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What’s Ahead For Mortgage Rates This Week – July 31st, 2018

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What's Ahead For Mortgage Rates 07-31-18Last week’s economic readings included reports on sales of new and pre-owned homes, mortgage rates and first-time jobless claims.

New Home Sales Slide; Pre-owned Home Sales Meet Expectations

Commerce Department reported lower sales of new homes in June. Sales were expected to reach 666,000 sales on a seasonally adjusted annual basis, but the actual reading slipped by 5.30 percent to a pace of 631,000 new home sales. Analysts cited higher building costs, home prices and mortgage rates sidelined some buyers.

Concerns over inadequate inventories of available homes also impacted sales of newly-built homes. New homes sold at a rate 6.90 percent higher year-over-year, but analysts cautioned that home price appreciation and demand may be at or near their peak.

The National Association of Realtors® reported an annual pace of 5.38 million sales of previously-owned homes for June, which matched analysts’ expectations. May’s reading was 5.41 million sales of pre-owned homes.

Analysts caution that Commerce Department readings are subject to adjustment due to the relatively small number of home sales used to represent all sales of pre-owned homes.

Mortgage Rates and New Jobless Claims Rise

Freddie Mac reported higher mortgage rates last week with incremental increases in average mortgage rates. Rates for 30-year fixed rate mortgages were two basis points higher at 4.54 percent; rates for 15-year fixed rate mortgages averaged 4.02 percent and were two basis points higher.

Rates for 5/1 adjustable rate mortgages were one basis point higher and averaged 3.87 percent. Discount points averaged 0.50 percent for 30-year fixed rate mortgages and 0.40 percent for 15-year fixed rate and 5/1 adjustable rate mortgages.

First-time jobless claims rose to 217,000 claims filed; this reading fell short of the expected reading of 219,000 new claims but was higher than the 208,000 new claims reported for the prior week.

What‘s Ahead

Next week’s scheduled economic releases include readings from Case-Shiller Home Price Indices and readings on pending home sales and construction spending. Labor reports including public and private sector jobs growth and the national unemployment rate will also be released.

Weekly reports on mortgage rates and new jobless claims will also be published.

 

Top Real Estate Predictions You Should Know About

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Top Real Estate Predictions You Should Know AboutWhether you are a homeowner looking to get the maximum return on investment, a buyer interested in fair market value or an industry insider grappling with the moving parts of the real estate industry, these are some trends and predictions you should know about.

Lower Home Supply Causing Significant Value Growth

Indicators point to a U.S. economy that has settled into a nice growth period. Unemployment rates have touched some record lows, wages appear to be on the rise and Millennials are entering high earning and home-buying years. Couple these factors with the fact that last year’s tax reform laws will likely put more money back in everyday Americans’ pockets and homes could be a hot commodity, so to speak.

Home supply — on the other hand — does not appear ready to meet the rising demand of buyers. Experts are predicting that rising demand will collide with the housing shortfall and prices will ramp up in 2019.

Home Values Could Rise Another 5 Percent By Year’s End

Some real estate insiders are pointing to National Association of REALTORS information that the number of available homes for sale has dropped for 35 consecutive months. The volume of sales is down because there simply are not enough homes being put on the market. Coupled with the uptick in the economy, sellers are in the driver’s seat right now and they are demanding top dollar for their homes.

That being said, it may be in the best interest of first-time homebuyers to get into the market sooner rather than later. The improved wages from the surging economy may not be able to keep pace with a potential 5-percent increase in property values by the end of 2019. It looks like a buy now or pay later real estate market.

It’s Not A Housing Bubble And Won’t Burst

The housing market has been on a tear over the last three years. Property values have appreciated fairly consistently for 35 straight months. Such data mirrors that of the housing market right before the crash. While some experts are calling for another housing bubble to burst due to an unforeseen flaw in the system, tough legislation and oversight are in place. It’s only human nature to be cautious when conditions appear similar to those leading up to a bad outcome.

This time around, rising home prices appear to be based on solid economic factors. Either contractors are going to start massive home-construction builds all over the country or the shortage will continue to drive prices up. While experts say we are not in a so-called housing bubble, the market may level off down the road to get in tune with consumer affordability.

If you are in the market for a new home, be sure to contact your trusted mortgage professional to get your financing pre-approval!

3 Generations Top Housing Market Trends

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3 Generations Top Housing Market TrendsHistorians like to say that those who do not learn the lessons of the past are doomed to repeat them. In the real estate industry, the chances of that happening are slim because agents and other professionals follow market trends closely.

That being said, a careful examination of 2017 market trends and other factors can help highlight where the housing market is headed. Consider these top trends when deciding about whether to buy or sell a property.

Millennials Scooping Up Homes

According to resources such as Zillow, the low inventory and emergence of Millennials in the home-buying market helped break records last year. Millennials comprised upwards of 34 percent of the market and about two-thirds of them were reportedly first-time home buyers.

Given the shortage of entry-level homes for this demographic, 2018 and 2019 should have them in the driver’s seat in terms of buying trends. Although home prices are expected to rise in the single digits during the foreseeable future, the second wave of Millennial home buyers are likely to take a big bite of listed properties.

As this group moves into their mid-30s, expectations are that last year’s 34 percent turns into about 43 percent of homes purchased. Millennials appear to be setting the pace.

Gen Z Home Buyers Expect Smarter Homes

Consider those born between 1995 and 2001 are adults or on the cusp of becoming adults. The front end of Generation Z is graduating college and looking for starter homes. This group is bound and determined to be different and they were basically weaned on technology.

Tech-friendly kitchens, lights and home-integrated devices have been trending and this demographic is likely to make them a priority when buying a home. Homeowners who are considering updating to a so-called “Smart Home” could be rewarded with resale value once Gen Z enters their collective mid-30s. Smart homes are trending and could go vertical with Gen Z buyers.

Generation X Returns From Great Recession

The housing crisis of 2007-09 put upwards of 10 million Americans out of their homes. Forced into foreclosure and bankruptcy, the financial aftermath of that catastrophe is coming to an end.

Those that filed for bankruptcy during the crash are in position to put their rebuilt credit to work. According to reports, approximately 1.5 million people could become eligible to re-enter the housing market in 2019.

A large portion of these potential returning homebuyers fall into the Gen X age group. They are likely to be savvier than the first time out. Many of these 50-somethings are expected to be frugal and cautious value buyers that could target properties that are traditionally considered starter homes. Regardless of how the trend plays out, Gen X is coming to a housing market near you.

If these emerging trends indicate anything, it’s that the shortage of homes on the market will only get tighter. Several large emerging demographics and returning buyers are going to speed an already fast-selling market. The trending idea may be to buy a home in today’s market and save money.

Contact your trusted mortgage professional for a pre-approval and get started looking for the house of your dreams!

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