Home Sales Bounced Big in March

Home Sales Bounced Big in March, But Lag January Pace

Spring market buyers got down to business in March and existing home sales rebounded, up 5.1 percent but didn’t quite recover from a disappointing February.  The National Association of Realtors® NAR said sales during the month were at a seasonally adjusted annual rate of 5.33 million with sales especially strong in the Northeast and Midwest but first-time buyers were still missing from the equation.

Compared to March 2015 existing home sales were up a modest 1.5 percent. February sales numbers, which had surprised many by retreating by 7.1 percent from January’s, were downgraded further today, from 5.08 to 5.07 million.

Existing home sales are completed transactions that include single-family homes, townhomes, condominiums and co-ops.  Single-family home sales were up 5.5 percent from February (only partially offsetting February’s 7.2 percent drop to 4.51 million) to a seasonally adjusted annual rate of 4.76 million units and are now 2.6 percent ahead of sales in March 2015.

Existing condominium and co-op sales rose 1.8 percent to a seasonally adjusted annual rate of 570,000 units in March from 560,000 in February.  Those sales are running 6.6 percent below the March 2015 pace of 610,000 units.

NAR chief economist Lawrence Yun, says home sales had a nice rebound in March following February’suncharacteristically large decline. “Closings came back in force last month as a greater number of buyers – mostly in the Northeast and Midwest – overcame depressed inventory levels and steady price growth to close on a home,” he said. “Buyer demand remains sturdy in most areas this spring and the mid-priced market is doing quite well. However, sales are softer both at the very low and very high ends of the market because of supply limitations and affordability pressures.”

Median prices across all existing home types were up by 5.7 percent from the previous March to $222,700, marking the 49th consecutive month of annual gains.  The March 2015 median price was $210,700. The median existing single-family home price gained 5.8 percent to $224,300 and condo prices rose to a $209,600 median, 4.6 percent above a year ago.

The number of available homes increased by 5.9 percent over the month but inventories remain 1.5 percent lower than last year at the same time.  The 1.98 million existing homes for sale at the end of March represent a 4.5-month supply at the current rate of sales.

“The choppiness in sales activity so far this year is directly related to the unevenness in the rate of new listings coming onto the market to replace what is, for the most part, being sold rather quickly,” adds Yun. “Additionally, a segment of would-be buyers at the upper end of the market appear to have been spooked by January’s stock market correction.”

Properties sold rapidly in March – a typical marketing period of 47 days compared to 59 days in February and 52 days in March 2015.  Short sales were on the market the longest at a median of 120 days in March, while foreclosures sold in 50 days and non-distressed homes took 46 days. Forty-two percent of homes sold in March were on the market for less than a month – the highest since July 2015 (43 percent).

The share of first-time buyers was 30 percent in March, unchanged both from February and a year ago and matching the average share for all of 2015.  The investor share of sales was 14 percent compared to 18 percent in February but identical to the share a year earlier.  Sixty-six percent of investors paid cash in March and cash sales were 25 percent of all transactions during the month.

“With rents steadily rising and average fixed rates well below 4 percent, qualified first-time buyers should be more active participants than what they are right now,” adds Yun. “Unfortunately, the same underlying deterrents impacting their ability to buy haven’t subsided so far in 2016. Affordability and the low availability of starter homes is still a major barrier for them in most markets.”

Distressed sales continued to decline; foreclosures represented 7 percent of sales and 1 percent were short sales, down from a distressed property share of 10 percent in both February and March 2015. Foreclosures sold for an average discount of 16 percent below market value in March (17 percent in February), while short sales were discounted 10 percent (16 percent in February).

NAR President Tom Salomone says despite modest improvements, mortgage credit is still difficult to come by for many first-time buyers and middle-income households. “Reducing the Federal Housing Administration’s annual mortgage insurance premium rate and repealing its life-of-loan policy requirement would certainly expand options for more of these buyers,” he said. “These changes would save consumers money and further strengthen the FHA’s program by enticing more creditworthy borrowers to seek out FHA-insured loans.”

Sales of existing homes were up in all four regions.  In the Northeast they increased by 11.1 percent to an annual rate of 700,000, and are now 7.7 percent above a year ago. The median price in the Northeast was $254,100, a 5.8 percent annual gain.

The Midwest saw a 9.8 percent jump which brought the annual rate to 1.23 million, 0.8 percent higher than in March 2015. The median price in the Midwest was $174,800, up 7.0 percent from a year ago.

Gains were more modest in the other two regions, up 2.7 percent in the South and 1.8 percent in the West.  Sales in the South were at an annual rate of 2.25 million, 2.3 percent higher than last March while sales in the West were at a 1.15 million pace, down 2.5 percent from the year before.  The median price in the South grew 4.6 percent to $194,400 and in the West the median price was $320,800 a 5.9 percent annual appreciation.

 Reference Jann Swanson
Mortgage News Daily

Jonathan Burdick

Xperity Lending Group/Arizona Lending Resource

Scottsdale Arizona 85260

602-212-1234

NMLS # 1045837

http://www.ArizonaLending.Net

Fairway Independent Mortgage Company

NMLS Entity ID 2289

Equal Housing Lender

Confidentiality Notice: The information contained in and transmitted with this communication is strictly confidential, is intended only for the use of the intended recipient, and is the property of Fairway Independent Mortgage Corporation NMLS #2289 or its affiliates and subsidiaries. If you are not the intended recipient, you are hereby notified that any use of the information contained in or transmitted with the communication or dissemination, distribution, or copying of this communication is strictly prohibited by law. If you have received this communication in error, please immediately return this communication to the sender and delete the original message and any copy of it in your possession.

 

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Early Spring Housing Numbers

Early Spring Housing Numbers

There probably isn’t a lot of backslapping going on in the housing world this morning.  March residential construction data released by the U.S. Census Bureau and the Department of Housing and Urban Development was disappointing to say the least, with permits and housing starts falling from February levels and both estimates falling way short of analysts’ predictions.  That March is the beginning of construction season in most of the country and that the downturn was almost universal across regions only makes it worse.  The less economically critical completions data did paint a more encouraging picture for current housing inventories.

Permits were issued in March at a seasonally adjusted annual rate of 1,086,000.  This is 7.7 percent lower than the February estimate and the fourth consecutive month of declines.  Permitting was 4.6 percent higher than in March 2015.  The February rate, originally estimated at 1,167,000 units was revised up to 1,177,000.

Analysts surveyed by Econoday had been expecting the permit number to be in the range of 1.175 million to 1.231 million.  Bloomberg said that after the big upswing for starts in February (an increase of 5.2 percent) and the 3.1 percent downswing for permits forecasters were calling for a big reversal in March, with starts down 0.9 percent and permits gaining 2.8 percent.  “A gain for permits, especially one centered in single-family homes,” Bloomberg said, “could lift the outlook for what has been an underperforming housing sector.”

Permits for single family construction did come in better than permits as a whole, but were still a loss, issued at a rate of 727,000, a 1.2 percent decline from February.  They were up 13.2 percent from a year earlier.  The February single-family permitting estimate was revised up from 731,000 to 736,000.  Permits for construction in buildings with five or more units dropped 20.6 percent from February to 324,000 and were down 12.4 percent year-over-year.

On a non-seasonally adjusted basis there were 98,500 permits issued in March compared to 84,500 in February.  Single-family permits numbered 67,700 compared to 53,000 the previous month.

Housing starts were at a seasonally adjusted rate of 1,089,000, a drop of 8.8 percent from February but 14.2 percent higher than the 954,000 starts the previous March.  The February estimate of 1,178,000 was revised higher, to 1,194,000.  Analysts had expected starts in the range of 1.120 to 1.195 million with a consensus at 1.167 million.

Single-family starts were estimated at a rate of 764,000, a 9.2 percent decline but much above (22.6 percent) starts in March of last year.  The February estimate was revised up from to 841,000 from 822,000.  Multi-family starts declined by 8.5 percent to 312,000 units.

On a non-adjusted basis, construction began on 88,700 units of housing during the month compared to 82,700 units in February.  Single family starts rose from 57,800 to 63,000 units.

There was an improvement in housing completions during March with units coming on line at a seasonally adjusted annual rate of 1,061,000, a 3.5 percent increase from February and 31.6 percent more than in the previous March.  Completions in February were revised upward slightly from 1,016,000 units to 1,025,000.

Of completed units an estimated 734,000 were single family houses, a 0.3 decline from 736,000 in February but 23.2 percent more than in March 2015.  There were 316,000 multi-family units completed, increases of 17.9 percent and 58.8 percent from the two earlier periods.

On a non-adjusted basis there were 77,800 units completed during the month, 55,500 of which were single family compared to 71,500 and 51,600 a month earlier.

At the end of the reporting period there were 990,000 units of housing under construction, 428,000 single family units.  The backlog of permits for which construction had not yet commenced was estimated at 154,700 on a non-seasonally adjusted basis.

Permits were issued in the Northeast region at a rate that was 17.9 percent lower than in February and 21.7 percent below a year earlier.  Housing starts however soared, up 61.3 percent for the month and 21.0 for the year and completions were also up significantly; 20.5 percent and 64.9 percent from the two previous periods.

The Midwest saw permits decline 3.1 percent from February but they were 24.2 percent higher than in February 2015.  Housing starts fell 25.4 percent for the month but rose 5.6 percent on an annual basis.  Completions gained 18.9 percent from February and 68.3 percent year-over-year.

Permits fell 3.2 percent in the South on a month-over-month basis while rising 11.3 percent annually. Starts were also down, a drop of 8.4 percent for the month but with an 8.6 percent gain from a year earlier. Completions were 6.7 percent higher than in February and up 26.3 percent on an annual basis.

In the West there was a decline in permitting of 15.4 percent for the month and 6.1 percent year-over-year.  Housing starts also fell, down 15.7 percent in March but starts were 30.8 percent ahead of last year.  This was the only region in which completions were down – off by 16.0 percent for the month.  They remained 15.3 percent higher than a year earlier.

 

Reference Jann Swanson

Jonathan Burdick

Xperity Lending Group/Arizona Lending Resource

Scottsdale Arizona 85260

602-212-1234

NMLS # 1045837

http://www.ArizonaLending.Net

Fairway Independent Mortgage Company

NMLS Entity ID 2289

Equal Housing Lender

Confidentiality Notice: The information contained in and transmitted with this communication is strictly confidential, is intended only for the use of the intended recipient, and is the property of Fairway Independent Mortgage Corporation NMLS #2289 or its affiliates and subsidiaries. If you are not the intended recipient, you are hereby notified that any use of the information contained in or transmitted with the communication or dissemination, distribution, or copying of this communication is strictly prohibited by law. If you have received this communication in error, please immediately return this communication to the sender and delete the original message and any copy of it in your possession.

 

 

Mortgage Lending Profitable in 2015

Year-end figures released on Tuesday by the Mortgage Bankers Association (MBA) shows that profits in at least one sector of mortgage lending increased substantially in 2015 compared to 2014.  Those profits, however trended down as the year wore on.

According to MBA’s Annual Mortgage Bankers Performance Report, independent mortgage banks and mortgage subsidiaries of chartered banks made an average profit of $1,189 on each loan they originated in 2015, up from $747 per loan in 2014. Ninety-two percent of firms responding to the MBA survey posted pre-tax net profits in 2015, including all business lines while 82 percent reported such profits in 2014.  However, in the first half of 2015 93 percent reported profits while only 83 percent did so in the second half of the year.

The average production profit (net production income) was 52 basis points (bps) in 2015 compared to 34 bps in 2014.  The income averaged 65 bps in the first half of last year then fell to 39 in the second half.

“Despite a drop in profits in the second half of the year compared to the first half, full-year 2015 net production profits were 52 basis points, 18 basis points higher year over year, with higher production volume,” said Marina Walsh. MBA’s Vice President of Industry Analysis. “Profits in 2015 were just below the annual average of 55 basis points since the inception of the Performance Report in 2008.  However, because of larger loan balances, per-loan profits were at their third highest levels since 2008.  Average loan balances for this sample grew 7 percent from 2014 to 2015 and have grown 22 percent since 2008.”

There were 276 companies reporting production data to MBA for the full year.  Seventy-two percent wereindependent mortgage companies and the remainder were subsidiaries and other non-depository institutions.

The average production volume was $2.40 billion or 9,906 loans compared to $1.57 billion or 6,779 loans per company in 2014. Among those companies reporting for both years, average production volume increased by 48 percent to $2.48 billion (10,183 loans) from $1.68 billion (7,243 loans) in 2014.  The size of an average loan increased 7 percent to $239,265 from $223,108 the previous year.

Total loan production expenses – commissions, compensation, occupancy, equipment, and other production expenses and corporate allocations – rose slightly year-over-year, from $6,950 to $7,046 per loan. In the first half of 2015, total production expenses averaged $6,893 per loan, then rose to $7,272 per loan in the second half of 2015.

Personnel expenses were an average of $4,699 per loan, up from $4,500 in 2014.  There were 2.20 loans originated per production employee per month in 2015, compared to 2.05 in 2014.

The “net cost to originate” including all production operating expenses and commissions, minus all fee income, but excluding secondary marketing gains, capitalized servicing, servicing released premiums, and warehouse interest spread. was $5,567 per loan compared to $5,200 the year before. Secondary marketing income plus origination fees rose to 330 bps from 321 bps the previous year.

The purchase share of total originations, by dollar volume, decreased to 64 percent in 2015, from 71 percent in 2014. For the mortgage industry as whole, MBA estimates the purchase share dropped from 60 percent in 2014 to 54 percent last year.

Reference Mortgage News Daily

Jonathan Burdick

Xperity Lending Group/Arizona Lending Resource

Scottsdale Arizona 85260

602-212-1234

NMLS # 1045837

http://www.ArizonaLending.Net

Fairway Independent Mortgage Company

NMLS Entity ID 2289

Equal Housing Lender

Confidentiality Notice: The information contained in and transmitted with this communication is strictly confidential, is intended only for the use of the intended recipient, and is the property of Fairway Independent Mortgage Corporation NMLS #2289 or its affiliates and subsidiaries. If you are not the intended recipient, you are hereby notified that any use of the information contained in or transmitted with the communication or dissemination, distribution, or copying of this communication is strictly prohibited by law. If you have received this communication in error, please immediately return this communication to the sender and delete the original message and any copy of it in your possession.