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MortgagePoint June2023

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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 54 J O U R N A L June 2023 Lending/Originations MONTHLY MORTGAGE PAYMENTS HIT RECORD HIGH IN APRIL T he median U.S. home-sale price fell 2.7% during the four weeks ending May 14, representing the smallest decline in over a month, according to a new report from Redfin. New data shows prices are dropping in fewer metros nationwide as mortgage rates continue to rise. That's because there's so little inventory hitting the market, leaving homeowners handcuffed to their houses by low rates. Monthly mortgage payments hit a record high due to still-high prices and elevated mort- gage rates. On a local level, home prices are declining in 28 of the 50 most populous U.S. metros, down from a high of 32 metros at the end of April. That's a reflection of a mismatch between demand and supply propping up prices. Pending home sales are also down 15% from a year earlier, but that's much smaller than the 24% decline in new listings. Today's elevated mortgage rates continue to discourage homeowners from selling; nearly all of them have a mortgage rate below 6%, while the average 30-year rate was 6.39%. The lack of new listings has drained inven- tory, with the total number of homes for sale dropping over the past two months, going against typical seasonal trends. The share of homes selling that are doing so within two weeks (48%) is also bucking sea- sonal trends, illustrating urgency from buyers who don't have much to choose from. That share has steadily increased over the last two months, while it typically falls this time of year. "High mortgage rates continue to dictate the housing market. Although a lot of homebuyers have acclimated to rates in the 6% range and many are finding ways to lower their monthly payments, like using a 2-1 buy- down, high rates are handcuffing potential sellers," Redfin Deputy Chief Economist Taylor Marr said. "It's hard to imagine a flood of new listings until rates come down at least into the 5s. For those who are selling now, the silver lining of giving up a low rate is that hardly anyone else is doing the same thing. That means buyers, who are hungry for new listings, will bite—and they don't have much power to negotiate the price down." Leading indicators of homebuying activity: » For the week ending May 18, the average 30-year fixed mortgage rate was 6.39%, up slightly from 6.35% the week before and back to the same level as two weeks before. The daily average was 6.7% on May 17. » Mortgage-purchase applications during the week ending May 12 decreased 5% from a week earlier, seasonally adjusted. Purchase applications were down 26% from a year earlier. » The seasonally adjusted Redfin Homebuy- er Demand Index—a measure of requests for home tours and other homebuying services from Redfin agents—was down 2% from a week earlier during the week ending May 14, though the decline was largely due to Mother's Day falling on this past Sunday. It was down 3% from a year earlier. » Google searches for "homes for sale" were little changed from a month earlier during the week ending May 13 and down about 16% from a year earlier. » Touring activity as of May 13 was up 20% from the start of the year, compared with an 8% increase at the same time last year, according to home tour technology com- pany ShowingTime. Newly built homes could help alleviate the inventory shortage even if rates remain elevated, and there are signs more may be coming. U.S. homebuilder confidence rose for the fifth straight month in May, hitting its highest level in nearly a year, and permits for single-family homes rose to a seven-month high in April. Housing-market trends are playing out differently in different parts of the country, but agents in most metros are reporting that demand is outpacing supply. In Boise, Idaho, which had one of the hottest markets in the country during the pandemic, Redfin Premier agent Shauna Pendleton says today's buyers are having a hard time finding homes because homeowners are sitting on 3% mort- gage rates and aren't moving unless they're leaving the state. "I'm practically begging potential sellers to list, especially those in the more affordable price point because those are the homes buy- ers are hungry for," Pendleton said. "Every listing I've had since January priced at under $400,000 has had multiple offers within a few days on the market. I listed a home at the end of April at $399,900, and we ended up with four offers by the fourth day; it ended up going for $10,000 over list price. I even

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