Home Sales and Prices Rose in July , but is the Momentum Sustainable
Didier Malagies • August 20, 2020
Homes Sales and Prices Rose inJuly, But is the Momentum Sustainable?
Jordan Borchard posted in
Housing in Housing News
Home Sales and Prices Rose in July, but Is the Momentum Sustainable?
National Mortgage News
Written by: Brad Finkelstein
July was a banner month for home prices and sales, but uncertainty looming over future changes to housing policy could blunt future momentum, according to Radian Group.
“While not contained in current data, recent changes to housing policy from the White House, Congress and the government-sponsored enterprises related to future stimulus and forbearance provisions, along with continued unknowns related to COVID-19 may begin to weigh on housing in coming months,” said Steve Gaenzler, Radian’s senior vice president of data and analytics.
The Radian Home Price Index increased 6.8% on an annualized rate in July from June. Between August 2019 and July, it rose by 8.1%.
The median home price nationwide was $258,206 in July, according to data from Radian’s Red Bell Real Estate subsidiary.
On the supply side, the number of listings for sale was 15% below the average monthly count over the last five years, and nearly 27% below the peak monthly listing count over the same period, Radian reported. Properties were on the market for an average of 114 days, the shortest stay in over a decade.
Even though rates remained in the record-low range, the purchase share of transactions has been growing in recent months. Ellie Mae reported that purchases made up 46% of the mortgage loans closed its loan origination system processed in July, up from a low of 35% in April and May.
Remax, which tracks 53 markets, reported an 8.7% year-over-year rise in home sales during July.
“The sharp gain in home sales in July — which was the best month of home sales in our report’s history — is further evidence of housing’s remarkable recovery amidst the pandemic,” Adam Contos, CEO at Remax Holdings, said in a press release. “Home sales typically peak in May or June, but this year we’re seeing an overlap of the spring and summer markets. And, as strong as July was, sales may have been even higher if inventory hadn’t been so tight.”
The inventory was down to just 1.7 months of supply, which is the lowest in the 12 years that Remax has been tracking this data. That is a 30.1% drop from July 2019.
Contos is more bullish about the housing market going forward, saying, “so far, buyers have shown they are willing to pay steadily increasing prices, so the months ahead could be very active, especially if more homeowners decide to jump in and sell.”
According to Remax data, July’s median sales price was $285,000, up 8.6% year-over-year.
Redfin tracked a slightly different period than either Radian or Remax, and found there was a 10% year-over-year median sales price increase for the four week period ended Aug. 9.
That resulted in median home sales prices reaching an all-time high of $314,000, Redfin said. On a month-over-month basis, prices rose 3.5%; for the same period in 2019, they fell by 1.7%.
The average sale-to-list price ratio increased to a new record high of 99.1%, up from 98.4% during the same period last year. From June, it increased 0.3 percentage points. Typically during this time of year, the sale-to-list ratio declines, Redfin said, noting it fell 0.1 percentage points in 2019 and 0.2 percentage points in 2018.
“Right now you have a set of people who are highly motivated to buy — they have the money and they have the desire, and they aren’t afraid of competition,” Daryl Fairweather, Redfin chief economist, said in a press release. “But there is an even bigger set of homeowners who are very comfortable where they are and don’t want to rock the boat. Some simply don’t want to deal with the hassle of moving during a pandemic and facing competition when they buy.”
Ironically, the GSEs’ adverse market fee on refinancings could relieve the inventory shortage, Redfin said. It postulated that homeowners that want to take advantage of low mortgage rates would list their current property and look for a new one.
“Of course, this could also lead to more demand for homes when those sellers buy again. Therefore, new listings and home sales may climb higher after the rule goes into effect,” Redfin said.
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Mortgage purchase applications are on a 22-week growth streak primarily due to a combination of improving market conditions, seasonal trends, and changing consumer behavior. Here's a breakdown of the key reasons behind the sustained growth: 🔑 1. Falling Mortgage Rates Mortgage rates have been gradually declining from the highs seen in 2023. Even small drops in interest rates significantly improve affordability, prompting more buyers to apply for loans. Borrowers are locking in rates with the hope that they’ve hit a local low. 🏡 2. Pent-Up Demand from 2023 Many potential buyers delayed purchases during 2023 due to high rates and limited inventory. As conditions improve, backlogged demand is being released into the market. 🌞 3. Spring & Summer Buying Season The U.S. housing market typically sees a seasonal increase in purchase activity starting in spring and continuing through summer. Families prefer to move during school breaks, contributing to more applications in this window. 💼 4. Improved Inventory Levels While still tight, housing inventory has started to improve slightly in some regions. Builders are offering incentives and new constructions are increasing, drawing more buyers into the market. 📈 5. Confidence in the Economy A strong labor market and steady wage growth are boosting consumer confidence , encouraging people to buy homes. Some buyers are moving before potential rate hikes or home price increases . 💡 6. Shift Toward Homeownership Rising rents and lifestyle changes post-pandemic are pushing many toward owning rather than renting . First-time homebuyers are a large portion of this demand. Summary: The 22-week growth streak in mortgage purchase applications is being driven by lower mortgage rates, seasonal buying trends, improved inventory, and returning buyer confidence . While challenges like affordability and supply remain, these positive signals suggest a slow but steady rebound in the housing market .
During the mortgage process, several disclosure documents are provided to help you understand the terms of the loan, your rights, and the costs involved. These disclosures are required by law and are designed to promote transparency and protect you as a borrower. Here’s a breakdown of the key disclosures you'll receive: 1. Loan Estimate (LE) When: Within 3 business days of submitting a loan application. Purpose: Provides a summary of the loan terms, estimated interest rate, monthly payment, closing costs, and other fees. Key sections: Loan terms (rate, type, prepayment penalty, balloon payment) Projected payments (principal, interest, taxes, insurance) Costs at closing (origination charges, services you can/cannot shop for) Why it matters: Lets you compare offers from multiple lenders. 2. Closing Disclosure (CD) When: At least 3 business days before closing. Purpose: Provides final details of the mortgage loan, including actual costs. Key sections: Final loan terms (rate, payments, closing costs) Cash to close (how much you need to bring to closing) A detailed breakdown of costs and payments over time Why it matters: Helps you confirm everything is accurate before you close. 3. Mortgage Servicing Disclosure Statement When: Within 3 business days of application. Purpose: Explains whether your loan might be sold or transferred to another company for servicing. Why it matters: Tells you who will manage your payments and account. 4. Affiliated Business Arrangement (AfBA) Disclosure When: At the time of referral to an affiliated business (e.g., title company). Purpose: Discloses any relationships between the lender and other service providers and explains you’re not required to use them. Why it matters: Ensures you know if there’s a potential conflict of interest. 5. Home Loan Toolkit (for purchase loans) When: Within 3 business days of application. Purpose: A consumer-friendly booklet from the CFPB that explains the mortgage process, costs, and how to shop for a loan. Why it matters: Helps first-time buyers understand the steps and choices. 6. Right to Receive a Copy of Appraisal When: Within 3 business days of application. Purpose: Notifies you that you can get a copy of the appraisal at no additional cost. Why it matters: Gives you insight into the value of the home you’re buying or refinancing. 7. Initial Escrow Disclosure When: At or within 45 days of closing. Purpose: Details amounts to be collected in escrow for taxes and insurance. Why it matters: Shows how your monthly mortgage payment is allocated. 8. Notice of Right to Rescind (for refinances only) When: At closing (for primary residence refinances). Purpose: Gives you 3 business days to cancel the refinance loan. Why it matters: Protects you from making a rushed decision. tune in and learn at https://www.ddamortgage.com/blog Didier Malagies nmls#212566 dda mortgage nmls#324329
