As rising mortgage rates continue to cool the housing market, the volume of existing home sales has declined for eight consecutive months as of September, according to the National Association of Realtors (NAR). The average 30-year fixed mortgage interest rate has increased from 3.11% at the start of the year to 6.9% this week, the highest level since April 2002, making housing less affordable. However, home price appreciation slowed for the third month after reaching a record high of $413,800 in June.
Total existing home sales, including single-family homes, townhomes, condominiums and co-ops, fell 1.5% to a seasonally adjusted annual rate of 4.71 million in September, the lowest pace since September 2012 with the exception of April and May 2020. On a year-over-year basis, sales were 23.8% lower than a year ago.
The first-time buyer share stayed at 29% in September, consistent with August 2022 and slightly higher than 28% from September 2021. The September inventory level fell from 1.28 to 1.25 million units and was lower than 1.26 million from a year ago.
At the current sales rate, September unsold inventory sits at a 3.2-month supply, unchanged from last month and higher than the 2.4-months reading from a year ago.
Homes stayed on the market for an average of just 19 days in September, up from 16 days in August and 17 days in September 2021. In September, 70% of homes sold were on the market for less than a month.
The September all-cash sales share was 22% of transactions, down from 24% last month and 23% a year ago.
The September median sales price of all existing homes was $384,800, up 8.4% from a year ago, representing the 127th consecutive month of year-over-year increases, the longest-running streak on record. The median existing condominium/co-op price of $331,700 in September was up 9.8% from a year ago.
Geographically, three regions saw a decline in existing home sales in September, ranging from 1.6% in the Northeast to 1.9% in the South. Sales in the West remained unchanged in September. On a year-over-year basis, all four regions saw a double-digit decline in sales, ranging from 18.7% in the Northeast to 31.3% in the West.
The Pending Home Sales Index (PHSI) is a forward-looking indicator based on signed contracts. The PHSI fell 2.0% from 90.2 to 88.4 in August. On a year-over-year basis, pending sales were 24.2% lower than a year ago per the NAR data.
Existing-home sales decreased for the seventh straight month to a seasonally adjusted annual rate of 4.80 million. Sales tailed off 0.4% from July and 19.9% from the previous year.
The median existing-home sales price rose 7.7% from one year ago to $389,500.
After five successive monthly increases, the inventory of unsold existing homes dwindled to 1.28 million by the end of August, or the equivalent of 3.2 months at the current monthly sales pace.
WASHINGTON (September 21, 2022) – Existing-home sales experienced a slight dip in August, marking the seventh consecutive month of declines, according to the National Association of REALTORS®. Month-over-month sales varied across the four major U.S. regions as two regions recorded increases, one was unchanged and the other posted a drop. On a year-over-year basis, however, sales fell in all regions.
Total existing-home sales,1https://www.nar.realtor/existing-home-sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, notched a minor contraction of 0.4% from July to a seasonally adjusted annual rate of 4.80 million in August. Year-over-year, sales faded by 19.9% (5.99 million in August 2021).
“The housing sector is the most sensitive to and experiences the most immediate impacts from the Federal Reserve’s interest rate policy changes,” said NAR Chief Economist Lawrence Yun. “The softness in home sales reflects this year’s escalating mortgage rates. Nonetheless, homeowners are doing well with near nonexistent distressed property sales and home prices still higher than a year ago.”
Total housing inventory2 registered at the end of August was 1,280,000 units, a decrease of 1.5% from July and unchanged from the previous year. Unsold inventory sits at a 3.2-month supply at the current sales pace – identical to July and up from 2.6 months in August 2021.
“Inventory will remain tight in the coming months and even for the next couple of years,” Yun added. “Some homeowners are unwilling to trade up or trade down after locking in historically-low mortgage rates in recent years, increasing the need for more new-home construction to boost supply.”
The median existing-home price3 for all housing types in August was $389,500, a 7.7% jump from August 2021 ($361,500), as prices ascended in all regions. This marks 126 consecutive months of year-over-year increases, the longest-running streak on record. However, it was the second month in a row that the median sales price retracted after reaching a record high of $413,800 in June, the usual seasonal trend of prices declining after peaking in the early summer.
Properties typically remained on the market for 16 days in August, up from 14 days in July and down from 17 days in August 2021. Eighty-one percent of homes sold in August 2022 were on the market for less than a month.
First-time buyers were responsible for 29% of sales in August, consistent with July 2022 and August 2021. NAR’s 2021 Profile of Home Buyers and Sellers – released in late 20214 – reported that the annual share of first-time buyers was 34%.
All-cash sales accounted for 24% of transactions in August, the same share as in July, but up from 22% in August 2021.
Individual investors or second-home buyers, who make up many cash sales, purchased 16% of homes in August, up from 14% in July and 15% in August 2021.
Distressed sales5 – foreclosures and short sales – represented approximately 1% of sales in August, essentially unchanged from July 2022 and August 2021.
According to Freddie Mac, the average commitment rate(link is external) for a 30-year, conventional, fixed-rate mortgage was 5.22% in August, down from 5.41% in July. The average commitment rate across all of 2021 was 2.96%.
Realtor.com®‘s Market Trends Report(link is external) in August shows that the largest year-over-year median list price growth occurred in Miami (+33.4%), Memphis (+25.8%) and Milwaukee (+25.0%). Phoenix reported the highest increase in the share of homes that had their prices reduced compared to last year (+30.9 percentage points), followed by Austin (+24.8 percentage points) and Las Vegas (+24.4 percentage points).
Single-family and Condo/Co-op Sales
Single-family home sales decreased to a seasonally adjusted annual rate of 4.28 million in August, down 0.9% from 4.32 million in July and down 19.2% from the previous year. The median existing single-family home price was $396,300 in August, up 7.6% from August 2021.
Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 520,000 units in August, up 4.0% from July and down 24.6% from one year ago. The median existing condo price was $333,700 in August, an annual increase of 7.8%.
“In a sense, we’re seeing a return to normalcy with the homebuying process as it relates to home inspections and appraisal contingencies, as those crazy bidding wars have essentially stopped,” said NAR President Leslie Rouda Smith, a REALTOR® from Plano, Texas, and a broker associate at Dave Perry-Miller Real Estate in Dallas. “In an ever-changing market, REALTORS® help consumers successfully manage the complexities of buying or selling homes.”
Regional Breakdown
Existing-home sales in the Northeast grew 1.6% from July to an annual rate of 630,000 in August, down 13.7% from August 2021. The median price in the Northeast was $413,200, an increase of 1.5% from the previous year.
Existing-home sales in the Midwest fell 3.3% from the prior month to an annual rate of 1,160,000 in August, retreating 15.9% from August 2021. The median price in the Midwest was $287,900, up 6.6% from the previous year.
At an annual rate of 2,130,000 in August, existing-home sales in the South were identical to July but down 19.3% from one year ago. The median price in the South was $356,000, an increase of 12.4% from August 2021.
Existing-home sales in the West expanded 1.1% compared to last month to an annual rate of 880,000 in August, down 29.0% from this time last year. The median price in the West was $602,900, a 7.1% increase from August 2021.
The National Association of REALTORS® is America’s largest trade association, representing more than 1.5 million members involved in all aspects of the residential and commercial real estate industries.
The prices of goods used in residential construction climbed 1.5% in June (not seasonally adjusted) even as softwood lumber prices fell 23%, according to the latest Producer Price Index (PPI) report. Prices have surged 41.7% since January 2020. Building materials (i.e., goods inputs to residential construction, less energy) prices have increased 4.8%, year-to-date, and are 12.2% higher than they were in June 2021.
The price index of services inputs to residential construction was driven 2.1% lower in June after a 2.0% decline in May (revised) by decreases in the building materials retail and wholesale trade indices. The services PPI is 0.1% lower than it was 12 months prior and 37.6% higher than its pre-pandemic level.
Softwood Lumber
The PPI for softwood lumber (seasonally adjusted) fell sharply (-22.6%) in June, its second such decline in three months. Prices have fallen 35.0% since March 2022, although the extent to which the decrease has reached home builders and remodelers is unclear.
Since early 2020, softwood lumber prices have been extraordinarily volatile. The average monthly change in the PPI for softwood lumber has been 2.6% since January 2020, nearly nine times the average change (+0.3%) from 1947 to 2020. The volatility of softwood lumber prices has exhibited the same pattern relative to the “all commodities” PPI. While lumber prices were 19.7% more volatile over the 1947-2020 period, they have been 100.1% more volatile than the broader index since January 2020.
Ready-Mix Concrete
The PPI for ready-mix concrete (RMC) gained 1.9% in June following increases in May (+0.8%) and April (+1.1%). The index has climbed 5.1%, year-to-date, and 11.3% over the past 12 months. Over the two decades beginning January 2000, the price of RMC moved more than 1% in 24 of 240 survey months. It has increased/decreased more than 1% in seven of the 30 months since, including three times through the first half of 2022.
Price changes were broad based geographically but increased the most in the Northeast where they rose 6.3% in June. Prices also increased in the South (+0.9%), Midwest (+1.6%), and West (+1.0%). Although prices are higher than pre-pandemic levels in all regions, the variance of increases across regions is quite large, ranging from 10.6% in the Midwest to 23.2% in the West.
Gypsum Products
The PPI for gypsum products increased 0.1% in June after surging 7.1% in May. and has soared 22.6% over the past year. After a quiet 2020, the price of gypsum products climbed 23.0% in 2021 and is up 7.6% through the first half of 2022.
Steel Products
Steel mill products prices decreased 1.8% in June after increasing 13.6% over the two prior months. 10.7%. Although prices are 6.5% below their all-time high (reached in December 2021), they are twice January 2021 levels.
Paint
The PPI for architectural coatings (i.e., paint) was flat over the month as the price of exterior paint gained 0.1% and that of interior paint did not change. The PPI for paint has not declined since January 2021—the prices of exterior and interior paint have risen 49.3% and 33.2%, respectively, in the months since.
Transportation of Freight
The price of truck transportation of freight decreased 0.4% in June, the first monthly decline since May 2020. Since then, the indices for local and long-distance motor carrying prices are up 31.0%% and 46.5%, respectively.
Water transportation costs declined 1.5% in June after increasing 21.6% over the prior two months. Deep sea (i.e., ocean) transportation of freight prices—which are 27.2% higher than they were in March—have accounted for most of the three-month increase as the category accounts for over half of the water transportation PPI. The price of deep sea water freight has climbed 57.8% since the spring of 2020.
Not only have freight costs increased, but the prices of services to arrange freight logistics have climbed steeply as well. Over the course of 2021, the PPI for the arrangement of freight and cargo increased 95.1%. Although prices have fallen nearly 12%, YTD, they remain 57.5% above pre-pandemic levels.
Other Building Materials
The chart below shows the 12-month and year-to-date price changes of other price indices relevant to the residential construction industry.
Surging home pricesand mortgage rates cut housing affordability by 29% over the last year, as measured by the National Association of Realtors.
It’s the sharpest year-over-year decline in affordability on record.
Why it matters: The cost of housing is a major source of irritation for the American public after two years of pandemic restrictions and persistent inflation.
A separate report from housing market research firm Black Knight published yesterday shows that the monthly principal and interest payment on an average-priced home, by a buyer who puts 20% down, has gone up by roughly $600 —44% — since the start of the year.
How it works: The drop in affordability is being driven by two components.
Surging house prices: One popular gauge of home prices known as the Case-Shiller index showed home prices posting their biggest ever year-on-year gain in March when they rose 20.6%.
Surging mortgage rates: Over the last year, the rate for a conventional 30-year fixed-rate mortgage has jumped from 3% to more than 5%.
What they’re saying: “Given 2022’s affordability collapse, these [home price appreciation] levels likely are at or near the peaks for this cycle. Key question is how much and how quickly they will decline,” Bank of America analysts wrote in a research note published on Friday.
Home prices increased 19.8% in February year over year, according to the S&P CoreLogic Case-Shiller national home price index. That is up from the 19.1% annual increase in January and is the third-highest reading in the index’s 35-year history.
The 10-city composite annual increase came in at 18.6%, up from 17.3% in the previous month. The 20-city composite was up 20.2%, rising from 18.9%.
Sun Belt cities continued to see the highest gains. Phoenix, Tampa, Florida, and Miami saw annual home price gains of 32.9% 32.6% and 29.7%, respectively. All 20 cities reported higher price increases in the year ending February 2022 versus the year ending January 2022.
Minneapolis, New York and Washington, D.C., saw the smallest price gains, although they were still in the double digits.
“The macroeconomic environment is evolving rapidly and may not support extraordinary home price growth for much longer,” wrote Craig Lazzara, managing director at S&P DJI, in a release. “The post-Covid resumption of general economic activity has stoked inflation, and the Federal Reserve has begun to increase interest rates in response. We may soon begin to see the impact of increasing mortgage rates on home prices.”
While mortgage rates began rising slowly at the start of this year, they didn’t really take off sharply higher until March. Given that this reading is a three-month running average through February, it doesn’t show much of an impact from rates. That could be coming next, though.WATCH NOWVIDEO02:04Home prices keep rising, despite drop in sales
“Today’s S&P Case Shiller Index highlights a housing market experiencing a renewed sense of urgency in February, as buyers worked through a small number of homes for sale in an effort to get ahead of surging mortgage rates. The imbalance between strong demand and insufficient supply pushed prices higher,” said George Ratiu, manager of economic research at Realtor.com
For a median-priced home financed with a 30-year loan, the monthly payment is $550 higher than a year ago, an increase of 46%, according to calculations by Realtor.com
Prices historically tend to lag sales by about six months, and pending sales, which measure signed contracts, have been falling for four straight months through February, according to the National Association of Realtors. March’s reading will be released Wednesday.
“As we move through the spring housing market, we are seeing clear signs of cooling demand. Many buyers are deciding to take a step back and re-evaluate their budgets and timelines,” added Ratiu.
The average interest rates on 30- and 15-year mortgages fell to their lowest levels in more than a month as rates offered on home loans retreated across the board.
The average rate offered to homebuyers using a conventional 30-year fixed mortgage, the most popular type of home loan, fell to 3.25% from 3.29% the previous business day. The average for a 15-year fixed mortgage fell to 2.48% from 2.52% the previous business day. Both are the lowest they’ve been since early October.
Fixed mortgage rates tend to track 10-year Treasury yields, which usually rise with heightened inflation fears (and fall when those fears subside.) Investor concerns about soaring inflation have generally pushed yields to a much higher range since the summer, plus everyone is closely watching how the Federal Reserve interprets the latest inflation data and whether it will take drastic action to control it. Yields have fallen some since last week, when the Fed said it would begin to pull back on the easy money policies it put in place to help the economy through the pandemic.
The average 30-year rate hit a six-month high of 3.48% late last month, but even at that level, it was pretty low by historic standards. According to a Freddie Mac measure that dates back farther than our data, the 30-year hasn’t gone more than about half a percentage point higher than its record low of last winter. Three years ago, it was almost 5% and at the start of the 1990s, around 10%.
During the pandemic, these relatively low rates have bolstered buying power, allowing house hunters to buy more expensive homes with the same monthly budget and helping to fuel a fiercely competitive residential real estate boom that has only recently begun to cool slightly. For the same reasons, the uptick in rates over the past few months has discouraged borrowing, in particular refinancing activity. An index measuring the volume of applications to refinance an existing mortgage is at its lowest level since January 2020, according to the Mortgage Bankers Association.
Mortgage rates, like the rates on any loan, are going to depend on your credit score, with lower rates going to people with better scores, all else being equal. The rates shown reflect the average offered by more than 200 of the country’s top lenders, assuming the borrower has a FICO credit score of 700-759 (within the “good” or “very good” range) and a loan-to-value ratio of 80%.
30-Year Mortgage Rates Drop
A 30-year fixed mortgage is by far the most common type of mortgage because it offers a consistent and relatively low monthly payment. (Shorter-term fixed mortgages have higher payments because the borrowed money is paid back more quickly.)
Besides conventional 30-year mortgages, some are backed by the Federal Housing Authority or the Department of Veterans Affairs. FHA loans offer borrowers with lower credit scores or a smaller down payment a better deal than they might otherwise get; VA loans let current or past members of the military and their families skip a down payment.
30-year fixed: The average rate fell to 3.25%, down from 3.29% the previous business day. A week ago, it was 3.37%. For every $100,000 borrowed, monthly payments would cost about $435.21, or $6.61 less than a week ago.
30-year fixed (FHA): The average rate fell to 3.04% from 3.08% the previous business day. A week ago, it was 3.19%. For every $100,000 borrowed, monthly payments would cost about $423.76, or $8.16 less than a week ago.
30-year fixed (VA): The average rate fell to 3.08% from 3.12% the previous business day. A week ago, it was 3.25%. For every $100,000 borrowed, monthly payments will cost about $425.93, or $9.28 less than a week ago.
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A lower rate can lower your monthly payment, but it can also give you more buying power, something you’ll want if you’re considering jumping into this fiercely competitive real estate market. For example, at 3% on a 30-year mortgage, your payments for a $380,000 home would be about $1,900 a month, assuming a 20% down payment, typical homeowners’ insurance costs, and property taxes, per our mortgage calculator. If you lock in a rate at 2.9%, though, you’ll have the same monthly payment for a $383,500 home.
15-Year Mortgage Rate Falls
The major advantage of a 15-year fixed mortgageis that it offers a lower interest rate than the 30-year and you’re paying off your loan more quickly, so your total borrowing costs are far lower. But for the same reason—that the loan is paid back over a shorter time frame—the monthly payments will be higher.
15-year fixed: The average rate fell to 2.48% from 2.52% the previous business day. A week ago, it was 2.57%. For every $100,000 borrowed, monthly payments would cost about $665.85, or $4.24 less than a week ago.
Besides fixed-rate mortgages, there are adjustable-rate mortgages (ARMs), where rates change based on a benchmark index tied to Treasury bonds or other interest rates. Most adjustable-rate mortgages are actually hybrids, where the rate is fixed for a period of time and then adjusted periodically. For example, a common type of ARM is a 5/1 loan, which has a fixed rate for five years (the “5” in “5/1”) and is then adjusted every one year (the “1”).
Jumbo Mortgage Rates Are Down
Jumbo loans, which allow you to borrow bigger amounts for more expensive properties, tend to have slightly higher interest rates than loans for more standard amounts. Jumbo means over the limit that Fannie Mae and Freddie Mac are willing to buy from lenders, typically $548,250 for a single-family home (except in Hawaii, Alaska, and a few federally designated high-cost markets, where the limit is $822,375).
Jumbo 30-year fixed: The average rate fell to 3.44% from 3.45% the previous business day. A week ago, it was 3.54%. For every $100,000 borrowed, monthly payments would cost about $445.70, or $5.58 less than a week ago.
Jumbo 15-year fixed: The average rate fell to 3.24% from 3.26% the previous business day. A week ago, it was 3.32%. For every $100,000 borrowed, monthly payments would cost about $702.18, or $3.90 less than a week ago.
Refinance Rates Decline
Refinancing an existing mortgage tends to be slightly more expensive than getting a new one, especially in a low-rate environment.
30-year fixed: The average rate to refinance fell to 3.36% from 3.4% the previous business day. A week ago, it was3.5%. For every $100,000 borrowed, monthly payments would cost about $441.27, or $7.77 less than a week ago.
15-year fixed: The average rate to refinance fell to $2.58% from 2.62% the previous business day. A week ago, it was 2.68%. For every $100,000 borrowed, monthly payments at that rate will cost about $670.56, or $4.74 less than a week ago.
Methodology
Our rates for “today” reflect national averages provided by more than 200 of the country’s top lenders one business day ago, and the “previous” is the rate provided the business day before that. Similarly, the week earlier references compare the data from five business days earlier (so bank holidays are excluded.) The rates assume a loan-to-value ratio of 80% and a borrower with a FICO credit score of 700 to 759—within the “good” to “very good” range. They’re representative of the rates customers would see in actual quotes from lenders, based on their qualifications, and may vary from advertised teaser rates.
S&P Dow Jones Indices (S&P DJI) today released the latest results for the S&P CoreLogic Case-Shiller Indices, the leading measure of U.S. home prices. Data released today for July 2021 show that home prices continue to increase across the U.S. More than 27 years of history are available for the data series and can be accessed in full by going to https://www.spglobal.com/spdji/.
YEAR-OVER-YEAR
The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 19.7% annual gain in July, up from 18.7% in the previous month. The 10-City Composite annual increase came in at 19.1%, up from 18.5% in the previous month. The 20-City Composite posted a 19.9% year-over-year gain, up from 19.1% in the previous month.
Phoenix, San Diego, and Seattle reported the highest year-over-year gains among the 20 cities in July. Phoenix led the way with a 32.4% year-over-year price increase, followed by San Diego with a 27.8% increase and Seattle with a 25.5% increase. Seventeen of the 20 cities reported higher price increases in the year ending July 2021 versus the year ending June 2021.
MONTH-OVER-MONTH
Before seasonal adjustment, the U.S. National Index posted an 1.6% month-over-month increase in July, while the 10-City and 20-City Composites both posted increases of 1.3% and 1.5%, respectively.
After seasonal adjustment, the U.S. National Index posted a month-over-month increase of 1.5%, and the 10-City and 20-City Composites both posted increases of 1.4% and 1.5%, respectively. In July, all 20 cities reported increases before and after seasonal adjustments.
ANALYSIS
“July 2021 is the fourth consecutive month in which the growth rate of housing prices set a record,” says Craig J. Lazzara, Managing Director and Global Head of Index Investment Strategy at S&P DJI. “The National Composite Index marked its fourteenth consecutive month of accelerating prices with a 19.7% gain from year-ago levels, up from 18.7% in June and 16.9% in May. This acceleration is also reflected in the 10- and 20-City Composites (up 19.1% and 19.9%, respectively). The last several months have been extraordinary not only in the level of price gains, but in the consistency of gains across the country. In July, all 20 cities rose, and 17 gained more in the 12 months ended in July than they had gained in the 12 months ended in June. Home prices in 19 of our 20 cities now stand at all-time highs, with the sole outlier (Chicago) only 0.3% below its 2006 peak. The National Composite, as well as the 10- and 20-City indices, are likewise at their all-time highs.
“July’s 19.7% price gain for the National Composite is the highest reading in more than 30 years of S&P CoreLogic Case-Shiller data. This month, New York joined Boston, Charlotte, Cleveland, Dallas, Denver, and Seattle in recording their all-time highest 12-month gains. Price gains in all 20 cities were in the top quintile of historical performance; in 15 cities, price gains were in the top five percent of historical performance.
“We have previously suggested that the strength in the U.S. housing market is being driven in part by a reaction to the COVID pandemic, as potential buyers move from urban apartments to suburban homes. July’s data are consistent with this hypothesis. This demand surge may simply represent an acceleration of purchases that would have occurred anyway over the next several years. Alternatively, there may have been a secular change in locational preferences, leading to a permanent shift in the demand curve for housing. More time and data will be required to analyze this question.
“Phoenix’s 32.4% increase led all cities for the 26th consecutive month, with San Diego (+27.8%) and Seattle (+25.5%) not far behind. As has been the case for the last several months, prices were strongest in the Southwest (+24.2%) and West (+23.7%), but every region logged double-digit gains and recorded all-time high rate increases.”
SUPPORTING DATA
Table 1 below shows the housing boom/bust peaks and troughs for the three composites along with the current levels and percentage changes from the peaks and troughs.
2006 Peak
2012 Trough
Current
Index
Level
Date
Level
Date
From Peak (%)
Level
From Trough (%)
From Peak (%)
National
184.61
Jul-06
134.00
Feb-12
-27.4%
265.35
98.0%
43.7%
20-City
206.52
Jul-06
134.07
Mar-12
-35.1%
272.34
103.1%
31.9%
10-City
226.29
Jun-06
146.45
Mar-12
-35.3%
284.74
94.4%
25.8%
Table 2 below summarizes the results for July 2021. The S&P CoreLogic Case-Shiller Indices could be revised for the prior 24 months, based on the receipt of additional source data.
July 2021
July/June
June/May
1-Year
Metropolitan Area
Level
Change (%)
Change (%)
Change (%)
Atlanta
190.52
2.2%
2.5%
18.5%
Boston
278.01
1.1%
1.3%
18.7%
Charlotte
211.49
2.2%
2.6%
20.9%
Chicago
168.10
1.2%
1.7%
13.3%
Cleveland
156.02
1.1%
2.3%
16.2%
Dallas
245.80
2.3%
3.0%
23.7%
Denver
283.18
1.8%
2.3%
21.3%
Detroit
156.19
1.2%
2.2%
16.1%
Las Vegas
246.36
2.8%
3.4%
22.4%
Los Angeles
358.50
1.4%
1.9%
19.1%
Miami
310.50
2.2%
3.0%
22.2%
Minneapolis
217.14
1.2%
1.8%
14.5%
New York
241.86
1.1%
0.8%
17.8%
Phoenix
280.47
3.3%
3.6%
32.4%
Portland
302.71
1.5%
2.2%
19.5%
San Diego
355.33
1.6%
2.5%
27.8%
San Francisco
338.68
1.2%
2.7%
22.0%
Seattle
343.92
0.9%
1.6%
25.5%
Tampa
289.59
2.9%
3.0%
24.4%
Washington
283.68
0.8%
1.6%
15.8%
Composite-10
284.74
1.3%
1.8%
19.1%
Composite-20
272.34
1.5%
2.0%
19.9%
U.S. National
265.35
1.6%
2.2%
19.7%
Sources: S&P Dow Jones Indices and CoreLogic
Data through July 2021
Table 3 below shows a summary of the monthly changes using the seasonally adjusted (SA) and non-seasonally adjusted (NSA) data. Since its launch in early 2006, the S&P CoreLogic Case-Shiller Indices have published, and the markets have followed and reported on, the non-seasonally adjusted data set used in the headline indices. For analytical purposes, S&P Dow Jones Indices publishes a seasonally adjusted data set covered in the headline indices, as well as for the 17 of 20 markets with tiered price indices and the five condo markets that are tracked.
S&P Dow Jones Indices is the largest global resource for essential index-based concepts, data and research, and home to iconic financial market indicators, such as the S&P 500® and the Dow Jones Industrial Average®. More assets are invested in products based on our indices than products based on indices from any other provider in the world. Since Charles Dow invented the first index in 1884, S&P DJI has been innovating and developing indices across the spectrum of asset classes helping to define the way investors measure and trade the markets.
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After notable and expected downward revisions for prior months, May recorded a decline of 5.9% for sales of newly-constructed single family homes, according to estimates from the Census Bureau and HUD. The May seasonally adjusted annual rate (769k) was the lowest in a year, due to builders slowing sales as a consequence of higher material costs and declining availability of labor, material and lots.
Residential demand continues to be supported by low interest rates, a renewed consumer focus on the importance of housing, and solid demand in lower-density markets like suburbs and exurbs. However, higher building costs, longer delivery times, and general unpredictability in the residential construction supply-chain are having measurable impacts on new home prices. In May, the median price of a newly-built home was 18% higher than a year ago, at $374,400. As NAHB has estimated, higher lumber costs alone are increasing new home prices by $36,000 on average.
Higher costs have priced out buyers, particularly at the lower end of the market. A year ago, 44% of new home sales were priced below $300,000. In May 2021, only 26% of new home sales were priced below $300,000.
Looking back to the spring of last year, the April 2020 data (570,000 annualized pace) marks the low point of sales for the 2020 recession. The April 2020 rate was 26% lower than the prior peak, pre-recession rate set in January. Sales then mounted a historic surge from April until July, outpacing gains in actual construction. Sales have been above the pace of the post-Great Recession trend since the second half of last year. However, since January the trend has been declining and has now dipped below the long-run trend (as indicated by the blue dashed line in the graph above).
Sales-adjusted inventory levels remained healthy in May, although they did increase to a 5.1 months’ supply.
Completed ready-to-occupy homes continue to fall as a share of new home inventory. Such homes were just under 24% of inventory a year ago. They are only a little more than 11% of the total in May 2021.
Moreover, to see how sales patterns have changed in a high demand, low supply market — the count of new homes sold that had not started construction is up 76 percent over the last year. The count of new homes sold that are completed and ready to occupy is down 33 percent.
Regionally on a year-to-date basis new home sales rose in all four regions, up 48.7% in the Northeast, 33.5% in the Midwest, 32.3% in the South, and 5.6% in the West. These significant increases are due in part to lower sales volume during the Covid crisis a year ago.
“After a run up over the first few months of the year, rates have paused and hovered around three percent since March,” said Sam Khater, Freddie Mac’s Chief Economist. “Despite this favorable rate climate, there remains a shortage of homes for sale. The lack of housing supply has been compounded by labor disruptions and expensive building materials that are driving up the cost of new housing, making it difficult for homebuyers to find homes to purchase.”
News Facts
30-year fixed-rate mortgage averaged 3.00 percent with an average 0.6 point for the week ending May 20, 2021, up from last week when it averaged 2.94 percent. A year ago at this time, the 30-year FRM averaged 3.24 percent.
15-year fixed-rate mortgage averaged 2.29 percent with an average 0.7 point, up from last week when it averaged 2.26 percent. A year ago at this time, the 15-year FRM averaged 2.70 percent.
The PMMS is focused on conventional, conforming, fully amortizing home purchase loans for borrowers who put 20 percent down and have excellent credit. Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage. Visit the following link for the Definitions. Borrowers may still pay closing costs which are not included in the survey.
According to Freddie Mac’s (OTCQB: FMCC) Quarterly Forecast, mortgage rates will continue to move up with the 30-year fixed-rate mortgage averaging just above three percent through the end of 2021.
“As the economy continues to improve, we expect conditions to remain generally favorable for the housing and mortgage market,” said Sam Khater, Freddie Mac’s Chief Economist. “Higher mortgage rates have the potential, however, to dampen the robust demand we’ve been experiencing, and we therefore forecast total originations to decline to $3.5 trillion in 2021.”
Khater continued, “Other important obstacles to consider include high home prices and low housing supply that will certainly influence the trajectory of purchase activity specifically.”
According to Freddie Mac’s Forecast:
The average 30-year fixed-rate mortgage is expected to be 3.2 percent in 2021 and 3.7 percent in 2022.
House price growth is expected to be 6.6 percent in 2021, slowing to 4.4 percent in 2022.
Home sales are expected to reach 7.1 million in 2021, falling to 6.7 million homes in 2022.
Purchase originations are expected to increase to $1.7 trillion in 2021 before dropping to $1.6 trillion in 2022.
Refinance originations are expected to be $1.8 trillion in 2021 before falling to $770 billion in 2022.
Overall, annual mortgage origination levels are expected to be $3.5 trillion in 2021 and $2.4 trillion 2022.
Freddie Mac makes home possible for millions of families and individuals by providing mortgage capital to lenders. Since our creation by Congress in 1970, we’ve made housing more accessible and affordable for homebuyers and renters in communities nationwide. We are building a better housing finance system for homebuyers, renters, lenders, investors, and taxpayers. Learn more at FreddieMac.com, Twitter @FreddieMac, and Freddie Mac’s blog FreddieMac.com/blog.
