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Housing market continues its ups and downs

June 9, 2017

The housing market's progress over the past few months has been a bit unsteady, despite the widely acknowledged demand among would-be buyers. It seems that many of the hurdles now in buyers' way - limited inventory, still-tight credit access, rising costs and so on - may be constraining a broader uptick in sales activity nationwide. That trend certainly continued in recent weeks.

"Purchase requests slid 3% on a weekly basis."

For instance, in the week ending May 12, the number of people who filed requests for home loans nationwide fell 4.1 percent on a weekly basis, as mortgage rates rose slightly, according to the latest Weekly Mortgage Applications Survey from the Mortgage Bankers Association. This decline was largely driven by a 6 percent drop in refinance activity, as more current homeowners were priced out by rising rates. At the same time, purchase requests slid 3 percent on a weekly basis while remaining 9 percent above where they were a year earlier.

Refinances now make up the smallest share of the market - 41.1 percent - seen since September 2008, the report said.

Changing affordability
More recently, after the small uptick that led to another decline in refinances, mortgage rates started to edge slightly back down, all while remaining in relatively affordable territory, according to the latest Primary Mortgage Market Survey from Freddie Mac. In the week ending May 18, average rates on a 30-year fixed-rate mortgage fell slightly, to 4.02 percent from the previous week's 4.05 percent. And while that number was in the same neighborhood it had been in for five weeks, that number was also significantly higher than the 3.58 percent for this type of home loan seen in the same week a year ago.

At the same time, rates on 15-year FRMs - which are mostly used in refinances, as opposed to purchases for 30-year FRMs - dipped lower, to 3.27 percent from the earlier 3.29 percent, the report said. But here too, the slightly more affordable number was still up considerably from the year-ago level of 2.81 percent.

"Fewer people are falling behind on their home loans."

Some positives
However, all this comes at a time when fewer people are falling behind on their home loans, with delinquency rates slipping to just 4.71 percent of all outstanding mortgage balances through the end of the first quarter, according to the latest National Delinquency Survey from the Mortgage Bankers Association.That was down from 4.8 percent in the final three months of 2016, as well as 4.77 percent in the same quarter a year earlier.

Meanwhile, only 1.39 percent of mortgages were in foreclosure at the end of March, down from 1.53 percent three months earlier and 1.85 percent in the first quarter of last year, the report said.

All these issues mean that would-be buyers may need to do a little more work to find the most affordable deals available to them, because fewer foreclosures and rising rates will typically lead to higher costs, especially as the spring buying season heats up. Experts say that waiting even a few months to buy at this point will typically result in buyers paying thousands of dollars more per year.




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