Mortgage News for the Week of November 8, 2019
Thanks to Lower Mortgage Rates, Housing is More Affordable Than It’s Been in 3 Years
With mortgage rates at a three-year low and a healthy job market, housing affordability rose to its highest level in three years in the third quarter of 2019, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI).

In all, 63.6 percent of new and existing homes sold between the beginning of July and end of September were affordable to families earning the U.S. median income of $75,500. This is up from the 60.9 percent of homes sold in the second quarter of 2019 that were affordable to median-income earners and slightly higher than a first quarter 2019 reading of 62.6. Read more from the National Association of Home Builders.
Fewer Homeowners Are Burdened by Housing Costs — But Fewer People Own Their Homes
American homeowners aren’t feeling the pinch from housing costs like they used to — but that’s not necessarily reason to celebrate.

Only 20.9% of homeowners with a mortgage were cost-burdened as of 2018, meaning that they spent at least 35% of their monthly household income on housing costs,  according to new data  from the U.S. Census Bureau’s American Community Survey. That’s down from 28.8% a decade earlier, just as the financial crisis was reaching its fever point. Read more from MarketWatch.
New vs. Used in Housing
Lessening the gap between median prices for new construction and existing single-family homes is crucial.
There are a number of factors that make the post-Great Recession housing market unique among recent business cycles. A persistent skilled labor shortage, growth in land development and regulatory construction costs, a years-long period of under-building, and a sustained decline for housing affordability define the economics of the housing market over the past decade and have led to an affordability crisis. These supply-side headwinds have left clear evidence on the relative prices of new and existing homes. Read more from Builder News.
Mortgage Apps Hit Their Seasonal Slump, YOY Numbers Tell a Different Story
Mortgage activity was little changed during the week ended November 1 as interest rates continued to bounce around. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of mortgage loan application volume, decreased 0.1 percent on a seasonally adjusted basis from one week earlier and was down 1.0 percent on an unadjusted basis.

Refinancing provided the only strength, rebounding after two weeks of declines. The Refinance Index increased 2 percent from the previous week and was 144 percent higher than the same week one year ago. The refinance share of mortgage activity increased to 59.5 percent of total applications from 58.0 percent the previous week. Read more at Mortgage News Daily.
Mortgage Market Update
After a year-long slide, mortgage rates hit a cycle low in September 2019 and have risen in six out of the last nine weeks due to modestly better economic data and trade related optimism. The improvement in sentiment has been one of the main drivers behind the surge in equity prices and will provide a halo effect to consumer spending heading into the important holiday shopping season.
We hope you enjoyed this week's Market News. For more information about how PMA can help you, please contact us.
Plymouth Meeting Office: 610.834.8700
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Ocean City, NJ Office: 609.398.8600

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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