Discussing mortgage rates, housing starts and building permits, the low inventory problem, underwater homes and much more!
Mortgage Rates This Week
- 30-year fixed-rate mortgages averaged 3.95% with an average 0.5 point
- This is up from last week when it averaged 3.90%
- Last year at this time, 30-year fixed-rate mortgages averaged 3.94%
- 15-year fixed-rate mortgages averaged 3.31% with an average 0.5 point
- This is up from last week when it averaged 3.24%
- Last year at this time, 15-year fixed-rate mortgages averaged 3.14%
Check out the chart:
The MBA reported:
The unadjusted Purchase Index was 17 percent higher than the same week one year ago.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) remained unchanged at 4.18%, with points increasing to 0.40 from 0.38 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $424,100) remained unchanged at 4.12%, with points increasing to 0.26 from 0.24 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
The average contract interest rate for 15-year fixed-rate mortgages increased to its highest level since March 2017, 3.54%, from 3.51%, with points decreasing to 0.43 from 0.44 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
At least the MBA did not report increases like Freddie did. But remember these are the average mortgage rates and all serious home buyers need to talk with their lender to find out what is possible for them.
Housing Starts and Building Permits Increase
From Census Bureau and HUD:
Privately-owned housing units authorized by building permits in October were 5.9% above the revised September rate and 0.9% above the October 2016 rate. Single-family authorizations in October were 1.9% above the revised September figure.
Privately-owned housing starts in October were 13.7% above the revised September estimate but 2.9% below the October 2016 rate. Single-family housing starts in October were 5.3% above the revised September figure.
Not as strong as we need due to the low level of inventory and household formation. Look at the chart to see how far we have come and how far we still need to go.
Some of this increase is due to rebuilding after the hurricanes but this is also the highest level of starts this year. We really need to see strong new home starts because of the low inventory problem…
Will the Low Inventory Problem Continue in 2018?
In most markets around the country, inventory of homes for sale has become so tight that housing is now a game of musical chairs: Nobody wants to stand up from the home they’re currently living in and list if for sale, for fear they won’t be able to find another home to buy. This inventory crisis leaves few options for millennials, a huge generation just entering the market that genuinely wants to become homeowners, but can’t find anything to buy.
Not really anything surprising or groundbreaking as we all know about the low inventory issue.
Zillow does say that the limited inventory will drive the housing market in 2018 and put upward pressure on home prices. Zillow thinks home prices will continue to increase but it will be a slower pace of appreciation.
One very interesting prediction that I hope comes true is that home builders will FINALLY start to focus on starter homes. The only catch is that these homes will be located in the suburbs according to Zillow.
They also say that we can expect to see more home owners remodeling since so many home owners are not willing to to sell their homes. You may remember that I posted the other day about remodeling heating up.
Looking at Mortgage Data for October 2017
Check out some highlights from Ellie Mae’s Origination Insight Report for October 2017:
- Closing time for purchase loans remained at 44 days in October
- The average 30-year rate for all loans decreased to 4.20% in October
- The closing rate on purchases fell to 75.2% from 76.4 percent in September
- 71% of purchase loans had FICO scores over 700
- The average FHA purchase FICO score decreased to 681 in October
For the week ending November 11 2017, total U.S. weekly rail traffic was 547,480 carloads and intermodal units, up 1.2 percent compared with the same week last year.
Total carloads for the week ending November 11 were 263,265 carloads, down 3.3 percent compared with the same week in 2016, while U.S. weekly intermodal volume was 284,215 containers and trailers, up 5.6 percent compared to 2016.
The good news about rail traffic continues!
Number of Underwater Homes Drops Dramatically
From Attom Data Solutions:
At the end of the third quarter of 2017 there were 4.6 million U.S. properties that were seriously underwater (where the combined loan amount secured by the property was at least 25 percent higher than the property’s estimated market value), down by more than 800,000 properties from the previous quarter and down by more than 1.4 million properties from Q3 2016 — the biggest year-over-year drop since Q2 2015.
The 4.6 million seriously underwater properties at the end of Q3 2017 represented 8.7 percent of all U.S. properties with a mortgage, down from 9.5 percent in the previous quarter and down from 10.8 percent in Q3 2016.
Daren Blomquist, senior vice president at ATTOM Data Solutions said:
Accelerating home price appreciation this year is increasing the velocity at which seriously underwater homeowners are recovering home equity lost during the Great Recession. Median home prices nationwide are up 9.4 percent so far in 2017, the fastest pace of appreciation through the first three quarters of a year since 2013. Continued home price appreciation is also helping to grow the number of equity rich homeowners across the country compared to a year ago.
Fantastic news for home owners but rising home prices are not good news for buyers. For the people that are wanting to sell their home but are unsure what their home is worth, I suggest contacting a local Realtor.
Unemployment Claims Increase
In the week ending November 11, the advance figure for seasonally adjusted initial claims was 249,000, an increase of 10,000 from the previous week’s unrevised level of 239,000. The 4-week moving average was 237,750, an increase of 6,500 from the previous week’s unrevised average of 231,250.
Not really bad since this is below the experts forecast and the the number of claims can still be considered low.
Architecture Billings Increases
After a stand-alone month of contracting demand for design services, there was a modest uptick in the Architecture Billings Index (ABI) for October. As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lead time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the October ABI score was 51.7, up from a score of 49.1 in the previous month. This score reflects an increase in design services provided by U.S. architecture firms (any score above 50 indicates an increase in billings). The new projects inquiry index was 60.2, up from a reading of 59.0 the previous month, while the new design contracts index eased slightly from 52.9 to 52.8.
Kermit Baker, AIA Chief Economist, said:
As we enter the fourth quarter, there is enough design activity occurring that construction conditions should remain healthy moving through 2018. Extended strength in inquiries and new design contracts, along with balanced growth across the major building sectors signals further gains throughout the construction industry.
Despite this measuring non-residential construction, it is great news for the economy. And since we need a healthy economy for a healthy housing market, it is a good sign for the coming months.
That’s all for today but I still have more so be sure to check back or subscribe so you never miss another post!