Mortgage Watch | March 19, 2018

Lack of inventory continues to push prices higher

It’s a great time to be a seller, but not such a thrill being a rookie buyer. Soaring home prices and the shortage of properties on the market are taking a toll on beleaguered first timers.

The share of first-time homeowners fell to just 29% of all existing home buyers in January, according to the most recent National Association of Realtors report, down from 32% in December and 33% in January 2017.

In the report, economist Joseph Kirchner expresses concerns this could further depress homeownership rates down the line, citing fewer affordable homes for those embarking on their version of the American Dream.

Nationally, the lack of inventory also drove down the number of existing (previously lived in) homes sold, while monthly sales dropped 3.2% and annual sales decreased 4.8%.

“There’s plenty of demand, but people just cannot find a home on the market that meets their needs and they can afford,” Kirchner says in the report, predicting that the shortage will continue.

Across the country, there were 15.5% fewer existing homes in January selling for $250,000 or less compared to a year ago, while there were 25% more homes selling for $500,000 or more.

Sales of coveted single-family homes hit 4.76 million in January, falling 3.8% from December and 4.8% from the same month a year earlier. Lower priced condos and co-ops fared a bit better than single-family homes, with the number of monthly sales rising 1.6% in January to approximately 620,000. But that’s down 4.6% from January of 2017.

January’s median existing home price was $240,500, a 2.4% drop from December but representing a 5.8% jump from January of the previous year. However, the cost was still substantially less than the median price of a newly constructed dwelling. New homes median pricing was at $335,400 in December, according to the most recent joint report by the U.S. Census Bureau and U.S. Department of Housing and Urban Development. That’s nearly 39.5% more than an existing home.

Southern states had the most existing home sales in January at about 2.26 million, while the Midwest had the second most home sales at 1.25 million. There were 1.14 million existing homes sold in the West, a 5% drop from the previous month and a 9.5% fall from the previous year. The Northeast had the fewest existing home sales, at just 730,000. That was also down, both by 1.4% month-over-month and 7.6% year-over-year.

Meanwhile, prices of existing homes were up in every region. They were the most expensive in the West, at a median $362,600 in January, an 8.8% jump over January 2017.

NAR Chief Economist Lawrence Yun is quoted as saying, ”It’s very clear that too many markets right now are becoming less affordable and desperately need more new listings to calm the speedy price growth.”

Rates Currently Trending: Neutral

Mortgage rates are trending sideways this morning. Last week the MBS market improved by +13bps. This probably wasn’t enough to improve mortgage rates or fees. Mortgage rates continue to move sideways with relatively low volatility.

About the Author

Tim Morissette, also known in the community as Mr. Foothill Ranch, offers over 43 years of real estate experience which has given him an established reputation and unmatched market knowledge. He is joined by his wife, Michele and son Matt, as they continue to offer personal service with an emphasis on achieving his clients’ real estate goals.  This unique combination of traits has led to his proven track record of referral and repeat business. This can be witnessed by the trust of homeowners in Foothill Ranch where he has sold twice as many homes and represented three times more buyers than the next-leading real estate agent for the last 23 years.

As residents of Foothill Ranch since 1994, Tim and Michele are actively involved in the community by fundraising for Foothill Ranch Library, Make-a-Wish Foundation, Cancer Society, Homes for Habitat, Relay for Life, South County Outreach, and the local church and schools. Tim enjoys sponsoring community-wide garage sales, as well as sponsors Paper Shredding and E-Waste Recycling events twice a year.

Tim and Michele are dedicated to their family of four sons, daughter-in-laws, and grandchildren. As a family, they enjoy many outdoor activities which include camping, spearfishing, mountain climbing and exploring the miles of hiking and equestrian trails in Foothill Ranch and the Whiting Ranch Wilderness Park. Tim and his sons are also avid snowboarders and enjoy mountain biking and lobster diving. Family is a top priority in the Morissette household. They look forward to helping more families achieve their dreams of homeownership.