Mortgage Rates Continue to Fluctuate

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Purchase demand continues to tumble as the cumulative impact of higher rates, elevated home prices, increased recession risk, and declining consumer confidence take a toll on homebuyers. It’s clear that over the past two years, the combination of the pandemic, record low mortgage rates, and the opportunity to work remotely spurred greater demand. Now, as the market adjusts to a higher rate environment, we are seeing a period of deflated sales activity until the market normalizes.

All content is subject to change without notice. All content is provided on an “as is” basis, with no warranties of any kind whatsoever. Information from this document may be used with proper attribution. Alteration of this document or its content is strictly prohibited. © 2022 by Freddie Mac.

Mortgage Rates Drop

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Over the last two weeks, the 30-year fixed-rate mortgage dropped by half a percent, as concerns about a potential recession continue to rise. While the drop provides minor relief to buyers, the housing market will continue to normalize if home price growth materially slows due to the combination of low housing affordability and an expected economic slowdown.

All content is subject to change without notice. All content is provided on an “as is” basis, with no warranties of any kind whatsoever. Information from this document may be used with proper attribution. Alteration of this document or its content is strictly prohibited. © 2022 by Freddie Mac.

Monthly Market Overview North San Diego County June 2022  

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Rising inflation, soaring home prices, and increased mortgage interest rates have combined to cause a slowdown in the U.S. housing market. To help quell inflation, which reached 8.6% as of last measure in May, the Federal Reserve raised interest rates by three quarters of a percentage point in June, the
largest interest rate hike since 1994. Higher prices, coupled with 30-year fixed mortgage rates approaching 6%, have exacerbated affordability challenges and rapidly cooled demand, with home sales and mortgage applications falling sharply from a year ago.

  • Closed Sales decreased 39.5 percent for Detached homes and 21.8 percent for Attached homes.
  • Pending Sales decreased 44.6 percent for Detached homes and 31.2 percent for Attached homes.
  • The Median Sales Price was up 14.1 percent to $1,084,000 for Detached homes and 19.3 percent to $699,000 for Attached homes.
  • Days on Market increased 8.3 percent for Detached homes and 22.2 percent for Attached homes.
  • Supply increased 28.6 percent for Detached homes and 18.2 percent for Attached homes.

With monthly mortgage payments up more than 50% compared to this time last year, the rising costs of homeownership have sidelined many prospective buyers. Nationally, the median sales price of existing homes recently exceeded $400,000 for the first time ever, a 15% increase from the same period a year ago, according to the National Association of REALTORS®. As existing home sales continue to soften nationwide, housing supply is slowly improving, with inventory up for the second straight month. In time, price growth is expected to moderate as supply grows; for now, however, inventory remains low, and buyers are feeling the squeeze of higher prices all around.

Monthly-0622

The cities where housing costs are likely to drop: ‘We’ve squeezed a decade of home-price appreciation into a year and a half’

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Mortgage rates are cooling off after sharply rising. But expect home prices to start slowing, and even dropping, in some of the most overheated markets in the country over the next couple of years.

With the average on the 30-year fixed-rate mortgage at 5.7%, some would-be buyers are spooked by the higher borrowing costs and are putting their plans on hold. A year ago, the rate was 2.72%.

The hesitation is starting to show up in proprietary data, Rick Palacios Jr., head of research at John Burns Real Estate Consulting, told MarketWatch. The company counts suppliers, builders and buyers (such as hedge funds) among their clients.

“The consensus is most forecasters … are anticipating prices to either flatten and/or go down next year, especially in a lot of these way overheated markets like Boise,” Palacios said.

Expect these declines to manifest more steeply in some parts of the country.

At a national level, he said he expected home prices to decline by mid-single digit percentages over the next two years. 

It’s not just him. Capital Economics’ Matthew Pointon also expects a “small fall” in home prices of around 5% on a year-over-year basis by 2023, he said.

Having looked closely at many of the markets, Palacios expects an even more “meaningful price decline” in some of the popular pandemic destinations.

In a tweet on Tuesday, Palacios highlighted how his research firm saw the rate of change in home prices slow in a hot market like Boise, Idaho, after the Federal Reserve hiked interest rates, sending mortgage rates up sharply.

“Boise is the poster child,” Palacios said, and, in his firm’s view, may see a decline in home prices as early as this year.

“Boise is the poster child,” Palacios said, and, in his firm’s view, may see a decline in home prices as early as this year.

Inventory is climbing, too. Realtor.com data from June noted a 18.7% increase in the number of new homes available for buyers — the “fastest yearly pace of all time,” the company said. The biggest jumps in listings were in markets like Raleigh and Charlotte in North Carolina and Nashville on a month-over-month basis.

“The U.S. housing market is at the beginning stages of the most significant contraction in activity since 2006,” Len Kiefer, deputy chief economist at Freddie Mac, said earlier this month.

The official data is telling a different story, though: The sale of new single-family homes last month, despite the higher mortgage rates, rose by 10.7% compared with the previous month, according to the Commerce Department. 

Original Article

Independence Day

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Inndependence Day of the United States, also referred to as Fourth of July or July Fourth in the U.S., is a federal holiday commemorating the adoption of the Declaration of Independence on July 4, 1776, by the Continental Congress declaring that the thirteen American colonies regarded themselves as 13 independent states, and no longer part of the British Empire. 

Independence Day is commonly associated with fireworks parades,  barbecues,  carnivals,  fairs,  picnics,  concerts,  baseball games,  family reunions, and political speeches and ceremonies, in addition to various other public and private events celebrating the history, government, and traditions of the United States.

Independence Day is the National Day of the United States.

Background

During the American Revolution, the legal separation of the Thirteen Colonies from Great Britain occurred on July 2, 1776, when the Second Continental Congress  voted to approve a resolution of independence that had been proposed in June by Richard Henry Lee of Virginia declaring the American Colonies independent from British rule. After voting for independence, Congress turned its attention to the Declaration of Independence, a statement explaining this decision, which had been prepared by a Committee of Five, with Thomas Jefferson as its principal author. Congress debated and revised the wording of the Declaration, finally approving it on July 4. A day earlier, John Adams had written to his wife Abigail:

The second day of July, 1776, will be the most memorable epoch in the history of America. I am apt to believe that it will be celebrated by succeeding generations as the great anniversary festival. It ought to be commemorated as the day of deliverance, by solemn acts of devotion to God Almighty. It ought to be solemnized with pomp and parade, with shows, games, sports, guns, bells, bonfires, and illuminations, from one end of this continent to the other, from this time forward forever more.

Adams’s prediction was off by two days. From the outset, Americans celebrated independence on July 4, the date shown on the much-publicized Declaration of Independence, rather than on July 2, the date the resolution of independence was approved in a closed session of Congress.

Historians have long disputed whether Congress actually signed the Declaration of Independence on July 4, even though Thomas Jefferson, John Adams, and Benjamin Franklin all later wrote that they had signed it on that day. Most historians have concluded that the Declaration was signed nearly a month after its adoption, on August 2, 1776, and not on July 4 as is commonly believed.

Coincidentally, both John Adams and Thomas Jefferson, the only signers of the Declaration of Independence later to serve as Presidents of the United States, died on the same day: July 4, 1826, which was the 50th anniversary of the Declaration. Although not a signer of the Declaration of Independence, but another Founding Father who became a President,  James Monroe, died on July 4, 1831, thus becoming the third President in a row who died on the holiday. Calvin Coolidge, the 30th President, was born on July 4, 1872, and, so far, is the only U.S. President to have been born on Independence Day.

Mortgage Rates Pause from their Ascent

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The rapid rise in mortgage rates has finally paused, largely due to the countervailing forces of high inflation and the increasing possibility of an economic recession. This pause in rate activity should help the housing market rebalance from the breakneck growth of a seller’s market to a more normal pace of home price appreciation.

All content is subject to change without notice. All content is provided on an “as is” basis, with no warranties of any kind whatsoever. Information from this document may be used with proper attribution. Alteration of this document or its content is strictly prohibited. © 2022 by Freddie Mac.