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Applications for both home purchases and refinancing rose for the fourth time during the week ended March 24. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of application volume, increased 2.9 percent on a seasonally adjusted basis and 3.0 percent unadjusted compared to the week ended March 17. The Refinance Index was 5 percent higher than the previous week and the refinance share of activity increased to 29.1 percent of total applications from 28.6 percent. The Index was 61 percent lower than the same week in 2022. [refiappschart] Purchase applications were 2.0 percent higher than the prior week on both an adjusted and an unadjusted basis but the unadjusted Purchase Index was 35 percent lower than the same week a year earlier. [purchaseappschart] “Application activity increased as mortgage rates declined for the third straight week. The 30-year fixed rate declined to 6.45 percent, the lowest level in over a month,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “While the 30-year fixed rate remained 1.65 percentage points higher than a year ago, homebuyers responded, leading to a fourth straight increase in purchase applications. Home price growth has slowed markedly in many parts of the country, which has helped to improve buyers’ purchasing power. Purchase applications remain over 30 percent behind last year’s pace , but recent increases, along with data from other sources showing an uptick in home sales, is a welcome development.”
Some people might like the idea of perpetual appreciation in the housing market, but others know that the industry was badly in need of a cool-down after values surged at an unprecedented pace post-pandemic. While the interest rate spike of 2022 wasn't entirely unprecedented, it was the fastest in decades and it left no doubt as to when home prices should embark on the much-needed correction. Two of the most official methods to track home price progress are the FHFA and Case Shiller Home Price Indices (HPIs), released concurrently once per month. January's update just came out this morning and the results are mixed. In annual terms, price appreciation continues to decline rapidly: Based on price trends over the past 12 months, it would be almost impossible for the annual pace to avoid dipping into negative territory in the coming months. That will be more a reflection of how high prices were a year ago than an absence of resilience in the present. In fact, the most recent trends in prices are more resilient than expected--especially when viewing the broader FHFA data set. FHFA's monthly HPI moved back into positive territory in January. Case Shiller was down 0.4%, but that's an improvement from December's drop of 0.5%. Both are well off their sharpest months of depreciation late last year. So yes... home prices are declining from last year and depending on the metro area, prices are still declining month-over-month to a small extent. But the declines were expected. The surprise is how shallow they've been and how quickly the resilience seems to be stepping in.
New home sales surprised everyone in January, surging by 7.5 percent to 670,000 units, the highest rate since March 2022. It was, however, only an illusion. That number has now been revised down to 633,000. The more modest number – which is still significantly higher than analysts had expected – means that the February number, a seasonally adjusted annual sales rate of 640,000 units, represents a monthly increase of 1.1 percent. This is down 19 percent from the 790,00-unit rate in February 2022. [newhomesall] The February number wasn’t a surprise. Even before the January revision, analysts had expected a pullback. Those polled by Econoday had a consensus estimate of 645,000 and Trading Economics came in at 650,000. On a non-adjusted basis, there were 59,000 homes sold in February, up from 55,000 in January. This brought the year-to-date numbers to 114,000 versus 141,000 units, respectively. At the end of February, there were an estimated 436,000 new homes available for sale. This is estimated to be an 8.2-month supply at the current sales pace. An estimated 75,000 of those homes are ready for occupancy. The median sales price of a home sold last month was $438,000 and the average was $498,700. A year earlier the respective prices were $427,400 and $522,200. [newhomeprices] Sales in the Northeast were down 40.0 percent from January and 55.3 percent from a year earlier. In the Midwest , the monthly decrease was 1.4 percent for an annual decline of 20.2 percent. Sales rose in both the South and West in February, growing by 3.0 percent and 8.1 percent, but were still lower year-over-year by 33.2 and 10.1 percent, respectively.
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