As is the case with a majority of housing and mortgage market data these days, the Existing Home Sales data from NAR is heavily dependent on context. To be sure, the headline is true. You'd have to go back to report that came out in February, 2024 to see a higher annual pace of sales. (NOTE: the table above contains initially-reported numbers. NAR subsequently revised the 3/31/24 report up to 4.31m) And if you were to chart these values only, the chart would probably look pretty good for the present month, but it would also belie the situation in the trenches. Home sales certainly aren't in freefall in the bigger picture, but they're generally still sideways at long term lows. Realtors credited an uptick in inventory for the uptick in sales. Additional details are available at NAR's release page here: https://www.nar.realtor/newsroom/existing-home-sales-accelerated-4-2-in-february
The Mortgage Bankers Association conducts a weekly survey on the level of mortgage applications, both for purchases and refinances. Both data series continue to be a tale of two decidedly different eras for the mortgage market. If we focus on the present era, for a moment, refi demand continued to enjoy a relative boom thanks to rates that remain much lower than they had been several weeks ago. The most recent levels were logically a bit lower as the average lender's rates were a bit higher this time around. If you were overcome with indignation at seeing someone refer to refi demand with the word "boom" in 2025, don't worry. We know about the context. The present era is a barren wasteland compared to bygone eras when a boom meant roughly 5 times as many refis as today. The "2 era" phenomenon is less extreme when it comes to purchases, which tend to respond to rates only very gradually. This has made for a much steadier level of purchase demand over the past few years. In addition, the boomier era only saw twice as many purchase apps. Other highlights from the data: Refis accounted for 42% of apps, down from 45.6% last week MBA's survey showed a conventional 30yr fixed rate increase from 6.72 from 6.67 the previous week FHA rates rate about 0.30% lower ARM rates were 5.84% but only account for 6.7% of applications
The Census Bureau released its New Residential Construction report this week, frequently referred to by its principal component "housing starts" (a term for the start of the first phase of new home construction, aka "breaking ground"). In addition to housing starts, the data also logs building permits as well as completions. As we often note, building permits are more even-keeled while housing starts and completions can experience much more month-to-month volatility. February was the latest example of that as permits came in right in line with forecasts while housing starts surged higher. Single family homes accounted for the vast majority of the improvement, rising to their highest levels in a year, and close to the highest levels since early 2022. There's often quite a bit of variation across geographies in housing starts. This time around, 2 regions did most of the heavy lifting with the Northeast surging 75% from last month, bringing the annual pace for single family homes up to 84k from 48k. The South only posted a 19.6% gain, but because it's a much larger housing market, that resulted in an annual pace increase of more than 100k units. In contrast, the Midwest slid backward by 34k units, or about 25% from last month's annual pace. The West was the most uneventful region, with a modest 1.8% increase, or 5k units in terms of annual pace. The full text and tables of the release are available at the Census Bureau's site, here: https://www.census.gov/construction/nrc/pdf/newresconst.pdf
The National Association of Homebuilders/Wells Fargo Housing Market Index (aka "builder confidence") hasn't been in a purgatory of sorts, ever since the big interest rate spike in the 2nd half of 2022. Builders aren't nearly as downbeat as they were during the Great Financial Crisis years, but nowhere remotely as confident as the during the post-pandemic highs. The index has now spent more than 2 years muddling sideways in an increasingly narrow range. The latest reading, reported this week, was worse than economists were expecting, largely due to a bigger decrease in buyer traffic. Even so, the headline confidence level remains in the same consolidation pattern (marked by the arrows in the following chart). Other details from this month's survey noted by the NAHB: Builders say tariffs should increase the cost of the typical home by $9200. Policy uncertainty is contributing to indecision, both on the part of buyers and developers. 29% of builders cut prices in March, up from 26% in February. The prospect of regulatory relief has helped offset the negative implications from new fiscal policies to some extent.
As we noted last week, the timing of the improvements in mortgage rates meant that the previous survey of mortgage applications from the MBA was unable to capture what would likely prove to be a fairly big uptick in refinance demand. This week's data confirmed it as the refi index jumped to the best levels since October. Unsurprisingly, this coincided with rate moving back to the range seen in mid-October, although it is somewhat surprising that we didn't see a better spike in refi demand in early December when rates were in the same zone. As has been and continues to be the case, we're taking victories where we find them. Refi demand is operating on an entirely different scale than in the past (when a rate rally meant that far more homeowners would benefit from refinancing). Purchase demand is always less influenced by short term rate fluctuations. This week was no exception with MBA's purchase holding almost perfectly steady and continuing to operate in the same broadly sideways range that's been intact for 2 years.
As is the case almost every week of the year, the Mortgage Bankers Association released its weekly mortgage app survey this week, showing the changes in purchase and refinance applications. We can skip right past any discussion or analysis of the purchase application index as it was almost identical to last week, not to mention reluctant to be influenced by interest rate movement in the first place. Refinance demand, on the other hand, is notoriously beholden to rate fluctuations. As such, it was somewhat surprising to see the refi index decline by about 3.6%. After all, last week's mortgage rates were lower than the previous week's, and continued to fall throughout the week. While it's true that rates were lower last week, it's important to remember MBA's methodology. Application data is collected through the previous Friday and then reported on the following Wednesday. Mortgage rates only began moving lower in any serious way on Thursday. That means the survey didn't have much time to benefit from the rate drop this time around. Given the pace of rate improvement since then, it would be a much bigger surprise to see another counterintuitive movement in next week's data. If precedent is an indication, refi demand could once again challenge the best levels since October 2024.
The Census Bureau released new home sales data for January this week, and the annual pace was a seemingly significant 10.5% lower than last month's pace. But before you devote even one extra BPM of your heart rate to the news, please look at a longer-term chart of the data in question. Home sales are indeed lower versus last month, but caveats abound. First off, last month was revised up from 698k to 734k (annual pace). January's 657k is only 5.9% lower from the unrevised number. It's also good to keep in mind that this data has a notoriously wide margin of error (±19.9 percent in the present case, according to the Census Bureau). But even if the data was completely error free, the chart continues to tell a story that is far from troubling, even if it's not grounds for unabashed excitement. Simply put, new homes continue to sell at a pace that's very close to recent highs (excluding the frenzied moments from 2020 through early 2022). Current levels are also on the higher end of the pre covid range going back to 2016. Bottom line, much like home price appreciation, new home sales have been sideways and boring at relatively strong levels. Full release available from Census Bureau here: https://www.census.gov/construction/nrs/pdf/newressales.pdf
The massive spike and subsequent correction in home price appreciation (mid-2020 through early 2023) generated lots of opinions and concerns about the fate of the housing market. Early on, the fear was that prices were rising too high, too quickly. By mid-2022, the fear was that home prices were en route to a crash that could be reminiscent of the infamous mortgage meltdown and great financial crisis. Of those two fears, only the first was ever going to be valid (i.e. a melt-down style contraction wasn't possible without the other ingredients in place 20 years ago). Prices definitely rose too high, too fast, but let's face it: the average homeowner isn't really scared of their home becoming more valuable. It's only housing economists and first time homebuyers that are truly troubled by runaway prices. Even then, higher prices were a bit of an illusion due to all-time low interest rates. By early 2023, the Case Shiller home price index had dipped well into negative territory, year over year. At the time, we were comfortable reminding our readers that this was a logical byproduct of rapidly rising rates and a much-needed correction from the blistering pace of appreciation seen through early 2022. Two years later and things really couldn't look any more boring, and this week's most recent update to both the major home price indices is just the latest confirmation. Even if we look at the super noisy month-to-month readings, we can still see both indices bouncing around the historically normal mid-point like a well-behaved EKG. Granted, Case Shiller's EKG rhythms are a bit wider than normal, but this is always the more volatile of the two series.
The National Association of Realtors released its Pending Home Sales Index (PHSI) today, which measures home purchase contracts that have been signed, but not yet closed. The index typically correlates with existing home sales in the following month. While January's contract signings were only down 4.6% versus December, that was enough for the index to inch down to the lowest levels since data-keeping began in 2001. “It is unclear if the coldest January in 25 years contributed to fewer buyers in the market, and if so, expect greater sales activity in upcoming months,” said NAR Chief Economist Lawrence Yun. “However, it’s evident that elevated home prices and higher mortgage rates strained affordability.” To be sure, mortgage rates hit their highest recent levels in January but fell short of the levels seen in early 2024. At the time, Pending sales had fallen nearly as low as today's report, thus adding some evidence for the negative impact from higher rates. [thirtyyearmortgagerates] The following bullet points show how each region changed from the previous month (and from the previous year). Northeast +0.3 (-0.5) Midwest -2.0 (-2.7) South -9.2 (-8.8) West -1.2 (-4.5)
Per the latest release from the Mortgage Bankers Association (MBA), both refinance and purchase indices decreased this week. In terms of the change from the previous week, it was the biggest drop so far this year, but not remotely as big as last week of 2024. Here is the refi index in terms of week-over-week change: And here is the exact same data, but expressed in terms of the outright index: If we're just focusing on 2025, the chart above doesn't look too bad for refi demand. But in case anyone needed to be reminded, the farther back one looks into the past, the more sobering the current levels become--even those seen at last year's peak. Purchase activity struggled as well, down 6% weekly, just barely beating the drop seen in the first week of the year in terms of week-over-week change. In outright terms, this brings purchase activity back near the middle of its recent range. The following bullet points offer a few highlights of changes in the % share of total activity for various categories: ● FHA Share increased from 16 to 16.6 ● VA Share decreased from 14.6 to 14.2 ● Refi Share decreased from 40.2 to 38.7