TheMReport

TH E M R EP O RT | 47 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 Sales Cool Off for Summer The number of sales, applications, and even online search activity has taken a downturn. J une existing home sales took a slight decrease, according to Ten-X, an online real estate transaction marketplace. In its Residential Real Estate Nowcast, Ten-X predicted June sales to hit a seasonally adjusted rate (SAAR) between 5.28 and 5.64 million with a targeted number of 5.49 million. This is down 2.3 percent from the National Association of Realtors' (NAR) reported May sales and down 0.7 percent from 2016. "Pending home sales numbers, mortgage applications, and online search activity all suggest that the market for existing home sales may be cooling off slightly as we enter the summer months," said Ten-X EVP Rick Sharga. "It's possible that home purchases in the first half were acceler - ated by consumers trying to get deals done before interest rates increased. If that's the case, we may see existing home sales plateau for the balance of 2017." It was predicted in the Tex-X Nowcast in May that home sales would remain near cycle highs, aligning with the recent NAR release, which showed a minor increase in sales from the month prior. It was also accurately predicted that another solid year-over-year gain in existing home prices would happen, which also was confirmed by NAR, as the median existing home price for all housing types rose 5.8 percent year-over-year to $252,800 in May. Now, the Tex-X Nowcast is predicting median existing home prices to continue to make annual strides falling between $244,194 and $269,899, with a target price point of $257,046—up 1.7 percent from May and 3.8 percent gain from last year. "While sales keep edging up, his - torically low inventory levels continue to restrain the pace of growth," Ten-X Chief Economist Peter Muoio said. "Meanwhile, intensifying competition between owner- occupants and increasingly active inves - tors amid the low inventory situation are generating substantial price increases. This price appreciation is beneficial for existing homeowners but will continue to affect affordability. As long as the labor market remains strong and wages continue to increase, the housing market will remain on solid footing." The Death of the 20 Percent Down Payment Nearly 40 percent of buyers choose VA, USDA, or FHA loans with mortgage insurance instead. G enworth Mortgage Insurance recently released its inaugural report on first-time homebuyers. The survey tracks home sales to first-time home - buyers on a monthly basis, publishes quarterly, and com- pares the data against national housing market indicators. It also singles out and identifies homebuyers who purchased their home using a VA loan, USDA loan, FHA loan, or with a low down payment coupled with mortgage insurance, rather than the traditional 20 percent down payment that has histori - cally been required. The report found that this de- mographic accounted for 424,000 single-family home sales or 38 percent of the total homes sold in Q1 of 2017. This amount is an 11 percent increase from Q1 2016 and the most since 2005. It also found that first-time homebuyers were the driving force behind the expansion of the housing market between 2014 and 2016, making up 85 percent of total sales and averaging an increase of 260,000 sales per year for two years running. During that time period, FHA loans were used 80 percent of the time to secure a mortgage— around 730,000 loans. An esti - mated 510,000 sales used private mortgage insurance to purchase their home, further reducing the number of homes obtained through a traditional 20 percent down payment. In order to fully understand and predict the first-time home - buyer market, the report also tracks repeat homebuyers. In 2016, repeat homebuyers account- ed for only 63 percent of home sales, the lowest since 2000. This is attributed to lower asset accumulation, which prevents people from upgrading their living situation. In a statement released with this new data, Tian Liu, Chief Economist for Genworth Mortgage Insurance, said, "[First- time homebuyers'] impact has already been felt in falling inven - tory and rising home prices, and we expect them to increasingly drive growth to businesses most exposed to this market seg- ment … [b]y studying this group more closely, we hope to bring a better understanding about the many low down payment op- tions available to help first-time homebuyers reach homeowner- ship sooner."

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