June 1, 2020
* CoreLogic Pending Index Indicates Annual Price Growth Holding Up Surprisingly Well In May. CoreLogic has developed a Pending Price Index using MLS data. The index is built on the price recorded on the contract date rather than the price on the closing date. Since it generally takes 30-45 days to close a sale on average, contracts negotiated in April can be used to project May home prices, which will be the first time for us to see COVID-19’s full impact on the housing market as the April home prices will still have transactions negotiated in the first half of March prior to the implementation of shelter-in-place mandates. The latest CoreLogic Pending Price Index indicates that annual price growth began to slow in May. However, home prices held up surprisingly well in many metro areas. The 20-CBSA composite Pending HPI year-over-year change came in at 4.4% in May. Among all 20 CBSAs included in the CoreLogic Pending Index, Phoenix leads the way with an 8.3% year-over-year growth in May. Home prices also hold up well in Seattle (6.2%), Portland (4.0%), Tampa (7.3%), and Miami (4.8%), all of which are projected continuous acceleration in the year-over-year change.
* Mortgage Rates Hit Another All-Time Low As Home Buyers Rush To Secure Cheap Financing. Mortgage rates have gotten even more affordable – a boon to the many Americans once again considering buying a home as coronavirus-related stay-at-home orders are lifted across the country. The 30-year fixed-rate mortgage dropped to an average of 3.15% during the week ending May 28, a decrease of nine basis points from the previous week, Freddie Mac reported Thursday. This represents the lowest level since Freddie Mac began tracking this data starting in 1971. A year ago, the 30-year fixed-rate mortgage averaged 3.99%. The previous record low was set at the end of April, when the average rate on a 30-year home loan dropped to 3.23%. This is now the third time in 2020 when the mortgage market has recorded a new historical low for interest rates. The strong performance of the stock market, as evidenced by recent gains in the Dow Jones Industrial Average and the S&P 500, could mean that low rates are here to stay for the foreseeable future. The number of mortgage applications for loans used to buy a home has risen for six straight weeks, according to the Mortgage Bankers Association. The volume of purchase loans is now up 54% from early April, when loan application volume dropped in the face of the coronavirus pandemic.
* New Home Sales Overperform in April. After weakening in March, the volume of new home sales came in much better than expected in April. new home sales estimates from the Census Bureau reveal relatively flat conditions compared to March. The Census estimates reported a 623,000 seasonally adjusted annual rate in April, after a slightly revised 619,000 pace in March. The April rate is down approximately 20% from the peak rate in January. Mortgage application data and anecdotal reporting from builders indicates that housing demand picked up in recent weeks. Overall, the data lend evidence to the NAHB forecast that housing will be a leading sector in an eventual economic recovery. Consider that despite the recent weakness, new home sales are reported to be 1.4% higher through April than the first four months of 2019. Given the momentum housing construction held at the start of 2020, the housing industry will help lead the economy in the eventual recovery and the April data is broadly consistent with that conclusion.