The Housing Beat: Mortgage Rates Down, Home Prices Up, Lending Declines, More Homeowners Stay Put

Zinger Key Points
  • The fourth-quarter 2021 U.S. Residential Property Mortgage Origination Report published by ATTOM showed 3.27 million mortgages secured by residential property (one to four units) were originated during the fourth quarter of 2021, down 11% from the previous quarter and down 13% from one year earlier.
  • This marked the third consecutive quarter of decreasing volume of mortgage originations, while the annual decline percentage was the largest since late 2018.

The latest housing market data took on the look of an oscilloscope as with mortgage rates tumbled, home prices soared, mortgage lending declined and home occupancy spans stretched longer than before.

The Mortgage Rate News: Freddie Mac FMCC reported the 30-year fixed rate mortgage averaged 3.76% for the week ending March 3, down from last week’s 3.89%. The 15-year fixed-rate mortgage averaged 3.01%, down from last week’s 3.14%, and the five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 2.91%, down from last week when it averaged 2.98%.

Sam Khater, Freddie Mac’s chief economist, attributed the decline to Vladimir Putin.

“Geopolitical tensions caused U.S. Treasury yields to recede this week as investors moved to the safety of bonds, leading to a drop in mortgage rates,” said Khater.

“While inflationary pressures remain, the cascading impacts of the war in Ukraine have created market uncertainty. Consequently, rates are expected to stay low in the short-term but will likely increase in the coming months.”

The Home Price News: A new data report from Realtor.com, a division of the News Corp NWSA subsidiary Move Inc., determined the U.S. median listing price increased 12.9% year-over-year to a new all-time high of $392,000; the previous peak of $385,000 occurred in July 2021.

Realtor.com Chief Economist Danielle Hale observed that this was “the record has been broken in February, signaling that competition is already heating up weeks before the start of the spring buying season in a typical year.”

February's biggest year-over-year listing price gains were in metro areas in Southern (+12.5%) and Western (+12.1%) states, most notably Las Vegas (+39.6%), Miami (+31.6%) and Tampa (+31.5%). The greatest year-over-year home price declines were in Rochester, New York (-18.2%), Detroit (-16.5%) and Pittsburgh (-14%).

Hale added that February also saw the first signs of improvement in the housing inventory levels, though she noted, “Whether inventory continues to improve will depend on a variety of economic and geopolitical factors, including the conflict in Ukraine and mortgage rate hikes, which haven't impacted home sales or price growth so far, but will increasingly lessen buyers' purchasing power.”

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The Mortgage Lending News: The fourth-quarter 2021 U.S. Residential Property Mortgage Origination Report published by ATTOM showed 3.27 million mortgages secured by residential property (one to four units) were originated during the fourth quarter of 2021, down 11% from the previous quarter and down 13% from one year earlier.

This marked the third consecutive quarter of decreasing volume of mortgage originations, while the annual decline percentage was the largest since late 2018.

Todd Teta, chief product officer at ATTOM, cautioned, "The receding volume of business for the residential mortgage industry is now showing up across all major categories of loans and appears to be more than just a temporary slide. The ebbing wave of refinance loan that started in early 2021 has fully spread to home-purchase and home-equity lending."

Separately, the Mortgage Bankers Association (MBA) reported that mortgage applications decreased 0.7% for the week ending Feb. 25.

“Although there was an increase in government refinance applications, higher rates continue to push potential refinance borrowers out of the market,” said Joel Kan, the MBA’s associate vice president of economic and industry forecasting. “Purchase activity remained weak, but the average loan size increased again, which indicates that home-price growth remains strong,
and a greater share of the activity is occurring at the higher end of the market.”

The Home Occupancy News: Also impacting the housing market is the increased number of years that the average homeowner remains in their residence.

Redfin RDFN reported the typical American homeowner in 2021 spent 13.2 years in their home, slightly lower than the 2020 peak of 13.5 years but much higher than the 10.1 years recorded in 2012.

Multiple reasons were cited for the longer occupancy time: More older homeowners are aging in place, fewer homes are available for purchase and historically low mortgage rates encouraged many homeowners to refinance on very favorable terms.

Whether this will be an ongoing trend remains to be seen.

“Homeowner tenure may have already peaked, or the decline in 2021 could be a blip before it climbs back up,” said Redfin Chief Economist Daryl Fairweather. “There are competing forces at work. Remote work is encouraging homeowners to sell their homes in expensive cities and move to more affordable areas, which could pull tenure down. But on the flip side, rising mortgage rates may discourage people from selling and older Americans are staying put longer, which could push it back up.”

Photo: F. Muhammad/Pixabay.

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