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All anyone seems to be talking about right now is the coronavirus. There are concerns over how the economy will be impacted by the outbreak in the near term. However, most other economic fundamentals remain very strong at this point, which should be encouraging as we head into the spring home buying season.

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The Federal Reserve chose to lower short-term interest rates by 0.5% earlier this week in response to growing fear over the knock-on effect the spread of the virus will have on the economy. Fed officials have said that while no cut can fully soothe worries, it’s meant to support continued growth. While not directly related, short-term rates being lower does help boost the chance for lower longer-term rates for things like mortgages.

The stock market has gone up over the past couple of days, and this may certainly stimulate the housing market, so it’s something to keep an eye on.

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Some economic summary assistance was provided by Econoday.1

Housing Starts

Of most concern to real estate agents is probably the number of completions. These are the home units that will most immediately impact chart supply in the housing market. In the most recently released January numbers, completions were down 3.3% from December to come in at 1.280 million on a seasonally-adjusted annualized basis. However, this is 1.5% ahead of where the number was in January 2019. Single-family completions were down 3.5% at 877,000. Meanwhile, multifamily completions were at 397,000.

Housing starts were down 3.6% to 1.567 million. However, this is up 21.4% from last January. Single-family starts were down 5.9% to 1.01 million. Meanwhile, multifamily starts were at 547,000.

Finally, the good news is on the permit side. Permits were up 9.2% from December at 1.551 million. This number has risen 17.9% since last year. Single-family permits were up 6.4% to 928,000. In properties with five or more units, these came in at 522,000.

FHFA House Price Index

FHFA House prices were up 1.3% in the fourth quarter according to numbers just released at the end of February. Prices are up 5.1% since last year. Monthly numbers for December were also released, but we’ll touch on the quarterly numbers first.

The biggest quarterly gains were in Idaho at 12% and Utah was 8.1%. Arizona, Indiana and Washington also saw 7% increases. The smallest increases were in Connecticut at 1.9%, Illinois at 2%, Iowa with a 2.1% increase, and Mississippi up only 2.8%. Prices did rise in 97 of the top 100 metropolitan markets.

In regional data, the strongest gains were the Mountain region, which was up 6.7% between the fourth quarter of this year and the fourth quarter of last year. New England only saw prices rise by 3.9% over the same period.

In terms of monthly numbers, the U.S. saw prices rise 0.6% between November and December of last year. The Mountain region was up 1% as was the East South Central and South Atlantic region. The West North Central and West South Central regions were up 0.8% and 0.6%, respectively. In New England and the Mid-Atlantic, prices were each up 0.7%, while they rose 0.4% in the Pacific. In the East North Central region, prices actually fell 0.3% in December. The Mountain region saw prices rise 7.4% on the year, while all other regions were up in a range between the low 4% and high 5% area.

S&P CoreLogic Case-Shiller HPI

In the other major home price Index, the Case-Shiller went up 3.8% for the year. The month-over-month increase over the 20-city index was 0.4% on a seasonally-adjusted basis while being flat overall in December.

The hottest regions for housing was Phoenix, up 6.5%. Charlotte, North Carolina and Tampa, Florida. Were up 5.3 and 5.2%, respectively.

Housing Market Index

The housing market index came in at 74 overall, which is down a point in February, but December was a 20-year high. All the major components were down one point, with present sales of 80, sales in the next 6 months at 79 and traffic of people in homes at 57. All numbers still indicate moderate to strong growth.

Meanwhile, the West is the best performer at 82, followed by the South at 79. The Northeast is at 67, and the Midwest is at 62 as the slowest region for builder sentiment.

Existing Home Sales

Existing home sales were down 1.3% in January to 5.46 million. However, this is up 9.6% on the year.

On the single-family home side, these sales were down 1.2% to 4.85 million on a seasonally-adjusted annual basis, but they are up 9.7% on the year. Meanwhile, condo sales were down 1.6% at 610,000, but these increased 8.9% annually. The median monthly price was up 6.8% on the year at $266,300.

First-time home buyers represent 32% of the market.

New Home Sales

New home sales were up 7.9% to a seasonally adjusted annual rate of 764,000. This is the highest they’ve been in 13 years. Meanwhile, the median price for a new home was up 7.4% to $348,200, up 14% on the year.

Supply continues to be an issue with 324,000 homes being on the market, but relative to sales, this supply is down to 5.1 months at the current pace as opposed to 5.5 months in December.

This number tends to be volatile, but this 3-month average confirmed the strength at 721,000, up 2.8%.

Pending Home Sales Index

In a good sign for finalized February existing home sales, homes under contract for sale were up 5.2% to an index level of 108.8 according to the National Association of REALTORS®.

At a regional level, the South led gains and only the West saw a decline in homes with a purchase agreement pending.

Mortgage Rates

Due to coronavirus concerns that have money flooding the bond market and the Fed subsequently cutting short-term interest rates, mortgage rates have quite literally never been lower. This is a great message to spread to your clients.

According to Freddie Mac survey data, the average interest rate on a 30-year fixed mortgage with 0.7 points paid in fees was down a whopping 16 basis points last week to 3.29%. This has fallen from 4.41% a year ago.

The average interest rate on a 15-year fixed mortgage fell the same amount to 2.79% with 0.7 points paid. Last year at the same time, the rate was 3.83%.

Finally, the average interest rate on a 5-year treasury-indexed, hybrid adjustable rate mortgage with 0.2 points paid fell a couple of basis points to 3.18%. This was down from 3.87% last year.

It’s a great time to get a mortgage and the economy remains strong. Spread the news!

1 Important Legal Notice: Econoday has attempted to verify the information contained in this calendar. However, any aspect of such information may change without notice. Econoday does not provide investment advice, and does not represent or warrant that any of the information is accurate or complete at any time. Copyright 2020 Econoday, Inc. All rights reserved.

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This Post Has 2 Comments

    1. It’s impossible to tell you that with certainty because there are a lot of factors, including but not limited to the type of loan and the amount of the mortgage you’re looking to do. To give you a better idea, I can give you this guide on closing costs. If you’d like to look into your options, you can do so with Rocket Mortgage or speak with one of our Home Loan Experts at (888) 980-6716.

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