Home Prices Archives - Credit Sesame Credit Sesame helps you access, understand, leverage, and protect your credit all under one platform - free of charge. Mon, 02 Dec 2024 22:02:27 +0000 en-US hourly 1 https://wordpress.org/?v=6.4.3 https://www.creditsesame.com/wp-content/uploads/2022/03/favicon.svg Home Prices Archives - Credit Sesame 32 32 Are mortgage rates and home prices stabilizing? https://www.creditsesame.com/blog/mortgage/are-mortgage-rates-and-home-prices-stabilizing/ https://www.creditsesame.com/blog/mortgage/are-mortgage-rates-and-home-prices-stabilizing/#respond Tue, 03 Dec 2024 12:00:00 +0000 https://www.creditsesame.com/?p=208233 Credit Sesame discusses the possibility of mortgage rates and home prices stabilizing in late 2024. Mortgage rates have experienced unpredictable ups and downs in recent years, much like a roller coaster ride. Meanwhile, housing prices have shot up rapidly, more like a rocket launcher, increasing significantly in a short span of time. Elevated mortgage rates […]

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Credit Sesame discusses the possibility of mortgage rates and home prices stabilizing in late 2024.

Mortgage rates have experienced unpredictable ups and downs in recent years, much like a roller coaster ride. Meanwhile, housing prices have shot up rapidly, more like a rocket launcher, increasing significantly in a short span of time.

Elevated mortgage rates and fast-rising home prices have caused many would-be home buyers to delay their dream of owning a home. So far, waiting for conditions to improve has been frustrating. Waiting for better mortgage rates and lower home prices may be futile. However, recently, rates and prices have shown signs of stabilizing somewhat. Mortgage rates and home prices stabilizing at least gives home buyers a sense of what they’re dealing with and firm financial goals to shoot for.

Mortgage rates have leveled off

Throughout late spring and summer of 2024,  30-year mortgage rates fell by 1.14%. At 6.08%, they seemed on the verge of dropping below the 6% mark for the first time in two years. This fall in rates gave people a reason to hope that buying a home was becoming more affordable.

Then mortgage rates reversed course. From the start of October 2024, rates rose by 0.71% over six straight weeks. Suddenly, they were heading back to above 7% instead of falling below 6%.

However, November 2024 brought an unusually calm stretch for mortgage rates. During the month, 30-year rates alternated rising and falling weeks and changed by less than 0.10%. This doesn’t represent the return to lower rates that home buyers might hope for, but at least they remained reasonably stable.

Are home prices stabilizing?

Mortgage rates aren’t the only challenge home buyers have faced in recent years. Home prices have risen steadily over the past decade, and the pace has accelerated in recent years.

From mid-2020 to mid-2024, the average US home price rose by 48%. This, combined with the sharp rise in mortgage rates, made affording a home much more difficult than it had been just a few years earlier. Worse, with prices rising so rapidly, it seemed impossible for many buyers to save or earn enough to afford a home before prices increased again.

However, home prices have fallen in the two most recent months. The total decline is less than a quarter of one percent—hardly enough to offset the increases of recent years. However, even a pause in the rapid rise of home prices is cautiously good news.

Waiting for rate and price reductions may be in vain

In a dream scenario, would-be home buyers would love to set the calendar back a few years to when mortgage rates and home prices were a lot lower than now. However, waiting for a return of those conditions looks pretty unrealistic.

Mortgage rates fell when it looked like inflation was making steady downward progress towards the Federal Reserve’s goal of 2% a year. Recently, though, that progress has stalled. The year-over-year inflation rate increased slightly in October 2024.

Worse, there is growing concern that new tariffs will fuel inflation even further in 2025. Mortgage rates are very sensitive to inflation. It remains to be seen whether tariffs will push inflation and mortgage rates much higher, but at the very least, they seem likely to make it harder for them to fall.

Knowing what to work towards

Home buyers may not get much of a break from rising home prices or mortgage rates, but they appear to have stabilized recently. Mortgages and home prices stabilizing is helpful when trying to achieve any financial goal.

The relative stability in home prices and mortgage rates gives people a firmer idea of what it will take to afford a house. It may take a little longer at today’s levels than people had hoped. However, more stable prices and mortgage rates at least lets them know what to shoot for.

Improving your own position

Buying a home may take a little longer, but There are things you can actively do to put yourself in a better position to afford a home:

  • Save toward a bigger down payment. A bigger downpayment means you need to borrow less, which can qualify you for a better mortgage rate.
  • Work on your credit score. Raising your credit score is another way to qualify for a better mortgage rate. Over the length of a mortgage loan, anything you can shave off the mortgage rate can add up to a substantial amount of money.
  • Know your target market. Monitor real estate prices in the areas where you’d consider buying. This will help you identify neighborhoods that represent better values and allow you to spot a true bargain when it comes along.

Get ready to be opportunistic

Building savings, improving your credit, and staying informed about the market will better position you to take advantage of opportunities when they arise. Being prepared is key because home prices and mortgage rates can change unexpectedly. It’s impossible to predict exactly where these rates and prices will go, but planning with today’s reality in mind allows you to adapt as conditions evolve. The relative stability observed in recent months offers a clearer path forward, making it easier to navigate the uncertainty.

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News roundup August 24, 2024 https://www.creditsesame.com/blog/headlines/roundup-august-24-2024/ https://www.creditsesame.com/blog/headlines/roundup-august-24-2024/#respond Sat, 24 Aug 2024 12:00:00 +0000 https://www.creditsesame.com/?p=206635 Credit Sesame’s personal finance news roundup August 24, 2024. Stories, news, politics and events impacting personal finance during the past week. Economic indicators declined in July 2024 The Conference Board’s Leading Economic Index (LEI) declined by 0.6% in July. The LEI has fallen by 2.1% over the past six months, slower than the -3.1% change […]

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Credit Sesame’s personal finance news roundup August 24, 2024. Stories, news, politics and events impacting personal finance during the past week.

Economic indicators declined in July 2024

The Conference Board’s Leading Economic Index (LEI) declined by 0.6% in July. The LEI has fallen by 2.1% over the past six months, slower than the -3.1% change over the prior six months. With this slight improvement over the past four months, the LEI has no longer been signaling a recession. Before that, the LEI was at levels generally associated with a coming recession for several months. See details at Conference-Board.org.

Newly-released Fed minutes point to September 2024 rate cut

The recent release of minutes from the last meeting of the Federal Open Market Committee (FOMC) adds to the belief that the FOMC will cut rates at its September meeting. The FOMC is the sub-group of the Federal Reserve that makes interest rate decisions. The new minutes show a growing chorus of Fed officials calling for a rate cut soon. Some even supported a rate cut at the previous meeting. Meanwhile, concern that a premature rate cut could revive inflation seems to be fading. The FOMC’s next meeting takes place on September 17 and 18. See article at Reuters.com.

Credit card delinquencies and balances rose in July 2024

Serious delinquency rates on credit cards rose during July to 2.22%. Payments that are 90 days or more overdue are defined as being seriously delinquent. Serious delinquency rates on auto loans and mortgage rates also rose. In addition to rising delinquency rates, another sign of credit risk is that the average credit card balance rose in July. The average credit card balance per consumer rose from $6,291 to $6,304 in July. Credit card companies are leaning into this risk to some extent, as the average credit line available to consumers rose from $26,906 to $26,986 last month. The increase in credit risk is seen most acutely among customers with less-than-prime credit scores. Over the past year, delinquency rate changes among prime, prime plus and superprime customers have been negligible. However, delinquency rates for near-prime customers (credit scores of 601 to 660) are up by nine basis points over the past year, and delinquency rates for subprime customers (credit scores of 300 to 600) are up by 18 basis points. See details at TransUnion.com.

Existing home sales losing streak ended in July 2024

Existing home sales rose 1.3% in July to a seasonally adjusted annual pace of 3.95 million. Previously, home sales had declined for four straight months. Year-over-year, home sales are down by 2.5%. A recent drop in mortgage rates could help revive home sales. However, this drop in mortgage rates is offset somewhat by a rise in the median home price. The median price for an existing home is now $422,600. That’s 4.2% higher than it was a year ago. See news release at NAR.realtor.

Banks challenge new credit card law in Illinois

A group of banks has sued to challenge a new law in Illinois that prevents credit card companies from charging merchants when customers pay by credit card. Those interchange fees finance the cost of credit card companies processing transactions, customer rewards, and fraud protection. They average about 2% per transaction. The banks bringing the lawsuit claim the new rule violates federal banking regulations. See article at Yahoo.com.

Rising home prices push home equity value to record high

The equity mortgage holders own in their homes has reached a record high of $17.6 trillion. Rising equity has reduced the debt-to-equity ratio of mortgaged homes to 44.1% as of June, down from 44.6% in the first quarter. That’s the third-lowest proportion of debt in the past 20 years. Assuming lenders require homeowners to maintain an equity cushion of 20%, this would give mortgage holders a record potential of $11.5 trillion they could tap into. By that standard, 32 million mortgage holders could tap into at least $100,000 in equity, and 4.6 million could borrow at least $500,000 against home equity. See article at ICEMortgageTechnology.com.

Wall Street growth outpaced the U.S. economy

The total value of U.S. investments has grown to 6 times that of the nation’s Gross Domestic Product (GDP). The value of those investments has been spurred by a 22% gain in the S&P 500 last year, followed by a 16% gain so far this year. This puts today’s ratio of investment values to GDP near the record high of 6.3, reached in June 2021. The lowest ratio was 2.9 times GDP back in the 1980s. See article at Morningstar.com.

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News roundup August 17, 2024 https://www.creditsesame.com/blog/headlines/roundup-august-17-2024/ https://www.creditsesame.com/blog/headlines/roundup-august-17-2024/#respond Sat, 17 Aug 2024 12:00:00 +0000 https://www.creditsesame.com/?p=206231 Credit Sesame’s personal finance news roundup August 17, 2024. Stories, news, politics and events impacting personal finance during the past week. Inflation ticked up but still moderate in July 2024 The Consumer Price Index rose by 0.2% in July. That’s the highest monthly increase since April 2024. Still, if continued, it would represent an annual […]

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Credit Sesame’s personal finance news roundup August 17, 2024. Stories, news, politics and events impacting personal finance during the past week.

Inflation ticked up but still moderate in July 2024

The Consumer Price Index rose by 0.2% in July. That’s the highest monthly increase since April 2024. Still, if continued, it would represent an annual rate increase of just 2.4% rate of increase. That’s less than the 2.9% increase over the past 12 months. Prices for shelter and transportation services experienced the biggest increases in July, each rising by 0.4% during the month. See inflation summary at BLS.gov

Americans now worse off because of the pandemic

Households are now worse off financially than they’d have been if there had been no pandemic. This is based on liquid wealth, adjusted for inflation. Initially, pandemic financial assistance and restrictions on spending helped US households build up a significant cushion of liquid wealth. Since then, though, rapid spending and high inflation have wiped out that cushion. Compared to a projection of real liquid wealth if the pandemic never happened, the top 20% of earners are now 2% worse off. The bottom 80% of earners have lost even more ground and are 13% worse off. See research paper at FRBSF.org.

Credit card customers prefer to get cash back

A JD Power survey of credit card customers found that most prefer cashback cards to other rewards. 58% of credit card customers use cashback cards, compared to 31% who use points or miles-based rewards cards. 11% use cards that offer no form of rewards. Customer attitudes towards credit cards depend on their financial health. Overall customer satisfaction with credit cards rose among customers classified as financially healthy, while it fell among those classified as financially unhealthy. Cardholders who carry debt are less satisfied with their cards than those who do not. See survey findings at JDPower.com.

Mortgage applications rise as rates drop

Following a sharp drop in mortgage rates the previous week, applications for home loans rose by a seasonally adjusted 16.8% last week. Refinancing experienced a powerful surge in popularity. Refinancing applications rose by 35% last week and were 118% higher than the same week a year ago. In contrast, applications for home purchase mortgages rose b 3%, and were actually 8% lower than a year earlier. See details at MBA.org.

Are banks responsible for Zelle fraud?

Zelle, a popular peer-to-peer payment platform, has often been used to defraud consumers. Scammers induce victims to make payments via Zelle based on various fraudulent pretexts. Zelle is owned by a group of seven major US banks. The Consumer Financial Protection Bureau is investigating how responsible those banks are for facilitating these scams. The focus is on whether banks should reimburse money lost, even if the customer authorized the transaction. See article at Yahoo.com.

Consumer spending expectations ease as they struggle to pay bills

The New York Fed’s Survey of Consumer Expectations found that planned spending growth for the year ahead fell by 0.2% to 4.9%. That’s the lowest level of expected spending growth since April of 2021. Still, it is higher than the 3% expected growth in household income. The percentage of consumers who expect to miss a debt payment over the next three months increased to 13.3%. This is the highest level since April of 2020. See details at NewYorkFed.org.

Rate of producer price increases slowed in July 2024

The Producer Price Index was up by a modest 0.1% in July. This represents a slower pace of price increases after June’s 0.2% increase. For the past 12 months, producer prices are up by just 2.2%. In a reversal of the recent trend, producer prices for goods increased in July while producer prices for services decreased. See details at BLS.gov.

Home prices continued to rise in Q2 2024

Most US home prices continued to rise in the second quarter of 2024. Nearly 90% of US metropolitan areas reported price gains during the quarter, with the housing market in Racine, WI, experiencing the fastest gain (19.8%). The median home price in San Jose, CA, the nation’s most expensive market, surpassed $2 million for the first time. The median home price is now $422,100, up 5% from a year ago. However, the pace of home price increases has slowed. See article at NAR.realtor.

Americans very concerned about financial fraud

A new survey found that 90% of Americans are worried about the rise of financial fraud, with 51% calling themselves extremely concerned and 39% calling themselves somewhat concerned. 45% of survey respondents said that they had been victims of financial fraud, with credit card fraud the most common type of this crime. Most respondents feel the development of artificial intelligence will increase both the occurrence and the success rate of financial crime. See article at Yahoo.com.

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News roundup May 11, 2024 https://www.creditsesame.com/blog/headlines/roundup-may-11-2024/ https://www.creditsesame.com/blog/headlines/roundup-may-11-2024/#respond Sat, 11 May 2024 05:00:00 +0000 https://www.creditsesame.com/?p=204736 Credit Sesame’s personal finance news roundup May 11, 2024. Stories, news, politics and events impacting personal finance during the past week. Consumers gloomy about housing affordability The Federal Reserve Bank of New York’s 2024 Survey of Consumer Expectations Housing Survey found that consumers expect housing to continue to get more expensive in the year ahead. […]

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Credit Sesame’s personal finance news roundup May 11, 2024. Stories, news, politics and events impacting personal finance during the past week.

Consumers gloomy about housing affordability

The Federal Reserve Bank of New York’s 2024 Survey of Consumer Expectations Housing Survey found that consumers expect housing to continue to get more expensive in the year ahead. Both prospective buyers and renters expressed concerns about affordability. Survey respondents expect home prices to rise by an average of 5.1% in the year ahead. Perhaps even more ominously, they expect mortgage rates to rise to 8.7% over the next year and 9.7% in three years. As for renters, they expect the average rent to increase by 9.7% over the next year. See news release at NewYorkFed.org.

Paying down debt top financial goal for adults of all ages

A new report by PYMNTS Intelligence found that paying down debt is a leading financial goal for young and old adults 15.2% of Generation Z consumers cite paying down debt as their number one financial goal. This was a higher percentage than any other financial goal, including buying a house or a car. Among Baby Boomers and Seniors, 21.7% identified paying down debt as their top financial goal. This exceeded every other goal except saving for retirement. See article at PYMNTS.com.

Borrowing binge may ease

The most recent Federal Reserve Senior Loan Officer Opinion Survey showed signs that new borrowing may slow for businesses and consumers. Loan officers reported that lending standards had tightened, and demand had weakened for C&I (commercial and industrial) loans and commercial real estate loans. Similar conditions of tougher standards and weaker demand were reported for various consumer credit categories, including home equity lines of credit, credit cards, auto loans, and other non-mortgage consumer loans. See report details at FederalReserve.gov.

Debt growth slows

The Federal Reserve announced that total non-mortgage consumer debt grew at a seasonally adjusted annual pace of just 1.5% in March. That represents a slower pace than the 3.2% annual rate for the first quarter overall. In March, revolving credit grew at a slower pace than non-revolving credit for the first time in 31 months. That’s significant because revolving debt generally carries higher interest rates than non-revolving debt. See data on consumer credit at FederalReserve.gov.

Home price increases mild but widespread

The National Association of Realtors found that 93% of the 221 metropolitan areas it tracks experienced home price increases in the first quarter of 2024. Overall, the national median home price climbed by 5% compared to a year earlier. That brought the national median home price to $389,400. Home price increases have continued despite higher mortgage rates. 30% of metro areas experienced double-digit year-over-year median price increases. The most expensive housing market is the San Jose-Sunnydale-Santa Clara metro area in California, where the median residential property goes for $1,840,000. See news release at NAR.Realtor.

Small business owners optimistic

A TD Bank survey of small business owners found they are even more optimistic than a year ago. Ninety percent have a positive outlook for their business prospects in the year ahead, up from 80 percent a year ago. Ninety-four percent say they have no plans to sell or close their business, and more than half (59%) have plans to expand. On the negative side, more than half (56%) cited high interest rates and inflation as prominent concerns. See article at ABA.com.

Consumers get reprieve from rising mortgage rates

30-year mortgage rates fell last week for the first time since March 2024. 30-year rates dropped by 0.13% to 7.09%. 15-year rates dropped by 0.09% to 6.38%. Before last week, 30-year rates had risen for five straight weeks. Even with the previous week’s decline, 30-year rates are still 0.48% higher than when this year began. See mortgage rate details at FreddieMac.com.

Gen Z adopting credit faster than Millennials

A new TransUnion survey finds that today’s 22 to 24-year-olds are using credit more heavily than their counterparts did a decade ago. 84% of that age group now have a general-purpose credit card, compared to 61% of people in that age group a decade ago. Members of Gen Z are also making heavier use of auto loans than millennials did a decade ago, by a margin of 30% to 25%. Even after adjusting for inflation, today’s young adults carry higher debt balances than the same age group a decade ago. Today’s inflation-adjusted balances on credit cards, auto loans, personal loans, and mortgages are all higher for 22- to 24-year-olds. See details at TransUnion.com.

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News roundup March 2, 2024 https://www.creditsesame.com/blog/headlines/roundup-march-2-2024/ https://www.creditsesame.com/blog/headlines/roundup-march-2-2024/#respond Sat, 02 Mar 2024 05:00:00 +0000 https://www.creditsesame.com/?p=202558 Credit Sesame’s personal finance news roundup March 2, 2024. Stories, news, politics and events impacting personal finance during the past week. 2023’s home price rally faded late in the year S&P Global reported that US home prices rose by 5.5% last year. However, prices declined in both November and December. While this may be partially […]

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Credit Sesame’s personal finance news roundup March 2, 2024. Stories, news, politics and events impacting personal finance during the past week.

  1. 2023’s home price rally faded late in the year
  2. Household wealth has gone through wide swings but little net change in recent years
  3. Consumer confidence soured in February 2024
  4. Consumer credit conditions seem to be heading in two different directions
  5. Estimate of GDP growth in Q4 still strong despite downward revision
  6. Key inflation measure confirms upturn in pace of price hikes
  7. Mortgage rates continue to climb

2023’s home price rally faded late in the year

S&P Global reported that US home prices rose by 5.5% last year. However, prices declined in both November and December. While this may be partially due to seasonal effects, last year’s mortgage rate rise is also likely to have had an impact. 17 out of 20 major metro markets saw home price declines in December. See analysis at SPGlobal.com.

Household wealth has gone through wide swings but little net change in recent years

A new study by the Federal Reserve Board of San Francisco found that household wealth is on roughly the same path it was on before the pandemic. However, between the start of the pandemic and now, household wealth has seen a dramatic rise and fall. Household wealth grew rapidly in the years 2020 and 2021. Over those two years, inflation-adjusted household wealth grew by 20%, mainly because of reduced personal spending due to pandemic restrictions and generous government assistance. This reversed sharply in 2022 and 2023, due largely to inflation and bear markets for financial assets. This rise and fall has left household wealth close to where it would have been at the pre-pandemic pace. See summary at FRBSF.org.

Consumer confidence soured in February 2024

The Conference Board reported that its Consumer Confidence Index fell in February. This was the first drop in the index since October. In addition, January’s original estimate was revised downward. Consumers reported less confidence about current economic conditions and the near-term outlook for the economy’s future. February’s decline put the component of the Consumer Confidence Index that measures the near-term outlook below a level traditionally associated with recessions. See news release at Conference-Board.org.

Consumer credit conditions seem to be heading in two different directions

The latest VantageScore CreditGauge report showed that newly delinquent consumer credit accounts rose to their highest level in nearly four years. Delinquency rates rose across all credit tiers and all products covered by the report (auto loans, credit cards, mortgages, and personal loans). However, the experience was not universal. While 0.3% of prime credit customers dropped into the subprime tier in January, another 0.7% rose from the prime tier to the superprime tier. While people with lower credit scores fell further behind on their payments over the past year, people with higher scores generally continued to keep up with theirs. See article PRNewswire.com.

Estimate of GDP growth in Q4 still strong despite downward revision

The Bureau of Economic Analysis’ second estimate of Gross Domestic Product (GDP) for the final quarter of 2023 showed that the economy grew at an annual pace of 3.2% after adjustment for inflation. This was slightly below the original estimate of 3.3% but still shows the economy was solidly expanding as the year ended. For the full year, GDP grew by an inflation-adjusted 2.5%, beating the 1.9% growth of the previous year. See details at BEA.gov.

Key inflation measure confirms upturn in pace of price hikes

The Personal Consumption Expenditures (PCE) price index rose 0.3% in January. That was the biggest increase since September 2023 and matched the rise in the Consumer Price Index (CPI) for January 2024. Core PCE inflation (which excludes food and energy) rose by 0.4%, which also matched the CPI core reading for January. A 0.3% increase would amount to an annual inflation rate of nearly 3.7% if continued over an entire year. This would be well above the Federal Reserve’s target of 2.0% and represents an upturn from the 2.4% increase in the PCE price index over the past 12 months. The PCE price index is especially significant because it is the measure of inflation the Federal Reserve primarily considers in making interest rate decisions. See details at BEA.gov.

Mortgage rates continue to climb

30-year mortgage rates rose for the fourth week in a row. Last week’s increase was by four basis points, bringing 30-year rates to 6.94%. That’s the closest they’ve been to the 7% mark since mid-December. In contrast to 30-year rates, 15-year rates fell last week. 15-year rates fell by three basis points to 6.26%. See rate information at FreddieMac.com.

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News roundup December 30, 2023 https://www.creditsesame.com/blog/headlines/roundup-december-30-2023/ https://www.creditsesame.com/blog/headlines/roundup-december-30-2023/#respond Sat, 30 Dec 2023 05:00:00 +0000 https://www.creditsesame.com/?p=201548 Credit Sesame’s personal finance news roundup December 30, 2023. Stories, news, politics and events impacting personal finance during the past week. 1. New home sales drop to lowest level of 2023 In November, sales of newly constructed homes fell to their lowest level of 2023. Sales dropped by 12.2% during the month, down to a […]

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Credit Sesame’s personal finance news roundup December 30, 2023. Stories, news, politics and events impacting personal finance during the past week.

  1. New home sales drop to lowest level of 2023
  2. Holiday sales growth appears to have been sluggish
  3. Latest figures show job markets vary widely from state to state
  4. Mortgage rates continue downward trend
  5. Pending home sales remain at record lows
  6. U.S. home prices reached new highs in October
  7. Dollar slides in response to falling interest rates
  8. Stocks end 2023 on a roll

1. New home sales drop to lowest level of 2023

In November, sales of newly constructed homes fell to their lowest level of 2023. Sales dropped by 12.2% during the month, down to a seasonally adjusted annual pace of 590,000 units. Monthly sales rose in the Northeast and Midwest but fell in the South and West. One optimistic note for would-be home buyers is that the average price of a new home fell in November. The average home sales price during the month was $434,700, a 6% decline from a year earlier. See article at Yahoo.com.

2. Holiday sales growth appears to have been sluggish

An early estimate of consumer spending during the 2023 holiday shopping season showed an increase of just 3.1% over the past year. That estimate, from the Mastercard SpendingPulse report, exactly matches the inflation rate over the same period. That means Americans bought pretty much the same amount as they did a year earlier after accounting for higher prices. Online sales growth outpaced in-person sales growth. Online holiday spending from November 1 through December 24 was up 6.3%, compared to just 2.2% for in-store shopping. However, in-store shopping still represents a much bigger portion of overall retail spending. See article at Yahoo.com.

3. Latest figures show job markets vary widely from state to state

While the national unemployment rate remains low at 3.7%, conditions are significantly worse in some states than others. On the positive side of the ledger, Maryland had the lowest jobless rate in the nation as of November, at 1.8%. North Dakota wasn’t far behind, at 1.9%. At the other extreme, Nevada had the nation’s highest unemployment rate, 5.4%. Over the past year, New Jersey had the worst increase in unemployment. Its unemployment rate jumped by 1.4% to 4.7%. Maryland achieved the nation’s lowest jobless rate by showing the biggest percentage decrease in unemployment over the past year. Its unemployment rate fell by 1.3% over the past twelve months. See report at BLS.gov.

4. Mortgage rates continue downward trend

30-year mortgage rates declined for the ninth week in a row. Rates fell by 0.06% last week to 6.61%. In all, rates have fallen by 1.18% over the past two months. 30-year rates are at their lowest level since the end of May but are still 0.19% higher than when the year began. Evidence that inflation eased in October and November has been the key to the recent decline in mortgage rates. See latest mortgage rate data at FreddieMac.com.

5. Pending home sales remain at record lows

Despite a sustained drop in mortgage rates, pending home sales volume was unchanged in November 2023. This leaves pending home sales at the lowest level since the National Association of Realtors began tracking them in 2001. The lack of improvement was a disappointment compared to the 0.9% increase in sales expected by economists. Pending home sales declined over the past year in all four regions of the United States and are down by 5.2%. See article at Yahoo.com.

6. U.S. home prices reached new highs in October

Despite sluggish sales volume, the latest figures on home prices show that they reached a record high in October 2023. After seasonal adjustment, the S&P CoreLogic Case-Shiller National Home Price Index was up 0.6% in October. That was the ninth consecutive monthly increase for home prices. Over the past 12 months, national home prices have risen by 4.8%. Detroit had the fastest annual price growth rate, at 8.1%. San Diego and New York City followed, with annual gains of 7.2% and 7.1%, respectively. See report at SPGlobal.com.

7. Dollar slides in response to falling interest rates

The U.S. dollar entered the last trading day of the year, down by about 3% in 2023. Though mild, that decline would mark the worst performance for the dollar against international currencies since 2020. The dollar’s weakness is a function of widely-anticipated interest rate cuts in 2024. Among other things, currencies respond to the interest rates investors expect to be able to earn in that currency. See article at Yahoo.com.

8. Stocks end 2023 on a roll

Bouncing back from a poor 2022, stocks entered the final day of trading in 2023 amid a strong rally. The S&P 500 was on track for its ninth straight week of gains. If it achieves that, it would be the S&P’s longest winning streak since 2004. The tech-heavy Nasdaq index was up by more than 40% for the year. See article at Yahoo.com.

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The bar remains high for typical homebuyers https://www.creditsesame.com/blog/mortgage/the-bar-remains-high-for-typical-homebuyers/ https://www.creditsesame.com/blog/mortgage/the-bar-remains-high-for-typical-homebuyers/#respond Wed, 29 Nov 2023 05:00:00 +0000 https://www.creditsesame.com/?p=196697 Credit Sesame on the challenges faced by typical homebuyers. Several trends in the housing market point to slower activity. Is this the break would-be home buyers have been looking for? Previously, purchase demand had been so hot and heavy that prices soared. With that demand finally slowing down, does that mean home prices are becoming […]

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Credit Sesame on the challenges faced by typical homebuyers.

Several trends in the housing market point to slower activity. Is this the break would-be home buyers have been looking for?

Previously, purchase demand had been so hot and heavy that prices soared. With that demand finally slowing down, does that mean home prices are becoming more reasonable?

Unfortunately, the supply-and-demand relationship in the housing market isn’t that simple. Bargains remain hard to come by, so buyers need to pick their spots.

Slowing demand hasn’t brought prices down

There are clear signs that the housing market has cooled off recently. However, this has yet to have a meaningful impact on housing affordability for typical homebuyers.

Signs of slowing demand

The Mortgage Bankers Association (MBA) reported that applications for home purchase loans as of the end of September were running 27% below the volume a year earlier. The slower mortgage activity mirrors the recent pattern in completed home sales. 

According to the National Association of Realtors (NAR), home sales stayed at an annual pace of over 6 million units from late 2020 through early 2022. They’ve since fallen off sharply.

After peaking at over 6.5 million per year, the pace of home sales has since fallen to just over 4 million. That’s a decline of around 38%. 

Little impact on affordability

So far, the impact of slowing demand on home prices has been less dramatic than you might think. In fact, home prices have risen in recent months despite falling volume.

Figures from the NAR show that the median price for sales of existing homes rose sharply during the pandemic, peaking at $413,800 in mid-2022. After falling for a while late last year, they’ve since rallied. The median sale price for an existing home is now less than 2% below the peak and 48% higher than at the end of 2019. In other words, the steep drop in demand has done little to cool off home prices. 

For most buyers, prices are only part of the problem. 30-year mortgage rates are now about 4.5% more than at the end of 2020. 

Mortgage rates were starting to ease late last year and early in 2023. Unfortunately, that has reversed in recent months.

30-year mortgage rates have been climbing since the end of February. They reached 7.19% in late September – their highest level in over two decades.

In short, home prices rose sharply and remain relatively close to their peak. Mortgage rates have soared and show little sign of returning to their former levels. 

Of course, most home buyers have to borrow to afford a home. So, the combination of sharply higher home values and mortgage rates leaves many typical buyers priced out of the market. 

Other supply and demand factors are keeping prices high

Though there are signs of less demand for housing this year, some other factors may be blunting the impact of that slowing demand on prices. 

In recent years, ordinary home buyers have had to compete with a flood of money from professional investors buying residential properties. NAR figures show this represents about 16% of sales – a significant incremental demand above and beyond normal home-buying activity.

Beyond this additional source of demand, there’s the fact that the supply of houses remains somewhat limited. Higher mortgage rates have made many existing homeowners reluctant to sell because that would mean effectively trading their current low-interest mortgage for one at a much higher rate if they buy a new home.

As a result, even with sales volume slowing, the supply of homes for sale remains tight. That tight supply helps keep prices elevated and recently has been pushing them even higher. 

Tighter credit standards could add an obstacle

Besides higher prices and interest rates, what else could go wrong for ordinary home buyers?

Tighter lending standards are another potential obstacle. Consumer debt levels are at an all-time high. Late payments and defaults are rising.

Understandably, those conditions make lenders wary. Many have tightened their lending standards. This year’s banking problems only add to this atmosphere of caution. 

This means loans may become more expensive and more challenging to secure for all but the most qualified buyers. 

Meeting the challenge

What is a would-be home buyer to do in this situation? It’s a challenging market, but there are some things you can do to make the best of it:

  • Save up for a bigger down payment. You may benefit from waiting for mortgage rates to come down anyway. So, use the time to build a bigger down payment. This will help you qualify for a loan and lower your borrowing costs.
  • Work on your credit. While waiting for the right opportunity, do what you can to improve your credit score. 
  • Remember that conditions vary greatly by region. For example, sales generally have declined more in the Northeast than other regions while generally held up better in the South. That means there may be more bargains in some markets than in others.
  • Keep a close eye on the market. Opportunities can come up quickly and unexpectedly. Don’t rush into anything; be prepared to strike when the right opportunity comes.

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Disclaimer: The article and information provided here is for informational purposes only and is not intended as a substitute for professional advice.

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Personal finance weekly news roundup July 29, 2023 https://www.creditsesame.com/blog/headlines/news-roundup-july-29-2023/ https://www.creditsesame.com/blog/headlines/news-roundup-july-29-2023/#respond Sat, 29 Jul 2023 17:00:00 +0000 https://www.creditsesame.com/?p=197378 Credit Sesame’s personal finance weekly news roundup July 29, 2023. Stories, news, politics and events impacting the personal finance sector during the last week. 1. Fed raises interest rates The Federal Open Market Committee (FOMC) announced an interest rate rise of 0.25%. This puts the Fed funds rate target range at 5.25% to 5.50%. The […]

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Credit Sesame’s personal finance weekly news roundup July 29, 2023. Stories, news, politics and events impacting the personal finance sector during the last week.

  1. Fed raises interest rates
  2. IMF issues mixed forecast for global economy
  3. UPS close to averting strike
  4. Visa rides consumer strength to continued growth
  5. Mortgage applications continue to slow
  6. Consumer confidence rises to highest level in two years
  7. Median home prices rise despite falling sales
  8. GDP growth eases upward in 2nd quarter
  9. Key inflation measure eases down

1. Fed raises interest rates

The Federal Open Market Committee (FOMC) announced an interest rate rise of 0.25%. This puts the Fed funds rate target range at 5.25% to 5.50%. The rate increase was widely expected after the Fed held off on raising rates at its previous meeting. In June, the Fed released economic projections suggesting two 0.25% increases between then and the end of the year. Now that the Fed has made one such increase, the Fed seems likely to make one additional 0.25% over the three remaining FOMC meetings this year. The Fed is also winding down its inventory of government and mortgage-backed securities. That has the effect of boosting long-term interest rates. See statement at FederalReserve.gov.

2. IMF issues mixed forecast for global economy

The International Monetary Fund (IMF) has issued an updated World Economic Outlook report. This report represents a mixed bag of news for the global economy. On the plus side, the IMF raised its forecast for global economic growth. They now expect global growth of 3% for 2023, up by 0.2% from the previous forecast. However, that’s still below last year’s pace of 3.5% and the historical growth rate of 3.8%. The outlook for the US economy is even more sluggish, with the IMF forecasting growth of 1.8% this year and 1.0% next year. However, the inflation outlook for the US is better than for the rest of the world. The IMF is forecasting a global inflation rate of 6.8% this year. That’s a high inflation rate but an improvement over last year’s 8.7% global inflation. In the US, though, inflation has already fallen to 3.0%. See details at Yahoo.com.

3. UPS close to averting strike

UPS reached a tentative deal with the Teamsters that would allow the delivery service to avoid a threatened strike as of August 1. The agreement would prevent a massive economic disruption that could reignite inflationary forces. However, the pact involves sizeable pay increases for full-time and part-time workers. That could result in rate increases that would add some inflationary pressure. The deal needs to be finalized through ratification by rank-and-file workers. See article at Yahoo.com.

4. Visa rides consumer strength to continued growth

Visa enjoyed strong payments growth of 9% over the past year. Most of that volume came from overseas, as U.S. growth was just 4.9%. The company attributes the growth to both continued strength on the part of consumers plus the continued migration of payments from cash to credit cards. See article at Yahoo.com.

5. Mortgage applications continue to slow

Mortgage applications responded to a recent rise in mortgage rates by posting another decline last week. Applications were down by 1.8% for the week on a seasonally-adjusted basis. Over the past year, purchase applications have fallen by 23%. Refinance applications have been hit even harder, declining by 30% year-over-year. See news release at MBA.org.

6. Consumer confidence rises to highest level in two years

The Conference Board’s Consumer Confidence Index rose 6.3% in July to reach its highest level since July 2021. Consumer perceptions of current conditions rose by 3%, while expectations for the months ahead did even better. The Expectations Index rose by 10.4% to 88.3. This is clearly above 80, which has traditionally signaled a recession. See news release at Conference-Board.org.

7. Median home prices rise despite falling sales

The housing market has continued to show a strange dynamic in which prices rise while sales volume is decreasing. Existing home prices fell by 3.3% in June and are off by 18.9% from a year ago. However, the median home price rose last month to $410,200. While this is lower than prices were a year ago, it is the second-highest level ever. Prices have been recovering even as volume remains weak. The reason is tight inventory, with limited properties available for sale. See news release at NAR.realtor.

8. GDP growth eases upward in 2nd quarter

The economy grew at a slightly higher rate in the 2nd quarter of 2023. The Bureau of Economic Analysis reported that GDP increased at a 2.4% inflation-adjusted annual rate during the quarter. This is an improvement over the first quarter’s 2.0% growth rate. The economy has now grown for four quarters in a row. The 2nd quarter figure is just a preliminary estimate, with routine adjustments to come in the months ahead. See details at BEA.gov.

9. Key inflation measure eases down

The Personal Consumption Expenditures Price Index is the Federal Reserve’s inflation measure to monitor price changes in the economy. This index increased by 3.0% over the past year, down from 3.8% for the year ending in May. Core inflation (excluding food and energy) remains more stubborn, at 4.1% over the past year. However, this is down from 4.6% for the year ending in May 2023. In June, prices of goods decreased by 0.1%, while services were up by 0.2%. See details at BEA.gov.

Weekly News Headlines from Credit Sesame

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Is the slump in home prices good or bad news? https://www.creditsesame.com/blog/mortgage/is-the-slump-in-home-prices-good-or-bad-news/ https://www.creditsesame.com/blog/mortgage/is-the-slump-in-home-prices-good-or-bad-news/#respond Tue, 21 Mar 2023 00:00:00 +0000 https://www.creditsesame.com/?p=171756 Credit Sesame discusses the slump in home prices and whether this is good for buyers. All markets have buyers and sellers. Trends that favor one side usually hurt the other. However, the housing market is a little more complicated than that. A recent slump in home prices might seem like good news for buyers and […]

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Credit Sesame discusses the slump in home prices and whether this is good for buyers.

All markets have buyers and sellers. Trends that favor one side usually hurt the other. However, the housing market is a little more complicated than that.

A recent slump in home prices might seem like good news for buyers and bad news for sellers. However, it’s not as helpful to buyers as one might think under today’s conditions. Also, it may not be as bad as one may imagine for sellers, depending on their reasons for selling.

Meanwhile, there’s a large group that is somewhere in the middle. Even homeowners without immediate plans to sell are impacted by changing home prices. The effect varies depending on the situation of the homeowner.

Slump in home prices since June 2022

A leading measure of home prices is the S&P Corelogic Case-Shiller National Home Price Index. This measures home prices nationally.

The S&P National Home Price Index rose by 5.8% in 2022. There is nothing unusual about that. The index has now risen for 11 straight years. However, the second half of 2022 represented something of a turning point.

Home prices peaked in June of 2022 and then began falling. They have fallen for six straight months. The last time that happened was in late 2011 and early 2012.

Since June 2022, home prices have fallen by 4.4%. Making financial decisions often depends less on where markets are today than on where they’re heading. The slide in home prices seems likely to continue because mortgage rates are up sharply. As this trend unfolds, it’s worth taking a closer look at how it affects home buyers, long-term homeowners, and people looking to sell their homes.

Buyers: Good news, but not a lot of help

So far, home prices are only down slightly, but after more than a decade of rising prices, potential buyers may welcome any break. However, the circumstances under which home prices are falling make this trend of limited use to home buyers. The housing market is slumping because mortgage rates are higher. This means anyone who has to borrow to buy a home still faces rising costs. The following chart shows how rising mortgage rates can counter the benefit of falling home prices:

slump in home prices

Credit Sesame examined data on home prices from S&P Global and mortgage rates from Freddie Mac. It used a Zillow calculator to calculate mortgage payments taking into account home price changes and mortgage rate changes.

As home prices and mortgage rates rose in the first half of the year, the monthly home buying cost increased steadily. Even after home prices started to fall in the second half of the year, the monthly mortgage cost continued to rise.

In the last couple of months of the year, the monthly cost dipped a bit, and that was because mortgage rates fell a little. By the end of the year, the average monthly mortgage cost was higher than it had been at mid-year when home prices started to fall.

Even the benefit of the late-2022 dip in mortgage rates proved to be short-lived. In recent weeks mortgage rates have resumed an upward trend, and are now higher than they were at the end of 2022.

So, although home buyers seem to be beneficiaries of falling home prices, that benefit has been negated by higher interest rates.

Excepting the few buyers who don’t have to borrow to buy a home, there has been no real relief in the cost of buying a home.

Homeowners: Good news for some

It may seem obvious that people who own a home would root for higher home prices. In many cases, their homes are their most valuable asset, so any rise in home prices adds to their net worth.

However, the financial impact of home ownership is more complicated than that. If you plan to remain in your home for the foreseeable future, its market value matters only if you borrow against it. In that case, the boost to the home equity you get from rising prices increases your borrowing power.

If you’re not planning to borrow or sell, rising prices are of little benefit. In fact, if you pay real estate taxes, one thing you don’t want is to live in a neighborhood where prices are rising quickly. This may mean you must pay a bigger share of local property taxes.

Sellers: It depends on why they’re selling

This is where rising home prices get really tricky. In theory, rising prices benefit sellers. In practice, it depends on why you’re selling.

People who are selling to relocate or upgrade their homes just have to turn around and buy another property. This can neutralize the impact of rising prices or even hurt someone who is both selling and buying.

Rising prices have a greater dollar impact on more expensive properties. So, anyone upgrading or moving to a more expensive market loses more than they gain.

Only sellers who are downsizing are clear beneficiaries of higher home prices.

Which will crack first: Home prices or interest rates?

The impact of higher home prices is complex, with winners and losers. One thing that unites buyers and sellers is that higher interest rates are bad for both. So far in 2023 higher interest rates prevail.

There is often an inverse relationship between home prices and interest rates: when one rises, the other falls. An increase in mortgage interest rates counters a slump in home prices.

Recent months suggest that home prices have started to crack before interest rates. Home prices are falling while interest rates are rising again. Until there is some lasting relief from inflation, that will likely continue.

The sweet spot for someone looking to buy might be when mortgage rates start dropping by a meaningful amount. There might be a short time as soon as that happens when a buyer could benefit from falling mortgage rates before home prices have a chance to rise again.

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Personal finance weekly news roundup March 4, 2023 https://www.creditsesame.com/blog/mortgage/news-roundup-march-4-2023/ https://www.creditsesame.com/blog/mortgage/news-roundup-march-4-2023/#respond Sat, 04 Mar 2023 13:00:00 +0000 https://www.creditsesame.com/?p=171753 Credit Sesame’s personal finance weekly news roundup for March 4, 2023. Stories, news, politics and events impacting the personal finance sector during the last week. 1. Key inflation measure heated up in January The Personal Consumption Expenditures (PCE) Price Index rose by 0.6% in January. This was the biggest monthly increase in the PCE Price […]

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Credit Sesame’s personal finance weekly news roundup for March 4, 2023. Stories, news, politics and events impacting the personal finance sector during the last week.

  1. Key inflation measure heated up in January
  2. Pending home sales tick up in January
  3. Money lost to scams up 30% last year
  4. Chinese manufacturing rebounds from COVID shutdowns
  5. Purchase mortgage applications dip to 28-year low
  6. Consumer confidence has been fading so far in 2023
  7. CFPB spotlights how fees erode the value of public assistance
  8. Mortgage rates climb for a fourth straight week
  9. Home prices continue to slide

1. Key inflation measure heated up in January

The Personal Consumption Expenditures (PCE) Price Index rose by 0.6% in January. This was the biggest monthly increase in the PCE Price Index since June of last year. Projected over the course of a full year, this would come to a 7.4% annual increase. That would be a step up in inflation after the PCE Price Index rose by 5.7% last year. The PCE Price Index is especially significant because it is the Federal Reserve’s preferred measure of inflation. Stocks plunged on the news, as a resurgence of inflation could mean more interest rate hikes. See full release at BEA.gov

2. Pending home sales tick up in January

Sales of existing homes had a better month than expected in January, but are still way down from a year ago. The index of existing home sales from the National Association of Realtors rose by 8.1% in January. That was the second consecutive monthly increase, but existing home sales are still down by nearly 24% from a year earlier. After a sharp increase in mortgage rates through most of last year, home sales were helped by a mild decline in rates from November through January. However, that improvement may be short-lived as rates turned back upward in February. See article at Yahoo.com

3. Money lost to scams up 30% last year

New data from the Federal Trade Commission shows that nearly $8.8 billion dollars were lost to financial fraud last year. That’s a 30% increase over 2021’s losses. Imposter scams were the most commonly-occurring forms of personal finance fraud, while investment scams incurred the highest losses. Older Americans suffered the highest median losses in cases of financial fraud. See article at AARP.org

4. Chinese manufacturing rebounds from COVID shutdowns

Official Chinese statistics reported the country’s fastest rate of manufacturing growth in more than 10 years. The rapid growth was spurred by the country reopening normal activity after imposing strict anti-COVID measures until recently. The pick-up in capacity may be good for global economic growth, though it may add to inflation pressures, especially for raw materials. See article at Reuters.com

5. Purchase mortgage applications dip to 28-year low

Mortgage applications for home purchases fell by a seasonally-adjusted 6% last week, and are now 44% lower than they were a year ago. This marks the lowest purchase mortgage applications have been in 28 years. Refinancing activity has been hit even harder by the higher mortgage rate environment. Refinance applications are now 74% lower than they were a year earlier. See article at MBA.org

6. Consumer confidence has been fading so far in 2023

The Conference Board’s Consumer Confidence Index fell for the second straight month in February. While consumers’ view of current conditions actually improved slightly during the month, their outlook for the months ahead fell sharply. The Expectations Index is now at 69.7, and when that index is below 80 it often signals a recession within the next year. The Expectations Index has now been in that danger zone for 11 of the past 12 months. See release at Conference-Board.org

7. CFPB spotlights how fees erode the value of public assistance

Certain government financial benefits to needy individuals are increasingly being issued via prepaid cards. The Consumer Financial Protection Bureau (CFPB) has expressed concern that the companies that administer those cards are charging excessive fees. These fees reduce the value of the benefits individuals actually receive. For example, in 2020 prepaid card administrators charged a total of $1.3 billion in transaction fees on public benefits. In some cases, people can avoid these fees by having their benefits directly deposited in a bank account rather than issued via a prepaid card. The CFPB has announced its intention to look into abusive fee practices by prepaid card issuers. See news release at ConsumerFinance.gov

8. Mortgage rates climb for a fourth straight week

After beginning the year in  a mild downtrend amid optimism about inflation easing, over the past month mortgage rates have reflected a growing consensus that inflation will prove to be stubborn. Both 30-year and 15-year mortgage rates have now risen for four straight weeks. 30-year rates are now up to 6.65% after bottoming out at 6.09% at the beginning of February. See update at FreddieMac.com.

9. Home prices continue to slide

The S&P CoreLogic Case-Shiller National Home Price Index declined for the sixth consecutive month in December. Higher mortgage rates were cited as a key factor holding back the housing market. Home prices declined by 0.8%, and are now 4.4% lower than the peak they reached in June. Even so, despite the recent slump, housing prices are now far from cheap. They remain 5.8% higher than they were a year earlier. Also, it’s important to note that housing conditions vary greatly from market to market. Home price changes for 2022 ranged from a high of 15.9% in Miami to a low of -4.2% in San Francisco. See full release at SPGlobal.com.

Weekly News Headlines from Credit Sesame

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