Existing-home sales performed strongly in February, with three out of the four major regions of the U.S. showing sales increases, the National Association of REALTORS® reported Friday. Home prices also were on the rise last month.
Total existing-home sales—accounting for single-family, townhouse, condo, and co-op transactions—increased 6.5% month over month, reaching a seasonally adjusted annual rate of 5.77 million. Sales were up 7.2% year over year, NAR reports. “February’s sales of over 5 million homes were the strongest since February 2007,” says NAR Chief Economist Lawrence Yun. “I would attribute that to incredibly low mortgage rates and a steady release of sizable pent-up housing demand that was built over recent years.”
Yun acknowledges COVID-19’s impact on the economy in March, but he notes that the impact of the virus on housing likely will be short-term given the strength of sales data prior to the outbreak. “Once the social distancing and quarantine measures are relaxed, we should see this temporary pause evaporate and potential buyers return [to the market] with the same enthusiasm,” Yun says.
He also notes that housing shortages and low mortgage rates are two factors that could drive the housing market moving forward. Yun says he believes home prices will continue to stay elevated. “Unlike the stock market, home prices are not expected to drop because of the ongoing housing shortage.”
Real estate pros are adapting their businesses in light of restrictions on social gatherings to help slow the spread of the coronavirus. “It is truly inspiring to see so many of our fellow REALTORS® and brokerages adjust on the fly,” says NAR President Vince Malta. “Agents nationwide are keeping consumer interest alive with innovative technologies, holding virtual open houses and computer-generated tours.”
Here’s a closer look at housing indicators for February from NAR’s latest report:
Home prices: The median existing-home price for all housing types in February was $270,100, up 8% from a year ago. Prices rose in every region of the U.S. in February. This marked the 96th consecutive month of year-over-year price gains.
Inventory: Housing shortages continue to abound. Total housing inventory at the end of February totaled 1.47 million units, down from 9.8% a year ago. Unsold inventory is at a 3.1-month supply at the current sales pace.
Days on the market: Forty-seven percent of homes sold in February were on the market for less than a month. Properties stayed on the market for 36 days, down from 44 days a year prior.
First-time buyers: This cohort comprised 32% of sales in February.
Investors: Individual investors or second-home buyers accounted for 17% of sales in February, up slightly from 16% a year ago. Investors tend to make up the biggest bulk of all-cash sales, which made up 20% of transactions in February.
Regional Breakdown
Here’s how home sales fared across the country in February:
Midwest: Existing-home sales rose 0.8% to an annual rate of 1.29 million, up 4% from a year ago. Median home price: $203,700, up 7.9% from a year ago.
South: Existing-home sales climbed 7.2% to an annual rate of 2.52 million in February, up 8.2% from a year ago. Median home price: $238,000, an 8.2% increase from a year ago.
Northeast: Existing-home sales dropped 4.1% in February to an annual rate of 700,000, a 2.9% uptick from a year ago. Median home price: $295,400, up 8.2% from a year ago.
West: Existing-home sales jumped 18.9% to an annual rate of 1.26 million in February, an 11.5% increase from a year ago. Median home price: $410,100, up 8.1% from a year ago.
For the second week in a row, mortgage rates climbed from their lowest levels on record. But economists reminded borrowers that rates continue to be near historic lows. The 30-year fixed-rate is still significantly below what it was a year ago. “Mortgage rates rose again this week as lenders increased prices to help manage skyrocketing refinance demand,” says Freddie Mac Chief Economist Sam Khater. “On the purchase front, daily loan purchase applications were rising as of mid-February but started to decline last Friday.”
Freddie Mac reports the following national averages with rates for the week ending March 19:
30-year fixed-rate mortgages: averaged 3.65%, with an average 0.7 point, rising from last week’s 3.36%. Last year at this time, 30-year rates averaged 4.28%.
15-year fixed-rate mortgages: averaged 3.06%, with an average 0.7 point, rising from last week’s 2.77% average. A year ago, 15-year rates averaged 3.71%.
5-year hybrid adjustable-rate mortgages: averaged 3.11%, with an average 0.2 point, rising from last week’s 3.01% average. A year ago, 5-year ARMs averaged 3.84%.
Cell phones and other everyday objects could potentially carry the coronavirus. Washing your hands and disinfecting areas frequently touched are the best strategies for stopping the spread of germs, according to the CDC.
For real estate pros, that also likely means paying careful attention to your laptop, car, and keys (particularly your clients’ keys). Homesnap, a real estate search portal, recently spoke with medical expert Amanda Nemecz to learn the most important strategies for keeping your tech and everyday objects clean.
“Soap and water are one of the most effective weapons in keeping germs and viruses at bay,” Nemecz told Homesnap. “We advise people not to share screens and devices, and to wipe down frequently used items with soap or antibacterial cleaners, especially if others have been in contact with them.”
Homesnap also offers these tips for keeping common objects and surfaces clean daily:
Smartphones: Your smartphone should be disinfected two times per day. To effectively kill a virus or germs on your phone, use a disinfectant solution of at least 55% isopropyl alcohol. “Apple and Google have both confirmed that it is OK to use wipes that contain 70% isopropyl alcohol and it will not damage the phone,” Homesnap notes.
Laptops: Similar to your smartphone, wipe your laptop down two times per day with an antibacterial alcohol wipe (Clorox, Lysol, etc.) of at least 55% isopropyl alcohol, Homesnap advises. To clean the keyboard, lightly dampen a Q-Tip to get in between the keys.
Cars: The main areas to focus on cleaning in a car include door handles, the steering wheel, the shifter, seat belt buckles, and radio controls. You should quickly wipe down these frequently touched surfaces every time you return to your car after being in public. You can do this easily with disinfectant wipes or even soap and water. “Soap and water remains one of the most highly effective solutions to fight viruses and germs regardless if it has antibacterial properties or not,” Homesnap reports.
Keys: Car and house keys should be cleaned with soap and water (for non-electronic keys) or antibacterial wipes once per day. Keep your keys in your pocket or bag when out in public. Similar to washing your hands, wiping down the surface for at least 20 seconds allows the soap time to fully break down the virus or germs.
Just how long mortgage rates will remain at rock-bottom percentages is tough to judge, but don’t be surprised if they do what they did last week and rise again over the next few weeks.
Despite the effects of the coronavirus on already turbulent financial markets and concerns of a recession, mortgage rates will “likely stabilize but remain low for now,” predicts Joel Kan, associate vice president of economic and industry forecasting at the Mortgage Bankers Association.
Last week, the 30-year fixed-rate mortgage rose to 3.36%, after a record low average of 3.29% during the week ending March 5, Freddie Mac reported.
“I was disappointed it went up,” Lawrence Yun, chief economist for the National Association of REALTORS®, toldThe New York Times. The lower rates can help homeowners lower their monthly payments at a time when some may be out of work due to the outbreak, he continued.
Mortgage rates typically follow those of 10-year Treasury bonds, which have been pushed to record lows over recent weeks. Yet, mortgage rates didn’t follow suit last week.
Could lenders be facing a capacity issue that is preventing rates from going lower? Mortgage brokers reported a slew of customers flocking to refinance their loans after rates sank to record lows. Some lenders said they actually ended up having to charge higher rates just to slow demand.
The Fed announced in an emergency meeting on Sunday that it would buy up at least $500 billion in U.S. Treasury bonds and $200 billion in government mortgage-backed securities over the coming months. Economists predict this will help support the surge in refinancings and stabilize mortgage-backed securities, which could help mortgage rates then move lower.
“That would stabilize rates and bring them back down lower,” says Danielle Hale, realtor.com®’s chief economist. “They’ll [likely] go back to the low 3% [range]. Might we see rates below 3%? I wouldn’t rule it out.”
Ali Wolf, chief economist at Meyers Research, a national real estate consulting firm, expects rates to fall into the 3.1% to 3.2% range within the next few weeks, but stay within or under the mid-3% range through the rest of the year,
“Today’s low mortgage rates are equivalent, in some cases, to $30,000 off the price of a home” in some of the country’s priciest markets, Wolf told realtor.com®. “Mortgage rates are turning back time on affordability.”
Real estate pros are taking disinfectant wipes to home showings and in their car to clean frequently touched surfaces as they interact with clients to help slow the spread of COVID-19. But are you disinfecting correctly?
HouseLogic.com reports that the best cleaners are either a bleach solution or a 70% alcohol solution. “Follow this bleach recipe: 5 tablespoons (1/3 cup) bleach per gallon of water, or 4 teaspoons of bleach per quart of water,” the site advises, reminding readers to properly ventilate while disinfecting with bleach. The site also notes that bleach can expire, so check the bottle’s expiration date, and never mix bleach with anything other than water.
If you don’t have bleach, use 70% rubbing alcohol, which is already diluted, HouseLogic says. Disinfecting wipes use an ammonium compound, which could allow viruses to become resistant over time. “Disinfection isn’t instantaneous,” Erica Marie Hartman, an environmental microbiologist at Northwestern University in Evanston, Ill., told HouseLogic. “[For a bleach solution], you want to leave it on the surface for 10 minutes before wiping it off. “
Allow for “dwell time,” agrees an article at Apartment Therapy that features an interview with microbiologists. Disinfecting solutions need to remain on the surface for a certain amount of time to be effective. That can vary by product. For example, Clorox Wipes instructions advise treating a surface “using enough wipes for the treated surface to remain visibly wet for four minutes.” Other disinfectants, including bleach, have their own instructions for proper use. Be sure to check the bottle.
Also, disinfectants don’t provide lasting protection. If a sick person touches the surface right after you clean it, new germs will be left there. “The reality is that bacteria are complex organisms, and the vast majority of people don’t understand the intricate mechanisms that power them, which leads to them underestimating just how easily they can be reintroduced and quickly multiply on an unprotected surface,” says Morgan Brashear, the scientific communications manager at Proctor & Gamble.
Mortgage rates dropped to an all-time low last week as the benchmark 10-year U.S. Treasury note, which tends to influence the direction of mortgage rates, posted a record-setting decline. But housing analysts say lenders may be stepping in to prevent mortgage rates from going even lower. The interest rate for the 10-year Treasury stood at 0.76% Friday afternoon—it had never before dropped below 1.1%—while Freddie Mac reported that the interest rate for the 30-year fixed-rate mortgage dipped to 3.29% for the week ending March 5.
Housing analysts say that with the low 10-year Treasury rate, borrowers should be able to get a mortgage rate of 2.75% or lower. But that’s not occurring, HousingWire reports, because some lenders may be purposely keeping rates higher in order to prevent demand from going too high. The lenders aim to ensure they can fulfill elevated mortgage requests due to a surge in demand.
Lenders say they can only handle so much volume. “The current market conditions can create exceptional opportunities for consumers, but I think it’s going to be critical for consumers to be very knowledgeable and, importantly, very patient,” says LoanDepot CEO Anthony Hsieh. “The analogy I would use is this: When you are using shared Wi-Fi at an airport, sometimes speed can be slowed because everyone around you is trying to use the same services. This market is unpredictable, but upcoming capacity demand for refinance may create a similar, slowed experience.”
Some lenders are extending their rate-lock windows up to 180 days to make sure they can close on new loans.
Remodeling any aspect of a home can be a big job and a lot can go wrong when owners aren’t adequately prepared. Houzz, a home remodeling website, asked a panel of renovating experts the most common remodeling blunders they see. Here are a few of their responses.
Not budgeting properly.
Underestimating the costs of a project can be a dire mistake that could leave homeowners either with an unfinished property or having to incur a financial loss. Have a detailed budget so you don’t run out of money. Remodeling experts advise always including a 10% to 20% buffer in the budget for any unexpected costs when tackling a remodel.
Assuming DIY will save you money.
Remodeling experts call it the “DIY trap,” and rookie remodelers are especially prone to it. It’s not always cheaper to do a project yourself. It may not look right and could take triple the amount of time to complete than if you would have just hired a pro. “Limit your DIY tasks to things such as painting and simple landscaping jobs, and dedicate your time to project managing the renovation,” experts told Houzz.
Selecting the cheapest contractor.
Another common pitfall is to go with the cheapest quote from a contractor. You don’t want to have to redo poor work. Don’t just focus on the affordability of a contractor’s quote but evaluate fully what it specifies, experts recommend. Gather quotes from at least three contractors and compare them in detail. Also, evaluate the quality of their work through project photos and professional recommendations.
Failing to describe what you want accurately.
Know exactly what you want before you start and use the right words to describe it. Create idea books; search online for ideas online or in magazines; and have a specific list of layouts and finishes you desire. Become familiar with the proper terminology of those looks and finishes so you communicate them correctly to the pros, the experts recommend.
Not researching the material options.
In the same regard, choosing materials often requires some homework. Builders or contractors may fall back on the same materials they always use, but that doesn’t always mean those are right for the project. “Spend time researching the various materials options available—including looks, price, pros and cons, sustainability, durability, and which ones are best suited to your location, and take this information to your builder,” Houzz notes. “Armed with this knowledge, you can decide together the most suitable materials and finishes for your project.”
After hitting a record low last week, rates reversed course this week and inched up. Rates still remain at “extraordinary levels,” Freddie Mac said in its weekly rate report.
The 30-year fixed-rate mortgage climbed from last week’s 3.29% record low average to 3.36% this week.
“As refinance applications continue to surge and lenders work to manage capacity, the 30-year fixed-rate mortgage ticked up from last week’s all-time low,” says Sam Khater, Freddie Mac’s chief economist. “Mortgage rates remain at extraordinary levels and many homeowners are smartly weighing their options to refinance, potentially saving themselves money.”
Freddie Mac reported the following national averages with mortgage rates for the week ending March 12:
30-year fixed-rate mortgages: averaged 3.36%, with an average 0.7 point, rising from last week’s 3.29% average. Last year at this time, 30-year rates averaged 4.31%.
15-year fixed-rate mortgages: averaged 2.77%, with an average 0.7 point, falling slightly from last week’s 2.79% average. A year ago, 15-year rates averaged 3.76%.
5-year hybrid adjustable-rate mortgages: averaged 3.01%, with an average 0.2 point, falling from last week’s 3.18% average. A year ago, 5-year ARMs averaged 3.84%.
With a severely limited supply of homes on the market and the lowest mortgage rates in history, house hunters should expect steep competition this spring. The new coronavirus remains a wild card for the housing market, but if the scare is short-lived, buyers are poised to swoop down in droves. “January has already been strong, with prices up, home sales up, and listings down quite a bit,” Daryl Fairweather, Redfin’s chief economist, told USA Today. “So home buyers are more likely to face competition.”
Inventory in January was the lowest it has been in more than two decades. At the end of the month, there were 1.42 million homes for sale, including condos, co-ops, and single-family homes. That is down 10.7% from a year earlier, according to data from the National Association of REALTORS®. However, buyer demand has remained high, which has put pressure on home prices. The median sales price for all housing types was $266,300, up 6.8% from a year ago, NAR’s housing data shows.
Coronavirus fears have rocked the stock market in recent weeks, and that may prompt some aspiring buyers to hold off on a purchase. But the stock market chaos also could make home prices rise. “There might be people looking to diversify into real estate instead of stocks,” Jason Gell, president of the Greater Boston Association of REALTORS®, told USA Today. “That can cut affordability for buyers.”
Lower interest rates could help. The Federal Reserve made an emergency rate cut last week to its short-term rate amid coronavirus concerns. The 10-year Treasury note, which influences mortgage rates, also has plummeted to record lows. The 30-year fixed-rate mortgage last week averaged 3.29%, the lowest on record, Freddie Mac reported. “We’re seeing lots and lots of people at open houses,” Gell says. “Interest rates are still extremely low so that the actual monthly payments are fairly affordable.”
A report released last week by realtor.com® also showed plunging national housing inventory. Twenty-five of the nation’s 50 largest metros saw their inventory decline by 20% or more. The largest drops were in Phoenix, San Diego, and San Jose, Calif., which saw decreases exceed 36% annually.
For buyers heading into the market: “Be patient,” says Jessica Lautz, vice president of demographics and behavioral insights at NAR. “You may have to bid on several properties before you beat out the competition for that home. That local REALTOR® will know how to sweeten the pot for that potential seller and make your offer the most attractive.”
“Given that a home transaction is a major commitment, the uncertainties on how the economy will play out and the spread of the virus itself are barriers to home buying and selling,” says Lawrence Yun, NAR’s chief economist. “The stock market crash is no doubt raising economic anxieties, while the coronavirus brings fear of contact with strangers. At the same time, the dramatic fall in interest rates may induce some potential buyers to take advantage of the better affordability conditions. It is too early to assess the likely impact as to whether lower interest rates can overcome the economic and health anxieties.”
At least in the short term, Yun predicts home sales to be down about 10% compared to what they could have been due to the spread of the coronavirus.
One movement that could lessen its impact, however, is the dip in mortgage rates and its effect on buyers to move ahead with a purchase. More than one-third of members said that their clients are excited by the lower mortgage rates.
Real estate pros credit the lower rates for prompting the majority of home sellers to not make a change in the listing of their home, the survey shows. They want to take advantage of the lower rates on the buying side.
In some areas, the number of home sellers is rising. In California, 12% of members said the number of sellers is increasing because of the desire to take advantage of lower interest rates upon moving, according to NAR’s survey. Nine percent of real estate pros nationwide also reported a higher number of homeowners wanting to sell for this reason. Only 3% of sellers nationwide have decided to remove their home from the market and refinance into a lower mortgage rate so they can remain in their home.
