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New vs. Used
By Jeff Walton & Kelly Guest
Kelly Guest
September 02, 2024
September 2, 2024
Home buyers went for the shiny objects in July: New home sales were up 5.6% over the 7-23 forecast and 10.6% above June's revised rate. Pending sales of existing homes were pitiful however, NAR's Pending Home Sales Index fell to the lowest level since they began keeping track in 2001.
Multiple real estate commission lawsuits are still in play, so why wouldn't the DOJ pile on? The Biden justice department changed its mind about going after the National Association of Realtors after the previous administration closed the investigation in light of the settlement that led to enactment of last month's practice changes. NAR wants its day in the Supreme Court.
HousingWire reported that partners at firms involved in the commission litigation are earning up to $2,200 per hour, associates are in the $600 range, and the paralegals are going for around $300. With that kind of coin - combined with an appeals court ruling that "attorneys’ fees of 25% to 36% of the total settlement amount are appropriate for class-action suits,"- we'll see how many more angles and cases emerge.
OH - and as if the real estate sector isn't already having enough fun two weeks after being turned on its ear with practice changes, the U.S. Treasury Department wants to make sure it's on the lookout for money laundering, publishing two rules that extend anti-money laundering regulations to real estate agents and investment advisers. Good times.
CHATTER
READY FOR RATE CUTS? PCE came in at +2.5% y-o-y in July, same as June; annualized core PCE inflation has held steady or fallen for each of the past 15 months.
BOLSTERING BROKERS: UWM & Willow Canyon Advisors behind Polygon report (using most recently-available HMDA data) that found that consumers save an average of $10,662 over the life of the loan when working with an independent mortgage broker as opposed to a nonbank retail lender. The study also found that VA borrowers using IMBs saved average of $13,432 per loan.
GIVE 'EM A BREAK: Rocket Mortgage Offers 2-1 Buydown Program
Rocket announced, "Welcome Home RateBreak," a lender-paid temporary buydown for qualified borrowers who earn equal or less than 80% of the area median income (AMI). Borrowers who go to Rocket Mortgage or through a Rocket TPO affiliate may see their rate reduced by two percentage points in the first year, then one percentage point in the second year before returning to the note rate in the third year and until the mortgage is paid off.
IT'S ALL ABOUT RATES & REP: Corporate Insight Survey
The mortgage interest rate and the firm's reputation were the top two considerations in CI's July 2024 Mortgage Origination Study, followed by prior relationship, reasonable communication, and incentives.
BATTLE FOR #2 IS UGLY: HW updates Move v. Costar
In addition to squabbling over whether Homes.com or Realtor.com holds the number two spot behind Zillow, there’s a lawsuit between the two real estate platforms alleging unauthorized document access that a Move employee tapped on his way over to Costar. One moral of this story appears to be that it's probably not a good idea to lay people off and allow them to work and access computers for two more days.
14 PAGES TO PUSH BACK: Federal Home Loan Banks tell FHFA increasing their investment threshold won't solve housing issues. Presidents of the 11 FHL banks explained their resistance to the FHFA's suggested increase of their annual affordable housing initiative investment from 15 to 20% in their July comment letter.
NEWDAY, NEW SLAP: CFPB orders New Day USA to pay $2.5M penalty to victims' relief fund, claiming, “NewDay USA baited veterans and military families into cash-out refinance mortgages by hiding the true costs of these loans,” according to CFPB Director Rohit Chopra. The CFPB previously took action against New Day Financial in 2015 for paying illegal kickbacks and deceiving borrowers about a veterans’ organization’s endorsement of NewDay USA products.
THIS IS RICH - AND UNSETTLING: Lawyer finds buyer agency agreements "incomprehensible." University of Buffalo law professor Tanya Monestier prepared a report on the documents being released by MLSs for use to comply with NAR practice changes after working with the California Association of Realtors on their forms earlier this year, in part saying, “You should not need to hire a lawyer to understand a listing agreement or buyer representation agreement." Further snippets reported by HousingWire include this: “By and large, they are all very complicated and will not be understood by the average buyer and seller. Many of these contain terms that would come as a surprise to a buyer or seller, and terms that signal how [R]ealtors plan to circumvent the NAR Settlement.”
MOVING & SHAKING
NFM LENDING taps Rick Roque to lead NFM’s retail growth strategy as Corporate VP of Retail.
CORNERSTONE CAPITAL BANK named Paul Woo as new Chief Financial Officer.
RE/MAX, C21 & ZILLOW ALUM Nick Bailey joined consulting and analytics firm T3 Sixty as Chief Real Estate Officer.
MARKET/INDUSTRY
BODNAR'S BULLETS: A laborious week ahead…
In this week’s Master the Markets, Bill Bodnar notes that inflation met expectations and the bond market shrugged it off.
Fed Chair Powell does NOT want to see further cooling in labor market; we'll find out Friday if unemployment numbers behave or not; but ee'll get some clues Tuesday in the Tuesday's JOLTS report…the key is in the hires and quits.
The market is showing uncertainty leading up to September's Fed meeting.
MORTGAGE RATES CONTINUE TO DROP: Freddie 8-29-24
Mortgage rates fell again this week due to expectations of a Fed rate cut. Rates are expected to continue their decline and while potential homebuyers are watching closely, a rebound in purchase activity remains elusive until further declines are seen.
MORTGAGE APPS TICKED UP .5%: MBA
“Mortgage rates declined for the fourth consecutive week, with the 30-year fixed rate at 6.44%, the lowest since April 2023. Rates have now come down more than 80 basis points from a year ago. Mortgage applications were slightly higher, driven by marginally stronger purchase activity. Refinance applications were essentially unchanged but are still 85% higher than last year as borrowers continue to act – particularly FHA and VA borrowers. As observed in recent weeks, despite lower rates, purchase applications have not moved much. Prospective homebuyers are staying patient now that rates are moving lower and for-sale inventory has started to increase.” - Joel Kan, MBA’s Vice President and Deputy Chief Economist.
AFFORDABILITY INCREASES - MBA:
Homebuyer affordability improved in July, with the national median payment applied for by purchase applicants decreasing to $2,140 from $2,167 in June. This is according to the Mortgage Bankers Association's (MBA) Purchase Applications Payment Index (PAPI), which measures how new monthly mortgage payments vary across time – relative to income
LENDING LANDSCAPE Q224: ATTOM DATA’s Q224 Residential Property Originations Report
Residential 1-4 unit lending was up 23.2% from Q1 to Q224
Residential lending activity down 1.6% from the Q223 and 61.2% from a high point hit in 2021.
Purchase-loan activity jumped 32.7% quarterly, to about 783,000, refinance deals rose by 10.3%, to about 546,000, and home-equity credit lines shot up 26.5%, to about 286,000.
PRICE PERSPECTIVES
HOME PRICES UP 5.7% BETWEEN Q223 & Q224: FHFA
House prices were up 0.9% compared to the first quarter of 2024. FHFA’s seasonally adjusted monthly index for June was down 0.1% from May.
JUNE HOME PRICE GAINS .05% BELOW MAY: S&P CoreLogic Case-Shiller
Their U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 5.4% annual gain for June, down from a 5.9% annual gain in the previous month. The 10-City Composite saw an annual increase of 7.4%, down from a 7.8% annual increase in the previous month.
NEW HOME SALES UP: US Census Bureau/HUD – July Report
Sales of new single-family houses in July 2024 were at a seasonally adjusted annual rate of 739,000.
This is 10.6% above the revised June rate of 668,000 and is 5.6% above the July ‘23 estimate of 700,000.
The median sales price of new houses sold in July 2024 was $429,800. The average sales price was $514,800.
PENDING DOOM? NAR's PHSI
Pending home sales fell 5.5% in July.
Month over month, contract signings declined in all four U.S. regions.
The Pending Home Sales Index slipped to 70.2 in July, the lowest reading since the index began tracking in 2001.
Y-O-Y, pending transactions were down 8.5%. An index of 100 is equal to the level of contract activity in 2001.
BETTER DAYS AHEAD: Commercial/Multifamily lending is predicted to jump 26% y-o-y in 2024 according to MBA, who also predicts that multifamily alone will jump 21% after plummeting 49% between '22 and '23.
DELINQUENCY RATES ROSE ACROSS ALL CREDIT TIERS EXCEPT SUPERPRIME: VantageScore
Delinquency rates rose y-o-y in July ’24 across all Days Past Due (DPD) categories in VantageScore Subprime, Nearprime and Prime credit tiers compared to July ‘23. VantageScore defines superprime borrowers as those with credit scores of 781-850
New credit account growth declined across all products year-over-year
Consumer credit utilization decreased to 51.6% down from the prior month, hitting a new four-year low
Early-stage credit delinquencies experienced their biggest month-over-month increase in more than four years
MEDIAN INCOME WON’T GET YOU A STARTER HOME IN ½ OF US METROS: REDFIN
The monthly housing payment for the typical U.S. starter home that sold in July was $1,981, up 4.4% from a year earlier
That means homebuyers must earn $79,252 annually to afford the typical starter home, also up 4.4% year over year and just a few hundred dollars shy of last October’s all-time high.
CA takes the cake: In both Anaheim and Los Angeles, a family would need to earn twice the local income to afford a starter home. Anaheim’s median income is $122,192; a family needs to earn $251,302 to afford the typical starter home. In Los Angeles, the median income is $93,197 and a household needs to earn $184,477 for a starter home.
THIS IS RICH - AND UNSETTLING: Lawyer finds buyer agency agreements "incomprehensible"
University of Buffalo law professor Tanya Monestier prepared a report on the documents being released by MLSs for use to comply with NAR practice changes after working with the California Association of Realtors on their forms earlier this year, in part saying, “You should not need to hire a lawyer to understand a listing agreement or buyer representation agreement." Further snippets reported by HousingWire include this: “By and large, they are all very complicated and will not be understood by the average buyer and seller. Many of these contain terms that would come as a surprise to a buyer or seller, and terms that signal how [R]ealtors plan to circumvent the NAR Settlement.”