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New home sales continue to climb in 2023

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January’s annual sales pace of 670,000 was the strongest since March 2022.

New home sales started off 2023 on a positive note, rising 7.2% from December to a seasonally adjusted annual pace of 670,000 homes, according to data published by the U.S. Census Bureau and the Department of Housing and Urban Development (HUD) on Friday. This marks the second consecutive month of increases and the strongest sales pace since March 2022.

On a year-over-year basis, however, new home sales are still down 19.4%.

“January marked a surge of people signing contracts to buy new homes. The increase in contract signings can be attributed to a decline in mortgage rates in January after a run-up in rates in October and November,” Holden Lewis, NerdWallet’s home and mortgage expert, said in a statement. “Rates have bounced higher since January, which likely is acting as a drag on new home sales in the meantime.”

The uptick in the sales pace resulted in just 439,000 new homes remaining on the market at the end of the month, representing 7.9 months of supply at the current sales pace, down from 8.7 months in December.

“The backlog of new construction homes continues to emerge into the market just in time for the spring shopping season,” Nicole Bachaud, Zillow’s senior economist, said in a statement. “Many home builders are offering incentives to buyers, sweetening the deal just enough to bump sales from the month prior.”

As a result of incentives such as price drops, the median new home sales price dropped from $465,600 in December to $427,000 in January, despite the increase in demand.

Regionally, on a month-over-month basis the sales pace was down in the Northeast (25,000 homes), Midwest (67,000 homes), and the West (127,000 homes), with the Northeast recording the largest drop at 19.4%.

The South (451,000 homes) was the only region to rise on a monthly basis, jumping 17.1%. On a yearly basis, all regions recorded drops in annual sales pace, with the West recording the largest drop at 46.9%.

Looking ahead, experts are optimistic about the spring selling season for new construction.

“There is still a large chunk of new construction homes currently under construction, and when those homes hit the market, especially over the next few months, we will see spring home buyers – those who can afford the higher new construction price tags – having more options and opportunities to break into homeownership,” Bachaud said.

Read more on Housing Wire.

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FHA To Cut Mortgage Insurance Premium By 30bps

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White House announces reduction; will take effect on March 20.

Big news for those considering FHA loans! Mortgage insurance cost will be decreasing an average of $800 per year. Read on to read the details and be sure to reach out to one of our incredible Streamline Loan Officers with any questions!

Homeowners will save an average of $800 per year following the Biden Administration’s announcement Wednesday that it will reduce by 30 basis points the annual mortgage insurance premiums charged on loans via the Federal Housing Administration.

In a news release, the White House said Vice President Kamala Harris and Department of Housing and Urban Development (HUD) Secretary Marcia Fudge will announce the change during a news conference in Bowie, Md.

HUD, through the FHA, will reduce its annual mortgage insurance premium from 0.85% to 0.55% for most new borrowers. The mortgage insurance premium is the monthly fee homeowners with FHA-insured mortgages pay to insure their mortgages. The fee is paid on top of the monthly principal and interest payments.

The premium reduction will take effect on March 20, and will be reflected in the President’s Fiscal Year 2024 Budget, the White House said.  

The reductions will save homebuyers and homeowners with new FHA-insured mortgages an average of $800 per year, the White House said, adding that it will lower housing costs for an estimated 850,000 homebuyers and homeowners in 2023.

The announcement is an important step in making homeownership more attainable, the administration added.

“Homeownership is currently the principal source of wealth creation for most American households,” the White House said in a statement. “But due to a nationwide shortfall in the supply of affordable homes and shifting demand for housing during the pandemic, first-time homebuyers have struggled in recent years to achieve homeownership. First-generation homebuyers and first-time homebuyers of color — who are less likely to have sufficient resources for a sizeable down payment due to a longstanding gap in intergenerational wealth transfers — have been particularly affected.”

FHA-insured mortgages, which accounted for 7.5% of home sales in the third quarter of 2022, are targeted at homebuyers who otherwise may not be able to achieve homeownership. 

Mortgage Bankers Association President and CEO Bob Broeksmit praised the announcement, calling it “a move we have strongly encouraged since 2021.”

“The lower premiums will expand homeownership opportunities by lowering mortgage payments for qualified FHA borrowers, providing critical relief from the steep rise in mortgage rates and home prices just in time for the spring buying season,” Broeksmit said. “This will especially help minority homebuyers and low-and moderate-income households who are predominantly served by FHA loans.”

FHA insures loans with a small down payment and more flexible underwriting, enabling families to begin building wealth through homeownership earlier than they otherwise might and providing an open door to credit-worthy borrowers. More than 80% of FHA borrowers are first-time homebuyers, and over 25% are homebuyers of color. 

The average home purchased with FHA-insured mortgages cost around half the price of the overall national median home and have an average mortgage amount of less than $270,000.

“Ensuring a robust FHA program that protects taxpayers and offers affordable homeownership opportunities for families in underserved communities is important,” Broeksmit said, “and we will work with the Biden administration and Congress on policies that have the greatest impact on borrower affordability and sustainability.”

Learn more.

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The Two Big Issues the Housing Market’s Facing Right Now

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The biggest challenge the housing market’s facing is how few homes there are for sale.

There are two things keeping existing-home inventory historically low - rate-locked existing homeowners and the fear of not finding something to buy. Let’s break down these two big issues in today’s housing market.

Let’s break down these two big issues in today’s housing market.

Rate-Locked Homeowners

According to the Federal Housing Finance Agency (FHFA), the average interest rate for current homeowners with mortgages is less than 4% (see graph below):

 
 

But today, the typical mortgage rate offered to buyers is over 6%. As a result, many homeowners are opting to stay put instead of moving to another home with a higher borrowing cost. This is a situation known as being rate locked.

When so many homeowners are rate locked and reluctant to sell, it’s a challenge for a housing market that needs more inventory. However, experts project mortgage rates will gradually fall this year, and that could mean more people will be willing to move as that happens.

The Fear of Not Finding Something To Buy

The other factor holding back potential sellers is the fear of not finding another home to buy if they move. Worrying about where they’ll go has left many on the sidelines as they wait for more homes to come to the market. That’s why, if you’re on the fence about selling, it’s important to consider all your options. That includes newly built homes, especially right now when builders are offering concessions like mortgage rate buydowns.

What Does This Mean for You?

These two issues are keeping the supply of homes for sale lower than pre-pandemic levels. But if you want to sell your house, today’s market is a sweet spot that can work to your advantage.

Be sure to work with a local real estate professional to explore the options you have right now, which could include leveraging your current home equity. According to ATTOM:

“. . . 48 percent of mortgaged residential properties in the United States were considered equity-rich in the fourth quarter, meaning that the combined estimated amount of loan balances secured by those properties was no more than 50 percent of their estimated market values.”

This could make a major difference when you move. Work with a local real estate expert to learn how putting your equity to work can keep the cost of your next home down.

Bottom Line

Rate-locked homeowners and the fear of not finding something to buy are keeping housing inventory low across the country. But as mortgage rates start to come down this year and homeowners explore all their options, we should expect more homes to come to the market.

Learn more on Keeping Current Matters.

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How to Know You’ve Found the Home of Your Dreams

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You know it when you feel it. That feeling of excitement, anticipation and joy when you walk into a house and just know that it’s the one.

But how do you know for sure that you’ve found your dream home? Here are some key factors to consider before signing on the dotted line. 

Check Your List of Must-Haves 
When house hunting, it is important to make a list of must-haves before you begin looking at potential homes. As you look at each property, check off what items it has that were on your list and note if there are any features that were missing or not as expected. This will help narrow down which properties are worth taking a closer look at and which ones should be crossed off your list. Additionally, by having a list of must-haves from the start, it will make it easier to know when one home stands out from the rest and makes your heart leap with joy. 

The Perfect Location
Location is one of the most important things to consider when choosing a new home. Are you looking for a quiet suburb or luxury high-end properties with plenty of amenities? Do you want easy access to public transportation or do you prefer a more rural setting? Thinking about what type of neighborhood will best suit your lifestyle is key in determining if a particular house is right for you. 

Consider Functionality
It's also important to think about how well a potential home functions for your needs. Does the size and layout meet your requirements? Is there enough storage space? Is the kitchen set up in such a way that it would make cooking and entertaining easy? Will any renovations need to be done in order for the house to meet your needs? Thinking through these questions ahead of time can help ensure that the house you choose truly meets your family’s needs. 

Look for Signs of Comfortability 
Another way to tell if you have found the perfect home is if you feel comfortable in the space immediately upon entering. This could mean anything from feeling like it already feels like yours or simply being able to envision yourself living there comfortably in the future. If you enter a home and feel relaxed and contented, then this is likely an indication that this could be the one. Don’t discount these feelings; sometimes our intuition can guide us towards making better decisions than we even realize! 

Consider What You Can Do With It 
Think about what projects would make the home better suited for your lifestyle. Whether it means redecorating certain rooms or making more structural changes such as adding a deck or renovating a basement, consider whether these projects would be feasible or too expensive without drastically reducing your budget or putting yourself in debt. If these changes would allow you to not just live in but truly enjoy this place, then this could mean that this is indeed your dream home! 

Finding a new place to call home can be daunting; however, by following these tips you can determine whether any given property fits into your vision of what constitutes “the perfect home” for you and your family. From considering what features are most important for making life comfortable within those walls to seeing how feasible certain projects may be given its structure, use these guidelines as helpful resources during your search for a dream home!

Read on.

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Can’t Get an Apartment Because of a Credit Report Error? Here’s How To Fix It

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By now you know that your credit score can have a big impact on your life—like when you want to finance a big purchase such as a house, or when you’re looking for a new rental.

You can expect your potential landlord to run a credit check and, as a general rule, you will need a score of 620 or higher to rent an apartment.

But credit reports can, on occasion, contain errors—and those errors can derail your apartment search when a landlord gives you a hard pass as a tenant.

“Credit report errors are actually common,” says David Bitton, co-founder of and chief marketing officer of DoorLoop, a property management software. “In fact, at least 1 in 5 people can encounter an error in any of their credit reports.”

Apartment hunting is hard enough, especially if you live in an area where desirable properties get snatched up at a moment’s notice. The last thing you need is to lose out on a rental because of errors on your credit report. But knowing what to look out for can get you back on level playing field. Read on for more information about credit score errors.

Why credit report errors happen

Errors on your credit report happen for a number of reasons: A creditor or lender might report incorrect information to a credit bureau. Other times, it can be a case of mistaken identity. You might share a similar Social Security number with someone with a less-than-stellar credit history.

“Someone with a similar name may show up on your account,” says Adjina Dekidjiev, a broker for Coldwell Banker Warburg.

Closed accounts, like student loans or car loans that you paid off in full, can still show as open or delinquent, show the wrong balance, or show an inaccurate payment history because the creditor didn’t update the account.

Errors can also happen in cases of identity theft or fraud.

Mihal Gartenberg, a broker for Coldwell Banker Warburg, says one of her tenant clients had a major credit issue due to a case of family fraud.

“The only way the credit bureaus would fix the problem was for my client to press charges against the family member. As my client was unwilling to do so, the credit hit remained in their history,” says Gartenberg.

Unfortunately, most credit report errors aren’t discovered until after a potential landlord has pulled your credit report.

You can fix a credit report error

When there’s a credit report error, the damage can be fairly severe. But it can be fixed.

When you discover the mistake, you must present written proof—as well as documents that support your dispute—to the company that provided the information and the three major credit-reporting agencies: Equifax, Experian, and TransUnion.

“Send a copy of the report along with your letter. Make sure that the errors in the report you want to dispute are highlighted,” says Bitton. “You may also send a copy of any pertinent documents that will support your dispute. Send these through certified mail, so you can request a return receipt.”

The Consumer Financial Protection Bureau offers a number of tools, including a sample letter, that you can send to a credit-reporting agency to dispute inaccurate information.

Credit-reporting companies must investigate your dispute and report the results back to you. However, if they determine that your dispute is baseless, they can choose not to investigate and will notify you within five days of their decision.

If your credit report does need to be corrected, the reporting agency must notify all of the furnishers (aka the bank or business that provided the information to the credit-reporting agency), so they can update their reports with the accurate data.

“A lot of bureaucratic work needs to be done to fix the error, but it’s well worth the effort,” says Josh Tepper, an agent for Coldwell Banker Warburg.

Monitor credit before renting

Before you start your apartment search, it’s best to get familiar with your credit score by going to a website like Credit Karma or myFICO, which allows you to check your credit whenever you’d like.

“It doesn’t cost anything, and it won’t affect your credit rating,” says Ellen Sykes, a broker for Coldwell Banker Warburg. “If you read the report carefully, you will be able to pick up on any negative issues—which could be errors—and fix them.”

Learn more on Realtor.com

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If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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