The 30-year fixed-rate mortgage averaged 3.33% this week, near its all-time low, Freddie Mac reports.
“Mortgage rates have stabilized over the last few weeks as the market searches for direction in the fog of economic data,” says Sam Khater, Freddie Mac’s chief economist. “While financial markets initially rallied on the news of Federal Reserve support and are improving due to the Senate’s passage of a new small business stimulus, we continue to see a deep economic contraction amidst uncertainty about the recovery formation.”
Freddie Mac reports the following national averages with mortgage rates for the week ending April 23:
30-year fixed-rate mortgages: averaged 3.33%, with an average 0.7 point, rising slightly from last week’s 3.31% average. Last year at this time, 30-year rates averaged 4.20%.
15-year fixed-rate mortgages: averaged 2.86%, with an average 0.7 point, up from last week’s 2.80% average. A year ago, 15-year rates averaged 3.64%.
5-year hybrid adjustable-rate mortgages: averaged 3.28%, with an average 0.3 point, dropping from last week’s 3.34% average. A year ago, 5-year ARMs averaged 3.77%.
Freddie Mac reports average commitment rates along with average fees and points to reflect the total upfront costs of obtaining the mortgage.
The new-home market was showing a strong first quarter in 2020 until the pandemic hit. Sales of newly built single-family homes decreased 15.4% in March to a seasonally adjusted annual rate of 627,000 units, according to data released Thursday from the U.S. Census Bureau and Department of Housing and Urban Development. Sales were 9.5% lower than a year ago, and markets hardest hit by COVID-19 saw the largest slowdown in sales last month.
“Despite the sharp decline in new-home sales [last] month, the first quarter of 2020 was actually 6.7% higher than the same period last year, reflecting a strong pace prior to the virus outbreak,” says Dean Mon, chairman of the National Association of Home Builders. “While we expect to see some further impacts to the industry, we remain confident that housing will be a sector that will help lead the economic recovery.”
Inventory of new homes increased to a 6.4-month supply in March. There were 333,000 new single-family homes for sale last month, which is 1.2% fewer than a year ago. The NAHB reports that of that total, 76,000 are completed and ready to occupy.
The median sales price for a new home in March was $321,400, up from $310,600 a year ago.
“Buyers still in the market for a home might take a fresh look at new homes in the months ahead, especially if new-home prices soften,” realtor.com® Chief Economist Danielle Hale said in a statement.
New-home sales dropped in all four regions of the U.S. last month. New-home sales saw the steepest drops in the Northeast, down 41.5%, followed by a 38.5% drop in the West, an 8.1% decrease in the Midwest, and a 0.8% decrease in the South.
“The drop in March sales reflects buyer concerns over the virus, and was primarily concentrated in the hardest-hit regions of the Northeast and West,” says NAHB Chief Economist Robert Dietz.
Existing-home sales saw a much smaller decline last month. The National Association of REALTORS® reported this week that sales of existing homes dropped 8.5% from February to March and were down just 0.8% over a year ago. Further, the median price for previously owned homes was up in March to $280,600—an 8% annual rise. Read more: Despite a Dip in March, Home Sales Push Ahead
The three main credit reporting bureaus—Equifax, Experian, and TransUnion—have announced that everyone will be able to request a free credit report from each of them weekly over the next year. The new policy started this week.
The companies say the reports are being made more readily available to help Americans “protect their financial health during the sudden and unprecedented hardship caused by COVID-19.”
The CARES Act requires that companies report to credit bureaus whether consumers are current on their loans if they’ve sought relief from lenders due to the pandemic. Americans can monitor their credit reports every week to ensure that’s happening. About 3 million borrowers in the U.S. have initiated forbearance on their mortgages since March.
“Credit vigilance is critical during these uncertain times,” the companies wrote in a statement. “Consumers are advised to review their credit reports frequently to understand the information that is being reported about their payment behavior. … We are making credit reports more accessible more often so people can better manage their finances and take necessary steps to protect their credit standing.”
While existing-home sales dipped in March as the COVID-19 pandemic sparked stay-at-home restrictions across the country, they’re not far off from the numbers a year ago, and home prices continue to rise.
The National Association of REALTORS®’ monthly existing-home sales—which includes completed transactions for single-family homes, townhomes, condos, and co-ops—dropped 8.5% in March compared to February. Sales were at a seasonally adjusted annual rate of 5.27 million in March—down just 0.8% from a year ago.
All four major regions of the U.S. reported a dip in sales last month. The West saw the largest drop, down 13.6% in March compared to February.
“Unfortunately, we knew home sales would wane in March due to the coronavirus outbreak,” says Lawrence Yun, NAR’s chief economist. “More temporary interruptions to home sales should be expected in the next couple of months, though home prices will still likely rise.”
Home prices remain strong, even early in the pandemic. The median existing-home price for all housing types in March was $280,600, up 8% from a year ago. Also, home prices rose in every region of the U.S. last month.
REALTORS® are still finding ways to get sales done amid social distancing and stay-at-home measures aimed at slowing the spread of the coronavirus.
“We have seen an increase in virtual home tours, e-signings, and other innovative and secure methods that comply with social distancing directives,” says Vince Malta, NAR president. “I am confident that REALTORS® and brokerages will adapt, evolve, and fight, ensuring the real estate industry will be at the forefront of our nation’s upcoming economic recovery.”
Here is a closer look at additional housing indicators from NAR’s report, reflecting March housing data:
Housing inventory: Total housing inventory at the end of March totaled 1.50 million units, up 2.7% from February but down 10.2% from a year ago. Unsold inventory is at a 3.4-month supply at the current sales pace.
“Earlier in the year, we watched inventory gradually tick upward, but with the current quarantine recommendations in place, fewer sellers are listing homes, which will limit buyer choices,” Yun says. “Significantly more listings are needed and more will come on to the market once the economy steadily reopens.”
Days on the market: Properties stayed on the market an average of 29 days in March, down from 36 days in February and down from 36 days in March 2019. Fifty-two percent of homes sold in March were on the market for less than a month.
First-time buyers: First-time buyers comprised 34% of sales in March, up from 32% in February and from 33% a year ago. “Despite the social distancing restrictions, with many REALTORS® conducting virtual open home tours with mortgage rates on the decline, a number of first-time buyers were still able to purchase housing last month,” Yun says.
Investors: Individual investors or second-home buyers purchased 13% of homes in March, down from 17% in February and down from 18% a year ago. Investors tend to account for the biggest bulk of all-cash sales. All-cash sales comprised 19% of transactions in March, down from 21% a year ago.
Distressed sales: Foreclosures and short sales comprised 3% of sales in March, unchanged from a year ago.
Regional Breakdown
Here’s how existing-home sales fared across the country in March.
Midwest: Existing-home sales decreased 3.1% in March, reaching an annual rate of 1.25 million. Sales were down 4.2% from a year ago. Median price: $219,700, up 9.7% from a year ago.
Northeast: Existing-home sales dropped 7.1% in March. Sales were at an annual rate of 650,000, a 3% decrease from a year ago. Median price: $300,400, up 8.3% from March 2019.
South: Existing-home sales fell 9.1% to an annual rate of 2.29 million in March, up 0.9% from a year ago. Median price: $245,100, up 7.5% from a year ago.
West: Existing-home sales dropped 13.6% to an annual rate of 1.08 million in March, a 0.9% decline from a year ago. Median price: $420,600, up 8% from March 2019.
Listing data, detailed photos, and virtual and live-video tours will suffice for a growing number of consumers who are looking to buy a home; they don’t need to physically visit the property before making an offer, according to a new joint survey from realtor.com® and Toluna Insights.
Twenty-four percent of 1,300 consumers surveyed say they’d be willing to buy a home without seeing it in person, and 30% would be willing to rent one, the survey shows. Younger demographics appear to be the most comfortable using virtual tools in lieu of physical, in-person showings (29%). Further, 21% say that COVID-19 has made them more likely to move into a home sight unseen in the future.
The survey follows on the heels of findings this week from the National Association of REALTORS® that a quarter of REALTORS® and their clients have put a contract on a home without physically seeing the property. “Uncertainty around COVID-19 and limitations around social interactions and group gatherings, like open houses, have made buying and selling homes more difficult than ever,” says Nate Johnson, chief marketing officer at realtor.com®. “As real estate agents and consumers seek out ways to safely complete these transactions, we believe that technology will become an even more imperative part of how we search for, buy, and sell homes moving forward.”
Still, 47% of respondents say they prefer to see a home in person with a buyer’s agent before submitting an offer. But with social distancing guidelines in place, they are willing to adapt: 23% of that group say they prefer to go view the home alone, 13% prefer an online video tour, and 6% prefer their agent to show the home via video chat, the survey finds. Survey respondents indicate the following technology features are most helpful when deciding to buy a new home virtually:
A virtual tour of the home (61%).
Accurate and detailed listing information (58%).
Accurate and detailed neighborhood information (53%).
High-quality listing photos (51%).
The ability for the agent or landlord to show the property via video chat (39%).
Home builders started on fewer new homes in March as the COVID-19 pandemic spread across the nation. New construction was at a pace of 1.22 million units in March, the Commerce Department reported Thursday. However, that number is still 1.4% higher than a year ago.
Building permits—which help gauge future construction activity—were at a seasonally adjusted rate of 1.35 million in March, still 5% higher than last year’s rate. Nevertheless, a slowdown is inevitable, builders say, as COVID-19 takes an economic toll. The decrease in homebuilding activity represents a shift from the beginning of the year, when record-breaking permitting activity gave the indication that a building frenzy was likely in 2020.
“Housing has been deemed an essential business in most of the nation, and in the few states where the governors have not acted, we urge them to deem construction as essential,” says Dean Mon, chairman of the National Association of Home Builders. “Housing can help lead an eventual rebound, as it has done in previous recessions.”
About 534,000 single-family homes and 684,000 apartments are currently under construction. About 90% of these single-family homes are located in states where homebuilding has been deemed an “essential service,” while 80% of apartments are located in such states, says Robert Dietz, NAHB’s chief economist.
Mortgage rates dropped for the third consecutive week, inching closer to the lowest averages ever on record. “Refinance activity remains high, but home purchase demand is weak due to economic tightening,” says Sam Khater, Freddie Mac’s chief economist. “While new monthly economic data are driving markets lower this week, they are a lagging indicator and should be priced in already. Real-time daily economic activity metrics suggest that the economy will likely not decline much further. Going forward, the key question is no longer the depth of economic contraction but the duration.”
Freddie Mac reports the following averages with mortgage rates nationwide for the week ending April 16:
30-year fixed-rate mortgages: averaged 3.31%, with an average 0.7 point, falling from last week’s 3.33% average. Last year at this time, 30-year rates averaged 4.17%.
15-year fixed-rate mortgages: averaged 2.80%, with an average 0.7 point, rising from last week’s 2.77% average. A year ago, 15-year rates averaged 3.62%.
5-year hybrid adjustable-rate mortgages: averaged 3.34%, with an average 0.3 point, dropping from last week’s 3.40% average. A year ago, 5-year ARMs averaged 3.78%.
Average commitment rates are reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage.
Real estate has been the sole road to wealth for many of the world’s billionaires. Overall, there are 256 billionaires in the world whose main business is in real estate—up by 17 a year ago, according to the Hurun Global Real Estate Rich List 2020.
China is the leader at 137, 54% of the international total, the report shows. Hong Kong is home to the most real estate billionaires.
Meanwhile, the U.S. boasts 34 real estate billionaires, or 13% of the world’s total. New York has the highest concentration of real estate billionaires in the U.S., at 15, followed by Los Angeles and Newport Beach, Calif., at two each.
As of January, there were 2,816 billionaires in the world, according to the report.
“Overall it [was] a good year for [the] world’s biggest real estate entrepreneurs,” says Rupert Hoogewerf, chairman and chief researcher of the Hurun Report. The report was issued prior to the coronavirus pandemic.
Real estate sales are continuing on within a global pandemic as the use of virtual tools is giving buyers a feel for homes—so much so that some are willing to put an offer on a home without even physically stepping inside.
A quarter of REALTORS® surveyed reported that their clients put contracts on homes this week without physically seeing the property. The survey was released Thursday by the National Association of REALTORS®.
As stay-at home orders keep more Americans physically distant, real estate pros are rushing to adapt their businesses and find ways to still show properties for those wanting to continue on with a home purchase. Virtual tours online are growing more common, whether through video or 3D models, and agents are conducting private video showings via platforms like Zoom, FaceTime, Skype, or others.
Real estate sales are continuing during the global pandemic as the use of virtual tools is giving buyers a feel for homes—so much so that they’re willing to put an offer without physically stepping inside.
A quarter of REALTORS® surveyed by the National Association of REALTORS® April 12–13 reported that their clients put contracts on homes this week without seeing the property in person.
As stay-at-home orders keep more Americans physically distant, real estate pros are rushing to adapt their businesses and find ways to show properties. Virtual tours online are growing more common, whether through video or 3D models, and agents are conducting private video showings via platforms like Zoom, FaceTime, Skype, and others.
These virtual options are leading to offers. The brokerage Redfin reported that for the week ending April 12, one in eight Redfin offers were written by customers who viewed the home via video chat. Some of these customers also viewed the home in person after viewing the home on video chat first. Mara Gemond, a real estate professional with Redfin in Virginia, said she’s had three buyers who’ve written offers based on a video tour.
Of those home buyers who put in an offer last week, they had viewed three homes prior, either virtually or in person, according to NAR’s latest Economic Pulse Flash Survey released Thursday. That indicates the buyers who are currently looking for a home are being very decisive and acting quickly. A previous 2019 survey from NAR shows that buyers typically look at nine homes prior to placing a contract on a home.
While some offers are continuing on—albeit in different ways—the real estate industry warns a slowdown is inevitable while the economy is shut down.
“Expect second-quarter home sales activity to slow down with the broad observance of stay-at-home orders, but sales will pick up when the economy reopens as many potential home buyers and sellers indicate they’re still in the market or will be in a couple of months,” says NAR’s Chief Economist Lawrence Yun. “Home prices remain stable as deals continue to happen with the growing use of new technology tools. Remarkably, 10% of REALTORS® report the same level or even more business activity now than before the economic lockdown.”
One-third of REALTORS®–or 33%—reported no closing delays from the COVID-19 outbreak. For those who did report delays, the top reasons cited were delays due to financing, appraisals, and home inspections.
Within the multifamily sector, property managers are reporting a surge in tenants who are facing rent payment issues. Forty-one percent of property managers reported being able to accommodate tenants who cannot pay rent, and about a quarter of individual landlords—or 24%—reported the same, the NAR survey showed.
The real estate industry is growing alarmed over recent moves to tighten credit standards for new loans to home buyers as banks try to fend off disruption and losses during the COVID-19 pandemic. The National Association of REALTORS® warns that lending standards could grow even more stringent if federal regulators don’t step in soon to alleviate the servicer logjam in lending.
Starting Tuesday, JP Morgan Chase, the nation’s largest lender by assets, announced that the majority of new customers applying for a mortgage will need a minimum credit score of 700 and a down payment of at least 20% of the home’s value.
Over the past two weeks, other banks have enacted stricter eligibility requirements. Some are raising credit score minimums and others are completely halting jumbo mortgages. The tighter standards are making it more difficult for borrowers to take advantage of the lowest mortgage rates in history.
“This will hurt home sales and weigh on the economy if lawmakers don’t act soon,” warns Ken Fears, NAR’s senior policy representative for banks, lending, and housing finance. “We are continuing to put pressure on regulators, and we are engaged in a number of calls to the Treasury to highlight that this isn’t just an issue of servicers but an issue for individuals and home buyers across the country in every market. If [lawmakers] don’t act, this problem on paper will hit main street.”
Banks are responding to the unprecedented, sudden wave of homeowners taking forbearance options to delay their mortgage payments as unemployment skyrockets, with more than 16 million out of work due to the pandemic. Around 2 million borrowers have already applied for forbearance programs as businesses have scale back at the direction of federal guidelines on the critical workforce and social distancing. But banks are still on the hook to make tens of billions of dollars in payments to securities investors even in the absence of those missed payments. This is now spilling over in servicers’ abilities to issue new loans for home purchases.
To prevent this, NAR—joined by other housing trade groups—has been calling on financial regulators to use available money and tools to help fund new loans, including the creation of a liquidity facility set up by the Fed and backed by the U.S. Treasury. The liquidity facility would provide a pool of money that servicers could use to make short-term loans and help ensure the stability of the housing finance market. Further, the Treasury has already provided Fannie Mae and Freddie Mac a $250 billion line of credit that could be used.
“We urge you to use these tools and others at your disposal to maintain market liquidity and support all consumers in these difficult circumstances,” NAR President Vince Malta wrotein a March 27 letter to the Treasury Department.
JP Morgan Chase said it was also motivated to tighten its lending standards in response to the growing number of refinancing requests that it’s been fielding in recent weeks as mortgage rates have dipped to new lows, prompting homeowners to rush in to lower their monthly payments.
But Fears warns that lenders can’t just cater to the refinance market. “Refinances help stabilize homeownership, but home sales help drive the economy,” Fears says. Each existing-home sale creates about $85,000 in economic activity and the category drives nearly 20% of the economy, NAR research shows. “If people can’t continue to buy homes, that can be destabilizing to the economy,” Fears says. “It’s crucial to continue to provide access to credit for home purchases.”
