PMA's Market News Update for the Week Ending May 17, 2019

Mortgage News for the Week of May 17, 2019

NAR Midyear Forecast: Home Sales Expected to be Stronger

Continued economic expansion, rising home sales and an increase in wage growth that is on par with home price growth are some of the expectations for the second half of 2019, according to speakers at today's residential real estate forum at the 2019 REALTORS® Legislative Meetings & Trade Expo.

Dr. Lawrence Yun, Chief Economist at the National Association of Realtors®, delivered his 2019 midyear forecast , which predicted changing future migration patterns as buyers search for more affordable markets. Inventory in the U.S. has grown for eight straight months on a year-over-year basis, and Yun expects that to continue.

"Home sales should be much stronger based on the economic fundamentals of jobs, interest rates, population and consumer confidence," said Yun. Read more from the National Association of Realtors.

Home Values Dip Month-Over-Month for First Time in Seven Years

In April, the median home value fell 0.1% from March, the first time the market has posted a monthly decline in seven years.
A more stable metric-year-over-year declines-shows U.S. home values up just 6.1% from last April. That's below annual growth of 7.5% in April 2018.
16 of the largest 50 metros posted home value declines in April and have had flat or falling home values since January, raising our confidence that they indeed have reached a peak.

The median U.S. home value fell 0.1% in April from March, the first monthly decline in seven years and another signal that the housing market continues to pump the brakes after several years of torrid growth. Read more at Zillow.com.

After Months of Setbacks, Housing Starts Rise Nearly 6%

Housing starts reversed course in April, climbing nearly 6% from March, according to the latest report from the U.S. Dept. of Housing and Urban Development and the U.S. Dept. of Commerce.

According to the analysis, housing starts rose 5.7% in April 2019 to a seasonally adjusted annual rate of 1.124 million units.

"New housing construction mirrored improvements in the housing market this past month, from rising inventory to lower mortgage rates and higher consumer confidence," Realtor.com Senior Economist George Ratiu said. "The National Association of Home Builders confidence index increased three points this month, indicating higher optimism in current market developments, as well as stronger expectations over the next six months." Read more at Housing Wire.

Rates Close In On Lowest Levels in Over a Year

Mortgage rates have had a few first world problems to complain about recently. Well, there's really only been one: a relative inability to keep pace with the broader decline in rates as seen in the Treasury market. If Treasuries are the "master," mortgage rates are the proverbial dog on a leash. The dog can pull ahead, heel faithfully, or drag recalcitrantly behind. The latter has been mortgage rates' M.O. for the past few weeks owing to some abstruse loan performance data that made investors rethink the value they were placing on mortgage investments. Read more from Mortgage News Daily.

13% of Adults Are Planning a Home Purchase in the Next 12 Months

In the first quarter of 2019, 13% of adults reported plans to purchase a home within a year. That is just slightly below where the share stood a year earlier, at 17%. The decline marks the second consecutive year-over-year drop in the share of adults planning to buy a home, providing further evidence that the deterioration in affordability is having an impact on people's homeownership plans.

Additional findings from the latest Housing Trends Report (HTR) show that in the first quarter of 2019, 60% of prospective home buyers had never owned a home before. In comparison, a year earlier, 54% of buyers were first-timers. Read more from the National Association of Home Builders.

Homeowners Still Overestimate the Value of Their Homes

The gap between the perceptions of homeowners and appraisers continued to widen in April, according to Quicken Loans National Home Price Perception Index (HPPI).

The HPPI expanded to 0.87% in April from 0.78% in March.

"The continued widening of the gap between homeowners' and appraisers' viewpoints is evidence of just how hard it can be to keep your finger on the pulse of local housing - especially at the onset of home selling season..." Read more at Mortgage Professional America.

Mortgage Rates Hold Steady Amid Global Trade Disputes

Modestly weaker consumer spending and manufacturing data, along with continued jitters around trade policy, caused interest rates to decline throughout the yield curve. While signals from the financial markets are flashing caution signs, the real economy remains on solid ground with steady job growth and five-decade low unemployment rates, which will drive up home sales this summer.

We hope you enjoyed this week's Market News. For more information about how PMA can help you, please contact us.

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Information and analysis is obtained through third parties and is deemed accurate but not guaranteed. Philadelphia Mortgage Advisors is a licensed mortgage lender by the PA Dept. of Banking and Securities, NJ Dept. of Banking & Insurance, the state of DE, the Florida Office of Financial Regulation, MD Mortgage Lender #23004 and VA State Corporation Commission #MC - 6797. NMLS #128570.

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