Finding a Home this Spring

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Published Date 4/10/2017

Realtor Report

Finding a Home this Spring

Anyone eager to buy a home this spring probably has reasons to feel good. The job market is solid. Average pay is rising. And mortgage rates, even after edging up of late, are still near historic lows.

The bad news, supply is at historic lows.

The national supply of homes for sale hasn't been this thin in nearly 20 years. And over the past year, the steepest drop in supply has occurred among homes that are typically most affordable for first-time buyers and in markets where prices have risen sharply.

"Sellers will have the edge again this year," said Ralph McLaughlin, chief economist for Trulia, a real estate data provider. "Homebuyers are going to be scraping the bottom of the barrel as far as housing choice is concerned."

About 1.75 million homes were for sale nationally at the end of February, according to the National Association of Realtors. That's down 6.4 percent from a year earlier and only slightly up from January when listings reached their lowest point since the association began tracking them in 1999. All told, the supply of homes for sale has fallen on an annual basis for the past 21 months.

Among the factors that have fueled the decline in homes for sale:

Since 2008, the average time homeowners have stayed in their houses before selling has doubled to nearly eight years, according to Attom Data Solutions.
Many homeowners aren't selling for fear they wouldn't find a new home they would like and could afford. Some who had locked in ultra-low fixed mortgage rates may be reluctant to take on a new loan at a higher rate. Others may wish to sell but can't because they own one of the 3.2 million homes worth less than what's owed on their mortgage.
Some homeowners own other properties they rent out and have little incentive to give up the steady rental income, especially while they're also benefiting from rising home values.
Investors, who typically keep properties for disproportionately long periods, own a larger share of houses. Between 2006 and 2016, the share of U.S. single-family houses and condos owned by investors averaged around 30 percent, according to Attom, and reached 35 percent last year.

Nor are builders replenishing the stock of new homes fast enough. Though the pace of building has been rising, it has yet to make up for years of sluggish construction growth that followed the housing bust. Builders complain that they can't build more homes because of a lack of ready-to-build land, costly regulations and a chronic shortage of skilled construction workers.

Source: Yahoo.com

This Week's Mortgage Rate Summary

How Rates Move:

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market. This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates or pricing generally goes down. When they fall, mortgage pricing goes up.

Rates Currently Trending: Neutral

Mortgage rates are trending sideways so far today. Last week the MBS market improved by +5 bps. This was not enough to improve mortgage rates or fees. Mortgage rates continued to trade in very narrow channel with relatively low volatility.

This Week's Rate Forecast: Neutral

Three Things: These are the three things that could have the greatest impact on mortgage rates this week: 1) The Fed, 2) Geo-Political and 3) Domestic

1) The Fed: MBS traders are trying to get a better sense of the timing and mix of the Fed reducing the amount of their MBS purchases each week. To that end, we'll focus on Janet Yellen's speech today at 4:10 PM EST at the University of Michigan.

St. Louis Fed President James Bullard spoke in Australia and said that the Fed should not be in a rush to raise rates but instead, end their balance sheet reinvestment. Here is the Fed's schedule this week:

04/10 James Bullard, Janet Yellen
04/11 Neel Kashkair
04/12 Atlanta Fed Business Inflation Expectations
04/13 Fed's Balance Sheet.

2) Geo-Political: We have several key stories that we are tracking. France will have a round of voting to narrow the Presidential field. The more votes that Le Penn gets, the better it is for MBS as traders are concerned that her (and other right-wing contenders) would lead France to leave the EU (similar to the Brexit).

Syria and the U.S. will continue gain attention as tensions mount among Russia, Iran, Syria and the U.S.

Tensions with North Korea and trade negotiations with China will also get a lot of attention.

3) Domestic Flavor: Our most significant releases won't hit until Friday, and the bond market is closed that day. Retail Sales, PPI and CPI will get the most attention from long bond traders.

Treasury auctions this week:

04/10 3 year note
04/11 10 year note
04/12 30 year bond (most important)

This Week's Potential Volatility: Average

Look for relatively low volatility this week from mortgage rates. The biggest economic news of the week will be released Friday when the bond market is closed. The Geopolitical situation is a bit of a wildcard and can have a significant effect on mortgage rates at any time.

Bottom Line:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.

Source: TBWS

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

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