TheMReport — News and strategies for the evolving mortgage marketplace.
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52 | TH E M R EP O RT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST DATA The Big and Small of it An analysis of single-family construction growth shows a wide divide between large metros and small towns. S ingle-family construction growth has been slow- ing down, especially in small cities, according to the latest data from the National Association of Homebuilders (NAHB). The NAHB used small cities, which make up 37% of all single-family construction nationwide and 30% of the U.S. population as a "demographic and economic microcosm" of the United States. According to the NAHB, small metropolitan areas, or cities with less than one million in population, despite posting the second highest year-over-year net growth rate for single family permits among all NAHB Home Building Geography Index (HBGI) areas, these small cities saw weak growth in single- family construction. Large metro areas, with popula- tions of more than one million, on the other hand, are posting greater rates of expansion at the start of 2019. According to the NAHB, exurbs—outlying counties of large metro areas with at least 1 million residents—were the only region that registered single-family permit growth on a year-over-year basis in Q1 2019. Despite consisting of only 9% of single-family construction nationally, exurbs were the only region to show net single-family permit growth when comparing Q1 2019 data relative to Q1 2018, with a 1.6% gain. Other rela- tively sparsely populated areas, including small towns, rural communities, and outer suburbs of small metropolitan markets, have shown the largest annual single-family growth over the past four quarters, while other areas have shown either no change or declines. A study from CoreLogic echoes the NAHB's data, indicating that inventory growth has been hit historical lows as construction stagnates. CoreLogic states that the inventory of homes for sale in the U.S. increased at the end of Q1 2019 with 4.5 months' supply of homes, which is historically one of the lowest numbers recorded. Although March's figure is an increase year-over-year from March 2018's 3.5 months of inven- tory, it was less than half of what it was 10 years ago—9.1 months of inventory. "Not only is new construction and mobility—two traditional drivers of inventory—at low levels, but some potential inventory shifted to the rental market over the past 10 years," the report states. Shopping Around for Savings Borrowers are quickly understanding the benefits of mortgage rate comparison. A recent study by Lend- ingTree found a wide distribution of mortgage fees offered to borrow- ers making the case for saving by shopping around. The study indicated that mort- gage fees in the first quarter had a median of $2,059 for purchase loans and $1,807 for refinanc- ing. However, the more offers a borrower received, the more they were likely to save on mortgage fees. In fact, for people receiv- ing five offers, the media spread between the highest and lowest fees offered was $2,045. As a result, the study found that 7% of purchase loan borrowers and 8% of refinance borrowers were offered $0 in fees. Furthermore, 15% of new purchase borrowers and 19% of refinance borrowers paid less than $500 in fees. On average, 28% and 35% of the purchase and refinance borrowers respectively paid less than $1,000 in mortgage fees. On the high end, the study indicated that 13% of purchase borrowers had to pay fees of over $5,000, 3% over $10,000, and 0.21% over $20,000. LendingTree said that many borrowers could also negotiate with the lender on their mortgage fees. However, the discounts, in this case, would only include aspects imposed by the government such as taxes, flood certification, city and county stamps, and recording fees. According to Sam Khater, Chief Economist at Freddie Mac, while the low rates indicate a good opportunity for borrow- ers to save on mortgage, Freddie Mac research has found that there can be a "wide dispersion among mortgage offers." "By shopping around and get- ting a single additional mortgage rate quote, a borrower can save an average of $1,500," Khater said. <$1,000 On average, 28% and 35% of the purchase and refinance borrowers respectively paid less than $1,000 in mortgage fees.