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Skinny & Dip
By Jeff Walton & Kelly Guest
January 6, 2025
Market activity and industry news were pretty thin over the holidays, and the trades tried to gin up interest with headlines like, "How big was the holiday dip in mortgage applications?" (Spoiler: 21.9%)
In his latest Master the Markets segment, Bill Bodnar predicts we'll stop walking through holiday week molasses and the news will hit the ground running this week. Treasury is selling $119B of bonds, and we'll get a telling take on unemployment. Get ready for jobs and JOLTS and Fed minutes, oh my!
CHATTER
FANNIE & FREDDIE ON THEIR WAY: Treasury & FHFA Nudge Toward Ending Conservatorship
The agencies amended their Preferred Stock Purchase Agreements (PSPAs) between Treasury and each of Fannie Mae and Freddie Mac (the GSEs) to help ensure that the eventual release of the GSEs from conservatorship will be orderly and to reflect certain existing practices. The amendment includes technical updates and a commitment to conduct a market impact assessment.
MARKET/INDUSTRY
MORTGAGE RATES REACH HIGHEST POINT SINCE JULY: Freddie 1-2-2025
Inching up to just shy of seven percent, mortgage rates reached their highest point in nearly six months. Compared to this time last year, rates are elevated and the market’s affordability headwinds persist. However, buyers appear to be more inclined to get off the sidelines as pending home sales rise.
MORTGAGE APPLICATIONS DECREASED 21.9% FROM TWO WEEKS EARLIER: MBA Weekly Survey for the week ending December 27, 2024. The results include an adjustment to account for the Christmas holiday.
“Mortgage rates moved higher through the last full week of 2024, reaching almost 7% for 30-year fixed-rate loans. Not surprisingly, this increase in rates – at a time when housing activity typically grinds to a halt – resulted in declines in both refinance and purchase applications.” - Mike Fratantoni, MBA’s SVP & Chief Economist.
RECALIBRATED = GOT OVER IT? NAR November Pending Home Sales
“Consumers appeared to have recalibrated expectations regarding mortgage rates and are taking advantage of more available inventory. Mortgage rates have averaged above 6% for the past 24 months. Buyers are no longer waiting for or expecting mortgage rates to fall substantially. Furthermore, buyers are in a better position to negotiate as the market shifts away from a seller’s market.” - NAR Chief Economist Lawrence Yun.
Pending home sales in November increased 2.2%.
Compared to one month ago, pending sales rose in the Midwest, South and West but declined in the Northeast.
Year-over-year, contract signings grew in all four U.S. regions, with the West showing the biggest jump.
REVERSES JUMP FORWARD: RMI December Release
HECM endorsements gained 9.1% to 2,626 loans in December, as loans continue to flow through from prior to the recent rate increases. From here on these volumes are swimming upstream for as long as rates keep ramping upward.
AGENTS ON ELECTION, NAR SETLLEMENT, & BUYER TRENDS: HomeLight 2024 Agent Insights
To afford a home, buyers in my area are increasingly…
27% - Requesting sellers buy down mortgage rates
23% - Using gift funds
How did the election affect the market?
47% - Election uncertainty caused buyers to wait and see – hurting demand
30% - Election uncertainty caused buyers and sellers to wait and see – suppressing overall activity
What length of time are buyers willing to commit to their agent for (sign a buyers agreement)?
21% - One-time, per property
42% - Multi-months
A roundup of HomeLight agent sentiment toward NAR Settlement:
“[The NAR Settlement] has made the process more difficult for both buyer and seller. Buyers are always short on money, and having to pay the agent’s commission can be difficult if a seller is not willing to pay their brokerage commission.” Duane Trinkle, TX
“It has had unintended negative effects against the most vulnerable group of buyers; first-time home buyers and lower-income buyers. Meanwhile, the luxury market is thriving and is unaffected, further widening the gap between classes.” Angelina Keck, TX
“This was a total fail for NAR.” Dottie Worthington, TX