TheMReport — News and strategies for the evolving mortgage marketplace.
Issue link: http://digital.themreport.com/i/522162
Th e M Rep o RT | 53 O r i g i nat i O n s e r v i c i n g a na ly t i c s s e c O n da r y m a r k e t ANALYTICS the latest Pending Home sales Up, reach Highest Point in two years experts say high demand will continue, but inventory will struggle to keep up. P ending home sales rose for the third straight month in March, and according to the National Association of Realtors (NAR) Pending Home Sales Index, they're at their highest point since June 2013. The index, an indicator of sales based on contract signings, showed a 1.1 percent increase in pending sales for March and an 11.1 percent increase over the same time last year. This marks the third month in a row that sales have risen and the seventh year that pending sales numbers have improved. The Pending Home Sales Index was at its highest point in June 2013, coming in at 109.4. As of March, it has now reached 108.6, its peak since that time. The index also broke down pending home sales by region. While the South and West saw an increase of 4 percent and 1.7 percent respectively for March, the Northeast and Midwest saw drops, decreasing by 1.5 percent and 2.5 percent. All regions were up over March 2014. The Northeast rose .6 percent, the Midwest was up 11.3 percent, the West jumped 15.6 percent, and the South increased 12.4 percent. As for explaining the ever- increasing sales, Lawrence Yun, chief economist at NAR, at- tributes it to a competitive spring market and an improving num- ber of long-term homeowners. "Demand appears to be stron- ger in several parts of the country, especially in metro areas that have seen solid job gains and firmer economic growth over the past year," Yun said. "While contract activity being up convincingly compared to a year ago is cer- tainly good news, the increased number of traditional buyers who appear to be replacing investors paying in cash is even better news. It indicates this year's activity is being driven by more long-term homeowners." Yun also said he expects sales to continue improving over the next few months, but that supply and rising prices could hinder them slightly. "Demand in many markets is far exceeding supply, and proper- ties in March sold at a faster rate than any month since last sum- mer," he said. "This in turn has pushed home prices to unhealthy levels—nearly four or more times above the pace of wage growth in some parts of the country. Simply put, housing inventory for new and existing homes needs to improve measurably to improve affordability." Freddie mac: index shows most metro Housing markets are improving MiMi reveals a three-month upward trend in 60 percent of regions. F reddie Mac released its latest Multi-Indicator Market Index (MiMi) recently, and the results are a positive sign for the housing industry overall. The new report, which now covers 100 metro areas (rather than just 50, as in previous ver- sions), reveals that 60 percent of the nation's top housing markets are now showing a three-month upward trend. Overall, the national MiMi value for February was 74.7, up 0.65 percent from January and 0.30 percent over the previ- ous three months. Since last year, the MiMi value has jumped 3.53 percent. Though the increases are minimal (the all-time high in the U.S. was 121.7), they still indicate the nation's housing markets are moving in a positive direction. After all, the nation hit its low- est point just five years ago—in October 2010—with a MiMi value of just 57.4. On a state-by-state basis, many areas are doing much better than the national value would suggest. Fourteen states, including North Dakota, Hawaii, Montana, and Wyoming, have MiMi values in the high-80s to mid-90s, while 18 of the 100 metro areas do as well. According to the report, the most stable housing mar- kets are located in Honolulu; Austin and McAllen, Texas; Los Angeles; and Fresno, California. Additionally, the most improved metros on a month-over-month basis were Detroit, Fresno, New Orleans, Milwaukee, and Portland, Oregon. Year-by-year, Las Vegas, Denver, Detroit, Palm Bay, Florida, and Stockton, California, saw the most im- provement. Stockton improved by 14.15 percent. According to Len Kiefer, deputy chief economist at Freddie Mac, expanding the MiMi to include 50 additional metro markets has help gather more comprehensive information on the state of the nation's housing industry. "By adding an additional 50 metro markets to the monthly MiMi," Kiefer said, "we are able to capture greater insights into what's moving local housing markets heading into the spring homebuying season. The good news is after a slight stumble last month, nearly 60 percent of all markets are improving. Also, of the top 100 metro areas, over 60 are showing purchase applica- tions up from the same time last year with over 20 of those metro areas showing double-digit percentage increases." Kiefer said improving job opportunities seem to be an indicator of a stronger housing market. "Likewise, the employment picture continues to improve in most markets, helping to support greater interest in purchasing a home, "Kiefer said. "For ex- ample, in markets like Fresno, California, Provo, Utah, and Portland, the employment picture continues to improve, homebuyer affordability is also strong, and we're seeing purchase applica- tions up nearly 20 percent com- pared to the same time last year." "Demand in many markets is far exceeding supply, and properties in March sold at a faster rate than any month since last summer." — Lawrence Yun, NAR chief economist