Following seven straight months of declining defect risk, the Loan Application Defect Index for purchase transactions remained the same in August compared with the month before. Year over year, the Defect Index for purchase transactions decreased 13.2 percent as compared to August 2017. The Defect Index for refinance transactions is the same as the previous month and is 1.4 percent lower than a year ago.
The Federal Open Market Committee (FOMC) meeting is just around the corner and a rate hike is almost certain, according to experts, which will trigger conversations about rising mortgage rates across the housing industry. While changes to the federal funds rate won’t necessarily spur further increases in mortgage rates, mortgage rates are expected to rise nonetheless.
Yesterday’s Census Bureau report for August is an indication of strength for the housing market. While the number of permits issued, which can signal how much construction is in the pipeline, decreased by 5.5 percent, home building rose in August as housing starts increased 9.4 percent compared with a year ago. The growth in housing starts is welcomed news after two consecutive monthly declines.
In August, the housing market continued to underperform its potential. Actual existing-home sales are 6.5 percent below the market’s potential, according to our Potential Home Sales model. That means the market has the potential to support more than 400,000 more home sales at a seasonally adjusted annualized rate (SAAR). Severe supply shortages have been the primary culprit for this performance gap – you can’t buy what’s not for sale. The supply shortage, combined with first-time home buyer demand, has created a strong seller’s market, where many potential buyers are bidding on the same few homes, which accelerates price appreciation.
Last month, we noted in our latest Real House Price Index (RHPI) report that house price appreciation may be slowing. According to our RHPI, 21 cities experienced a monthly decline in their real, consumer house-buying power-adjusted price level. One reason for the price appreciation slowdown is that 21 of the 50 largest cities in the U.S. experienced an increase in the number of houses on the market in July compared with a year ago, according to realtor.com data.
Whether students are beginning middle school or their last year of college, back-to-school season is here. Although many students may grimace when they hear “back to school,” they won’t regret pursuing a higher education as adults as they compete for well-paying jobs and one day, hopefully, buy a home.
The Loan Application Defect Index for purchase transactions continued its downward trend, declining 1.3 percent in July compared with the month before, the seventh consecutive month defect risk in purchase transactions have fallen. Yet, is declining loan application misrepresentation, defect and fraud risk isolated to a few markets or is the trend more geographically broad based?
House price appreciation remains on a tear, as unadjusted home prices nationwide increased by 7.3 percent compared with a year ago and are now 1.3 percent above the housing boom peak in 2006, according to DataTree by First American. The U.S. economy continues to perform well, as the current economic expansion reaches record levels, prompting some to ponder when it will end.
The U.S. economy remains on an impressive growth streak. Last month, the Commerce Department reported that the gross domestic product, the broadest measure of goods and services produced in the economy, grew at a 4.1 percent annualized rate in the second quarter, the strongest pace of growth since 2014. The economy has added jobs every month for 94 consecutive months, producing the lowest unemployment rate since 2000.
The short answer is yes. Home buyers looking for more housing supply to choose from can take heart, as Thursday’s Census Bureau report on housing construction showed builders are starting work on additional housing, inching closer to balancing inventory with demand.