According to Bankrate, homebuyers were “sailing calm waters” with lower rates and slowing home price appreciation.
“Our view is that the housing market peaked in 2017, we saw about a 3% drop in sales in 2018. The pace of home price increases started to slow in 2018,” says Doug Duncan, Chief Economist at Fannie Mae. “Starting at the beginning of 2019 rates started to come down, then we saw this big drop in rates. We didn’t expect such a significant drop-off—it was 30 points more than we forecasted.”
According to the latest Existing Home Sales report by the National Association of Realtors (NAR) notes that single-family home transactions increased 1.3% from July to August, and home sales passed last year’s number by 2.6%. Sales prices jumped 4.7% in August year-over-year, moving the median existing home price to $278,200 from last August’s $265,600, the NAR report shows.
“The housing market is sitting well,” says Frank Nothaft, Chief Economist for CoreLogic. “We are sub-4% on mortgage rates and sub-4% on unemployment. This is the first time since World War II era that we have both metrics (under 4 percent). Incomes are rising faster than inflation. This is the reason we’re seeing home sales up.”
Despite the positive increases, housing supply remains the weak spot of the market as inventory fell to 1.86 million units in August, down 2.6% from the same time last year.
“On the for-sale side, inventory remains low and the homes that are being started are priced above what many homebuyers are prepared to pay, so there’s an affordability problem,” says Michael Neal, a senior research associate in the Housing Finance Policy Center at the Urban Institute.
Bankrate also looked at refinance activity, noting that between September 11 and 25, the number of refinances dropped by 17%, according to data from the Mortgage Bankers Association.
“I think it’s overall a positive for consumers to buy houses and refinance at these lower rates,” says Marc Doss, Regional Chief Investment Officer at Wells Fargo. “But there are people who are trying to perfectly time rates, which is impossible. People have the chance to float down now. Don’t wait too long. Don’t try to get too cute.”