Kathleen Howley writing for Housing Wire wrote the following:

Record lows: The average 30-year fixed rate is 2.86% this week, and the 15-year is 2.37%, Freddie Mac says

Average mortgage rates for 30-year and 15-year mortgages fell to all-time lows this week, Freddie Mac said in a report on Thursday.

The 30-year average is 2.86%, breaking the prior low of 2.88% set in the first week of August, and the 15-year average is 2.37%, beating last week’s record low of 2.42%, the mortgage financier said.

The rates are driving demand in the housing market, helping to counter-balance an economic slowdown that showed signs of worsening after the COVID-19 pandemic flared in some of the nation’s largest states in recent months, said Sam Khater, Freddie Mac’s chief economist.

“These low rates have ignited robust purchase demand activity,” Khater said.

U.S. home sales surged at a record pace in June and July as purchases that were delayed during pandemic lockdowns were shifted later in the year.

Seasonally adjusted existing-home sales jumped 25% in July, beating the prior record monthly gain of 21% set in June, the National Association of Realtors said in an Aug. 21 report.

The supply of homes on the market was the lowest for any July since NAR started tracking the data about five decades ago, said Lawrence Yun, NAR’s chief economist.

Existing home sales in 2020 likely will total 5.4 million, a gain of 1.1% from last year, Yun said. Sales of new houses probably will rise 17% to 800,000, Yun said.

Early in the pandemic, before it was clear the Federal Reserve’s intervention in the bond market would drive mortgage rates to all-time lows, Yun projected home sales in 2020 would plummet 15% this year.

“The buyers are coming in because of the low interest rates – that’s the No. 1 reason in my view,” Yun said in an interview.

Writing for Housingwire, Julia Falcon addressed the migration of homeowners.

The pandemic is pushing homeowners out of the big cities and into rural and suburban areas, pushing up home prices in previously sleepy towns.

In July, less densely populated areas showed more buyer interest than urban areas, Redfin said. Before the pandemic, 9% of homebuyers said they were searching for a home in rural areas. Now, 19% say they are looking at rural options.

The median sale price of homes in rural areas increased 11.3% year over year in the four weeks ending Aug. 2, and rose 9.2% in suburban areas, while homes in urban areas had a smaller home price increase at 6.7%.

“We’ve been speculating about increasing interest in the suburbs and rural areas since the start of the pandemic,” said Redfin Economist Taylor Marr. “Now we’re seeing concrete evidence that rural and suburban neighborhoods are more attractive to homebuyers than the city, partly because working from home means commute times are no longer a major factor for some people.”

As a result of COVID-19, 13% of homebuyers had searched for homes in a different area than originally planned, according to a Redfin survey conducted from July 19 through 21.

Before the pandemic, 37% of homebuyers said they were looking for a home in an urban area, compared to 19% now. The number of homebuyers looking in the suburbs grew – 43% said they were looking for a home in the suburbs before the pandemic and 50% said they are looking in the suburbs now.

Home supply in rural areas went down 37.9% year over year, and down 31.8% in the suburbs in the four weeks ending Aug. 2, Redfin said, compared to a 21.3% decline in urban areas.

Meanwhile, new listings in rural areas fell 14.2% year over year, and dropped 3.6% in suburban neighborhoods. In urban areas, new listings remained flat year over year.

From RISMedia Staff

By necessity, due to the coronavirus pandemic, some homebuyers have been purchasing homes sight-unseen. But is this a trend that’s here to stay? According to a new Zillow® survey, 36 percent of Americans say they are more likely to try purchasing a home completely online during the pandemic, while 30 percent say they would do the same even after outbreak ends.

“We didn’t feel safe getting on a plane so having these digital tools on Zillow allowed us to narrow down our search and find the right home for us and our 8-year-old son,” said Jarrod Schwartz, a sales manager, in the report. “After our real estate agent provided a video tour, we had the confidence to make an offer.”

Sellers are feeling the same way. According to Zillow, 43 percent would try to sell their home entirely online during the pandemic, while 33 percent would still do so after the outbreak ends.

And while homebuyers still want to “walk through” the property in some way, according to the survey, one in three consumers would prefer a virtual or video tour over an in-person tour after the outbreak ends.

Agents predict this is a trend that’s here to stay. Of the Zillow Premier Agents who were surveyed, 31 percent anticipate sight-unseen purchasing will stay even once the outbreak is over. During the outbreak, 64 percent have reported fewer in-person showings.

“The home shopping tradition of loading the family into the minivan and touring open houses all weekend may be over,” said Zillow economist Jeff Tucker. “Now shoppers are realizing they can use virtual tours to either skip in-person shopping, or at least to winnow down their options and visit fewer homes in person, making it easier and less time-consuming to find their next home. That speed advantage can give buyers a leg up in today’s fast-moving market. ”

Mortgage Rates Dip Below 3%

According to Realtor® Magazine the 30-year fixed-rate mortgage averaged 2.98% this week, the lowest rate in Freddie Mac’s records dating back to 1971.

“The drop has led to increased home buyer demand and, these low rates have been capitalized into asset prices in support of the financial markets,” says Sam Khater, Freddie Mac’s chief economist. “However, the countervailing force for the economy has been the rise in new virus cases which has caused the economic recovery to stagnate, and this economic pause puts many temporary layoffs at risk of ossifying into permanent job losses.”

Freddie Mac reported the following national averages with mortgage rates for the week ending July 16:

  • 30-year fixed-rate mortgages: averaged 2.98%, with an average 0.7 point, falling from a 3.03% average last week. A year ago, 30-year rates averaged 3.81%.
  • 15-year fixed-rate mortgages: averaged 2.48%, with an average 0.7 point, falling from last week’s 2.51% average. A year ago, 15-year rates averaged 3.23%.
  • 5-year hybrid adjustable-rate mortgages: averaged 3.06%, with an average 0.3 point, rising slightly from last week’s 3.02% average. A year ago, 5-year ARMs averaged 3.48%.

Freddie Mac reports average commitment rates along with average fees and points to reflect the total upfront cost of obtaining a mortgage.

RISMedia reported from the Mortgage Bankers Association the following:

The mortgage space continues to bounce back amid the coronavirus pandemic, according to the latest data from the Mortgage Bankers Association (MBA). In June, new mortgage applications were up. And for the week of July 5, forbearance rates continued to post declines. Here’s the breakdown:

New Home Mortgage Applications

According to the MBA’s Builder Application Survey, in June, mortgage applications for new home purchases increased 54.1 percent YoY. Compared to the previous month, applications increased by 20 percent.

Conventional loans made up 65.1 percent of loan applications, while FHA loans composed 22.6 percent, RHS/USDA loans composed 1.0 percent and VA loans composed 11.2 percent. In June, the average loan size of new homes increased from $332,793 in May to $338,589.

“The new home purchase market continues to recover—applications surged 20 percent in June, and although this is not adjusted for seasonal impacts, it is another piece of data indicating that homebuying activity that was delayed by the pandemic in March and April is just being realized later in the season. The fact that applications are up over 50 percent from last June further reinforces that point,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. “MBA estimates that new home sales in June increased 15 percent to a seasonally adjusted pace of 774,000 units—which would be the strongest level of activity since January 2020.”

Added Kan, “We do anticipate that new home construction will speed up to attempt to better meet demand. However, with the low level of homes for sale on the market, the sustainability of the upward trend in home purchase activity will hinge on supply ramping up more rapidly.”

Mortgages in Forbearance

According to the MBA’s latest Forbearance and Call Volume Survey, forbearance rates decreased by 21 basis points as of July 5. The total number of loans in forbearance is now 4.1 million—8.18 percent of servicers’ portfolio volume.

For the fifth week in a row, the share of Fannie Mae and Freddie Mac loans in forbearance decreased—dropping to 6.07 percent, a 10-basis-point improvement. Ginnie Mae loans in forbearance also decreased, by 116 basis points to 10.56 percent. For private-label securities, the share increased 85 basis points to 10.93 percent. And for loans in forbearance for depositary services, the share dropped to 8.80 percent. The percentage of loans in forbearance held by independent mortgage bank services decreased to 8.10 percent.

“The share of loans in forbearance continues to decrease, as more workers are brought back from temporary layoffs. However, our survey reveals a notable shift in the location of many FHA and VA loans, which have been bought out of Ginnie Mae pools—predominantly by bank servicers—and moved onto bank balance sheets,” said Mike Fratantoni, MBA’s senior vice president and chief economist. “As a result, there was a sharp drop in the share of Ginnie Mae loans in forbearance, and an offsetting increase in the share of portfolio loans in forbearance. These buyouts enable servicers to stop advancing principal and interest payments, and to work with borrowers in the hope that they can begin paying again before they are re-securitized into Ginnie Mae pools.”

Added Fratantoni, “Forty-three percent of loans in forbearance are now in an extension following their initial forbearance term, while more than 10 percent of borrowers entered into a deferral plan to exit forbearance—down from 16 percent the week prior. For those exiting forbearance over the next several months, we expect to see many of the borrowers with GSE loans to utilize the deferral option.”

A Bit of Advice…

Rebecca Donatelli, Realtor ® with the National Association of Realtors YPN Advisory Board writing for RISMedia shares the following advice to agents and buyers.

With a rapidly changing market and low inventory, homes are selling faster than ever. New listings can have several offers before your clients even have a chance to see the home. With this being the case, not only do you have to move quickly, you have to come prepared with offers that stand out above the others.

While it can be difficult to be the first of multiple offers coming in, you can make your offer the one that will get your clients the home they have fallen in love with. Check out some of the tips below.

Communicate With the Listing Agent

When your clients decided to purchase a home, they chose you to be the one to guide them through the process. When they find a home that they like, you have to move quickly to get the process going. The first thing you should do is contact the listing agent for the home.

When you contact the listing agent, ask questions about the home’s availability and if there are already other offers on the table for the home. If there are offers, try to find out what your clients are up against. Keep in mind that the listing agent may not be able to disclose anything to you at the request of the seller.

You should also inquire about the seller’s preferences; they may want you to use a specific title company or may have a specific timeline or possession date that would be convenient for them. The more you can make your clients’ offer align with the seller’s goals, the better chance you have of getting the home your clients want.

Keep Your Offer Simple

There is nothing simple about making an offer on a home. When your clients put in an offer, the best way to make it stand out is to keep the offer simple. The fewer contingencies that are put in place, the better. Some contingencies you might put in place range from a financing contingency to a home inspection contingency.

Also, when you put in an offer, keep in mind that it’s not all about price. Your client may be prepared to go well over asking, but remember that the best offer will be the sum of the terms that work best for the seller. While you want to make sure that your clients get the home, you don’t want them to overextend themselves.

Be Ready to Move Fast

When a new client decides to move forward with their home search, they will want to begin seeing homes. If you have an incredibly busy schedule, you may want to team up with your broker or another agent who can help show homes to your clients, so you don’t miss out on an opportunity to show the perfect home. Another option is to hire a licensed showing agent who can handle all of the showings and pass the transaction over to you once your clients find the home they want.

One Last Thing…

Writing an offer can be challenging and it takes time for the sellers and the listing agent to go through the offer and make their decision. Make sure to let your clients know that the waiting process is normal and can take a few days.

One thing you can do to make the main points of your offer stand out is to make a one-pager that outlines the terms and contingencies on the front of the offer package. This will give the seller and listing agent the opportunity to see what the offer entails from the beginning.

During a hot market where homes are selling as fast, you have to be diligent in writing your offer so that they will stand out from the rest.

Housing Stats From CMLS for July, 2020

Strong buyer demand in the face of a constrained supply of homes for sale continues to be the story again this month.

New construction activity, in the form of housing starts as reported by the Department of Commerce, has picked up in recent weeks but remains well below levels required to substantially increase the number of homes for sale. Continued low interest rates are expected to maintain healthy buyer activity, while reluctant sellers and the changing season are likely to drag the inventory of homes for sale lower into the late summer and early fall market. For the 12-month period spanning August 2019 through July 2020, Pending Sales in the CMLS region were up 5.4 percent overall. The price range with the largest gain in sales was the $300,001 and Above range, where they increased 20.3 percent.

The overall Median Sales Price was up 6.8 percent to $189,000. The property type with the largest price gain was the Single-Family Homes segment, where prices increased 6.9 percent to $194,500. The price range that tended to sell the quickest was the $100,001 to $150,000 range at 38 days; the price range that tended to sell the slowest was the $300,001 and Above range at 73 days. Market-wide, inventory levels were down 31.4 percent.

The property type that lost the least inventory was the Condos segment, where it decreased 5.3 percent. That amounts to 1.6 months supply for Single-Family homes and 2.3 months supply for Condos.

Mortgagee Application Information…

RISMedia reported from the Mortgage Bankers Association the following:

The mortgage space continues to bounce back amid the coronavirus pandemic, according to the latest data from the Mortgage Bankers Association (MBA). In June, new mortgage applications were up. And for the week of July 5, forbearance rates continued to post declines. Here’s the breakdown:

New Home Mortgage Applications

According to the MBA’s Builder Application Survey, in June, mortgage applications for new home purchases increased 54.1 percent YoY. Compared to the previous month, applications increased by 20 percent.

Conventional loans made up 65.1 percent of loan applications, while FHA loans composed 22.6 percent, RHS/USDA loans composed 1.0 percent and VA loans composed 11.2 percent. In June, the average loan size of new homes increased from $332,793 in May to $338,589.

“The new home purchase market continues to recover—applications surged 20 percent in June, and although this is not adjusted for seasonal impacts, it is another piece of data indicating that homebuying activity that was delayed by the pandemic in March and April is just being realized later in the season. The fact that applications are up over 50 percent from last June further reinforces that point,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. “MBA estimates that new home sales in June increased 15 percent to a seasonally adjusted pace of 774,000 units—which would be the strongest level of activity since January 2020.”

Added Kan, “We do anticipate that new home construction will speed up to attempt to better meet demand. However, with the low level of homes for sale on the market, the sustainability of the upward trend in home purchase activity will hinge on supply ramping up more rapidly.”

Mortgages in Forbearance

According to the MBA’s latest Forbearance and Call Volume Survey, forbearance rates decreased by 21 basis points as of July 5. The total number of loans in forbearance is now 4.1 million—8.18 percent of servicers’ portfolio volume.

For the fifth week in a row, the share of Fannie Mae and Freddie Mac loans in forbearance decreased—dropping to 6.07 percent, a 10-basis-point improvement. Ginnie Mae loans in forbearance also decreased, by 116 basis points to 10.56 percent. For private-label securities, the share increased 85 basis points to 10.93 percent. And for loans in forbearance for depositary services, the share dropped to 8.80 percent. The percentage of loans in forbearance held by independent mortgage bank services decreased to 8.10 percent.

“The share of loans in forbearance continues to decrease, as more workers are brought back from temporary layoffs. However, our survey reveals a notable shift in the location of many FHA and VA loans, which have been bought out of Ginnie Mae pools—predominantly by bank servicers—and moved onto bank balance sheets,” said Mike Fratantoni, MBA’s senior vice president and chief economist. “As a result, there was a sharp drop in the share of Ginnie Mae loans in forbearance, and an offsetting increase in the share of portfolio loans in forbearance. These buyouts enable servicers to stop advancing principal and interest payments, and to work with borrowers in the hope that they can begin paying again before they are re-securitized into Ginnie Mae pools.”

Added Fratantoni, “Forty-three percent of loans in forbearance are now in an extension following their initial forbearance term, while more than 10 percent of borrowers entered into a deferral plan to exit forbearance—down from 16 percent the week prior. For those exiting forbearance over the next several months, we expect to see many of the borrowers with GSE loans to utilize the deferral option.”

Recommendations from Experience

Brooke Chaplan a freelance writer and blogger writing for RISMedias Housecall recommends the following:

4 Things Homebuyers Should Know About New Construction Homes

Being the first person to own a newly-built home can be a source of immense pride and enjoyment. Having the chance to build a house to your exact specifications gives you a great opportunity to move into a home that you can enjoy for many years.

As a potential buyer of a new home, there are some important things to keep in mind throughout the research and building process that will help make the process simpler. To help ensure you’re fully prepared, here are four things homebuyers should know about new construction homes:

There Are Lots of Options

It’s easy to miss when you walk through a completed home, but the number of options available when you’re constructing a new home is staggering. If you’re buying a home in a new development, you can simplify this decision-making process by choosing from certain pre-selected packages. Of course, you can choose each option individually, keeping in mind that this will take quite a bit of time and could result in an unexpected finished product if you don’t have a decent handle on interior design.

There’s Time Involved

New construction homes don’t just pop up overnight. Most new homes take a few months to build, meaning you need to have a plan for where you’ll live in the meantime. To be sure, the end result is more than worth the wait. It’s important, though, to keep in mind that the waiting period will likely be longer than if you buy a pre-existing home. To help maintain your excitement, you can drop by the building site on occasion to check out the construction progress.

Home Warranties Are Encouraged

There’s no doubt that home builders work hard to produce the best homes they can. However, that doesn’t mean that a home warranty is not a smart idea, even when the home you’re protecting is brand new. If one of your appliances should turn out to be a lemon, for example, you don’t want to have to pay to replace it when you’re already working hard to pay down your mortgage. Before you move into your new home, it’s important to understand the warranties that are available to you so that you can take advantage of the options that are best for your situation.

It’s Good to Have a REALTOR®

Even when buying a new construction home straight from the developer, it’s a good idea to have a REALTOR® to represent you. A real estate professional can help make the paperwork process much easier and ensure that you’ve completed all the small details to make your transition into your new home far smoother. Plus, a REALTOR® will ensure that you’re getting a fair price and you didn’t miss any details that could turn out to be problems later on.

Even when the completion of your home seems a long way off, the reality is that moving into a new construction home is usually worth all the effort involved. Knowing that you’re the first family to make memories in a home serves as a daily reminder of the hard work that has gotten you to this point. Plus, with the right planning in place, buying a new home can be as simple as buying any other home!

Record Breaking Home Sales!

According RISmedia.com pending home sales reached a 44.3 percent monthly increase in May—a new record, according to the National Association of REALTORS® (NAR).

After two previous months of declines, pending home sales are showing a market rebound, with every major region recording a month-over-month increase. According to NAR, the Pending Home Sales Index (PHSI) increased to 99.6 in May—the highest MoM growth since NAR began the series in January 2001. Since the same time last year, pending home sales have fallen 5.1 percent.

NAR expects existing home sales to reach 4.93 million units in 2020, with new home sales potentially hitting 690,000. In addition, in 2021, NAR expects sales to rise to 5.35 million units for existing homes and 800,000 for new homes.

Regional Breakdown:

Northeast
+44.4% MoM – Now 61.5 PHSI
-33.2% YoY

Midwest
+37.2% MoM – Now 98.8 PHSI
-1.4% YoY

South
+43.3% MoM – Now 125.5 PHSI
+1.9% YoY

West
+56.2% MoM – 89.2 PHSI
-2.5% YoY

“This has been a spectacular recovery for contract signings, and goes to show the resiliency of American consumers and their evergreen desire for homeownership,” said Lawrence Yun, NAR’s chief economist. “This bounce back also speaks to how the housing sector could lead the way for a broader economic recovery.”

“More listings are continuously appearing as the economy reopens, helping with inventory choices,” Yun said. “Still, more home construction is needed to counter the persistent underproduction of homes over the past decade. The outlook has significantly improved, as new home sales are expected to be higher this year than last, and annual existing-home sales are now projected to be down by less than 10 percent—even after missing the spring buying season due to the pandemic lockdown.”

“All figures light up in 2021 with positive GDP, employment, housing starts and home sales,” Yun added.

“New home sales took a similar upward turn last week, but today’s pending data is a more important indicator of market activity since it covers existing homes, which made up roughly 80 to 90 percent of sales in recent years. This move confirms that May closings could represent a low-point for home sales, with June and July numbers looking much better,” Danielle Hale, chief economist at realtor.com®, said in a statement.