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With the market for existing homes struggling amid a lack of inventory, New Home Sales continue doing the heavy lifting for the housing market. Rather, New Home Sales are doing more to show a stronger relative performance to the pre-pandemic years. The market for existing homes is still far bigger, even at its weakest levels. But existing home sales data is so "last week." Today's release is specific to new homes, so let's zoom in. When we do, we can see new home sales remaining in the 2017-2019 range for nearly two years now. In other words, new residential sales continue chugging along without much fanfare since the initial supply glut and demand surge that followed covid-related lockdowns. There was quite a bit of variation depending on geography, which is often a result of ebbs and flows of weather events at this time of year. Here's how the chips fell in January by region: The Western region saw a huge 38.7% increase, moving from the lowest levels in 10 months to the highest levels in more than a year The Northeast saw and even larger 72% increase, but that's not saying as much given the vastly smaller unit count in that region The Midwest ticked up 7.7% month over month but remained well under July's peak The South decreased by 15.6% to the lowest levels in more than a year, but only slightly below November
Prospects for the spring market look a bit brighter as January numbers show an increase in both the pace of existing home sales and the size of the unsold inventory. The National Association of Realtors® (NAR) said sales of pre-owned single-family houses, townhomes, condominiums, and cooperative apartments were at a seasonally adjusted annual rate of 4.00 million. This was an increase of 3.1 percent from the December rate of 3.88 million and was 1.7 percent below the pace in January 2023. December sales figures were also revised slightly higher, cutting the previously reported year-over-year decline nearly in half to -3.7 percent. Single-family home sales rose from 3.48 million in December to 3.6 million, a gain of 3.4 percent, and remained lower year-over-year by 1.4 percent. Condo sales were flat at an annual rate of 400,000 and were 4.8 percent lower than one year earlier. Existing home sales beat analysts’ expectations, but not by much. The consensus forecast from Econoday was 3.97 million. “While home sales remain sizably lower than a couple of years ago, January’s monthly gain is the start of more supply and demand,” said NAR Chief Economist Lawrence Yun. “Listings were modestly higher, and home buyers are taking advantage of lower mortgage rates compared to late last year.” Those listings did expand in January, up 2.0 percent to 1.01 million units. This is estimated to be a 3.0-month supply at the current rate of sales, but that estimate is virtually unchanged from that in both December and January 2023. Properties typically remained on the market for 36 days in January, up from 29 days in December and 33 days in January 2023.
Higher interest rates continued to depress mortgage applications last week. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of application volume, decreased 10.6 percent on a seasonally adjusted basis during the week ended February 16. The volume declined 8.0 percent before adjustment. The Refinance Index declined by 11.0 percent compared to the previous week but eked out a 0.1 percent gain from the level one year earlier. Refinance applications accounted for 32.6 percent of the total, down from 34.0 percent the previous week. [refiappschart] The seasonally adjusted Purchase Index dropped 10 percent week-over-week and was down 6 percent before adjustment. Purchase applications lagged the same week in 2023 by 13.0 percent. [purchaseappschart] "Mortgage rates moved back above 7 percent last week following news that inflation picked up in January, dimming hopes of a near-term rate cut,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “Mortgage applications dropped as a result with a larger decline in refinance applications. Potential homebuyers are quite sensitive to these rate changes , as affordability is strained with both higher rates and higher home values in this supply-constrained market." Other Highlights from MBA’s Weekly Mortgage Applications Survey Loan sizes were changed only slightly, to an average of $381,800 for all submissions and $440,700 for purchase mortgages. The FHA share of applications decreased to 13.2 percent from 13.5 percent and the VA share decreased to 12.1 percent from 13.3 percent. USDA applications accounted for 0.5 percent of the total. The average contract interest rate for conforming 30-year fixed-rate mortgages (FRM) increased to 7.06 percent from 6.87 percent, with points inching up to 0.66 from 0.65. Thirty-year FRM with jumbo loan balances had a rate of 7.16 percent with 0.45 point. The prior week the rate was 7.00 percent with 0.39 point. The average rate for FHA-backed 30-year FRM jumped to 6.91 percent from 6.68 percent and points increased to 1.03 from 0.89. Fifteen-year FRM saw an increase of 8 basis points to an average rate of 6.61 percent while points dropped to 0.77 from 0.94. The average contract interest rate for 5/1 adjustable-rate mortgages (ARM) increased to 6.37 percent from 6.30 percent, with points increasing to 0.71 from 0.60. The ARM share of activity increased from 7.0 to 7.4 percent of total applications.