-FOMC meeting press release. But whereas the press release is succinct and to-the-point, the minutes are lengthy and often meandering.
As a comparison, December’s press release contained 535 words. December’s minutes had 6,260.
But these “extra words” aren’t superfluous. They’re actually very important to homeowners. Because the Federal Reserve’s internal debates help to shape Wall Street expectations, it doesn’t take much for those conversations to have a trickle-down effect on Main Street.
For example, after the December meeting, the Fed said that economic growth is steady, inflation is in check, and an orderly wind-down of mortgage market support was underway. A look at the minutes, though, showed some disconnect.
Some Fed members believe rising commodity prices could lead to stronger-than-expected, and others think that improvement is housing could be “undercut” by a pull-back in government stimulus.
Overall, the Fed appears optimistic about the economy, but not as optimistic as on December 16. Mortgage markets responded favorably to the minutes and mortgage pricing improved.
Although rates remain higher as compared to early-December, pricing has been on a good run this week. If you’re under contract for a home or just looking to refinance, now may be a good time to lock.
Just one month after touching a 3-year high, the National Association of Realtors® Pending Home Sales index plunged in November. A “pending” home sale is a home that is under contract to sell, but has yet to close.
The 16 percent drop marks the first retreat in Pending Home Sales since January of last year.
The weak Pending Home Sales data is an indication that Existing Home Sales data will be soft this month. This is because, historically, 80 percent of Pending Home Sales convert to “closed sales” within 60 days, and most of the rest close within 120.
With Pending Home Sales down, the housing market should lose some of its momentum. For today’s home buyers, this kind of slack can represent a terrific opportunity.
Home prices are a function of supply and demand; of buyers and sellers. When buyers outnumber sellers, competition leads to bidding wars, ultimately, and higher home prices overall. The imbalance can also create a sense of urgency that results in over-paying for a home.
When buyers are sparse, on the other hand, the psychology of real estate shifts.
Home sellers are keenly aware of foot traffic and requests for second and third showings. Without buyers, their homes can’t sell. They also note a lack of general feedback from the market.
It’s at this point that seller fear can creep in and it becomes a buyer’s best time to buy.
Based on November’s Pending Home Sales data, it’s clear that home sellers are in abundance right now. Home buyers have leverage.
It may not last.
With mortgage rates easing lower this week, the federal home buyer tax credit still in effect, and the Holiday Season officially over, buyers are getting back to business everywhere.
Plus, with the tax credit deadline of April 30, 2010 fast approaching, buyer activity should increase over the next 4-6 weeks.
The market looks ripe for a buy but don’t rush it. Take your time and bid right. But when you’re ready, be ready — once the market momentum shifts back to sellers, you might lose all that leverage you built up through the winter.
2010 is just a few days old and already the “experts” are making predictions for the year.
Housing calls and mortgage rate predictions run the gamut:
Given how varied their outlooks, it’s clear that the professionals have no better view of the future than the amateurs. An expert can make an educated guess, but it’s a guess nonetheless.
Last year, Wall Streeters predicted a 25% pullback in home prices. 12 months later, we know prices didn’t fall. Wall Street also predicted higher mortgage rates for 2009. That prediction was fulfilled.
There’s a lot of talk on CNBC and elsewhere about what’s coming in 2010. Before you take those predictions to the bank, just remember that analysts do a much better job interpreting data from the past than projecting it into the future.
The only thing that’s certain right now is that mortgage rates are historically low, the government is giving tax credits to qualified buyers, and there’s a lot of good “deals” in housing. Make the most of what’s out there today because it will take 12 months for us to look back and know which predictions were right and which were wrong.
Until then, predictions are just opinions and guesses.
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You’ll only need a few basic supplies in addition to fresh soil and some tools:
The video is broken down with easy-to-follow instructions. You don’t need handyman skills or a green thumb to finish the job. Your end-result will be well-functioning self-watering pots and plants that require less time and attention.
More positive signals from housing — home values are still on the rise.
According to the Federal Housing Finance Agency, after posting its first quarterly increase since 2007 this past September, the Home Price Index rose by another 0.6 percent in October.
Prices are up in 4 of the last six months.
But before we take the stats to the proverbial bank, it’s important that we recognize the Home Price Index for its shortcomings.
On a broad scale, the Home Price Index can be useful, but it doesn’t specifically apply to any specific U.S. market. For that, analysts tend to turn to the Case-Shiller Index, a privately-produced report that assesses home values in 20 cities nationwide.
The good news for home sellers is that Case-Shiller’s most recent report corroborates the government’s conclusion — home values are creeping back.
Home buyers should pay attention. When public and private sector data is in accord, markets tend to go along and, looking back, housing likely bottomed in February 2009. Since then, home sales are up, home supplies are down, and values have increased in most U.S. markets. Furthermore, so long as mortgage rates remain low and government stimulus is in place, the trend should continue through at least the first quarter of 2010.
If you’re on the fence about buying a home right now, or wondering about timing, consider your options vis-a-vis today’s market. Into the new year, homes won’t likely be as cheap to buy, nor to finance.
