The Resilient Housing Market

Home prices rose in the month of April by 0.2% and by 5.5% year over year, according to the newest report from the Federal Housing Finance Agency.  The FHFA’s Home Price Index measures home price changes on single family detached properties purchased and/or refinanced with conventional, conforming mortgages.

New home sales increased by 16.6% in the month of May.  This was a large increase over the estimated 1.6% forecast.  Compared to last year, new home sales are up 12.7%.  Estimated inventory of new homes has decreased by 7,000 down to 318,000.  At the current sales pace, supply of new homes available for sale is about 5.6 months.  Lastly, median sales prices of new homes has increased to $317,900, which is an increase of 4.9% since last reported.  The overall average sales price was $368,800, which is an increase of 4.6% since last reported.  New home sales measure signed contracts, not closings, on new single-family homes.

Reports that contain measurements that are further away from the first few months of the coronavirus outbreak show a strong comeback.  As states across the nation re-open their businesses, we are seeing housing reports improve, and the housing market resume its heathy onward growth.   


Homebuyer Mortgage Highest in Eleven Years!

According to the Mortgage Bankers Association’s seasonally-adjusted index, mortgage purchase applications rose 4% last week from the previous week, and is up a staggering 21% from a year ago.  Overall, this is the ninth consecutive week of increases, and represents the highest volume in eleven years!  MBA Economist Joel Kan echoed the strong numbers, stating, “The housing market continues to experience the release of unrealized pent-up demand from earlier this spring, as well as gradual improvement in consumer confidence.” 

Strong mortgage demand was further supported by a report conducted by Redfin, which reflected that seasonally-adjusted demand for houses during the week of June 1st was 25% above pre-pandemic levels.  In addition, the percentage of newly-listed homes that resulted in an accepted offer within fourteen days, increased from 42% in May to 47% in June. 

Overall, these two strong reports indicate that demand for housing continues to accelerate through the summer months.  Strong demand coupled with record-low interest rates are keeping the housing market’s continued strength. 

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The Fed and Interest Rates

Last week the Federal Reserve (the Fed) had met and decided to leave their Federal Funds Rate unchanged at 0.0% – 0.25%.  They also had mentioned that they expect the rate to stay at this level through 2022.  The Fed Funds Rate, in a nut shell, is the rate banks use to lend money to one another.  The lower the rate, the cheaper it is to borrow and the more stimulating for the economy, as money is “cheaper”. 

Even though lower Fed rates point to higher inflation, the Fed surprisingly said last week that they predict no inflation for 2020, around 1.5% inflation levels for 2021 and under 2% inflation for 2022.  Lower levels of inflation point to lower longer term interest rates. If they are predicting lower levels of inflation, that could be a good indicator for lower rates going forward.  On top of low levels of forecasted inflation, the Fed has also been purchasing over $20B a week in mortgage backed securities.  This is also very much helping interest rates stay low and aids home buyers’ affordably and homeowners’ refinance potential. 

Call your Advisors Mortgage Loan Officer today to discuss the current market in more detail and to learn what you qualify for.



Mortgage Applications Continue to Rise

According to the Mortgage Bankers Association (MBA), mortgage applications to purchase a home increased 9% from the last week, which represents a staggering 54% increase since early April.  This increase represents the sixth consecutive week of gains, and the highest levels since mid-March.   As states and businesses begin to re-open, buyers are resuming their home search, while looking to capitalize on the current ultra-low interest rate environment. 

In addition to the strong purchase demand numbers, new home sales numbers were extremely surprising to analysts.  According to the US Census, new home sales were expected to fall 22% in April, but instead rose nearly 1% for the month.

Both reports indicate that the demand for housing continues to grow week by week and as businesses continue to open, the positive outlook continues to grow.

Call your Advisors Mortgage Loan Officer today to discuss the current market in more detail and to learn what you qualify for.


Housing Market Update

New Home Sales were up 0.6% for the month of April.  This report measures signed contracts on new homes.  Year-over-year, sales were down 6.2%.  The median home price was released at $309,900, which is down from $339,000 from the prior report.  Median home price does not show that home prices were necessarily lower, but that homes for sale during this time might have taken lower price offerings. There were 325,000 new homes for sale, which was slightly lower than March’s number of 333,000 and is showing a further tightening of inventory.

The Case-Shiller Home Price Index reported a rating of 4.4% for the month of March. This report tracks the changes in the value of residential real estate across the US, and it increased by 0.2% since last release from 4.2%

The Federal Housing Finance Agency (FHFA) released their House Price Index for March, and it showed that home prices increased by 0.1%.  Compared to last year, home prices have increased by 5.9%!   This report measures home price appreciation on single-family homes with conforming loan amounts.

Overall, home pricing across the nation is still holding strong.  There might be some homes selling at a discount because of timing and the availability to find the right buyer, but as we see the economy slowly reopen, the housing market will continue to push forward as demand for homes is still out weighing supply.

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