There are two primary measures of housing prices that we track at FREEandCLEAR: the Federal Housing Finance Agency (FHFA) House Price Index, which uses certain nationwide mortgage activity to track home prices and the S&P / Case-Shiller Home Price Index, which tracks home prices in 20 U.S. metropolitan markets.  Both indices are reported on a monthly basis and include information for the month that is two months prior to the reporting date.

The FHFA House Price Index for April 2015 showed that February housing prices increased 0.7% as compared to January and increased 5.4% on a year-over-year basis (so as compared to February 2014).  The FHFA House Price Index for February came in slightly above the range of analyst estimates and improved relative results for January 2015 which showed a 0.3% increase on a monthly basis and a 5.1% increase on a year-over-year basis.  The FHFA House Price Index shows that home prices are appreciating at a somewhat faster pace which suggests increasing demand from home buyers.  The S&P / Case-Shiller Home Price Index for April 2015 showed similar strong results with housing prices increasing 0.9% in February, as compared to January, and increasing 5.0% on a year-over-year basis, which represents an increase as compared to the 4.6% year-over-year growth reported in January.  The S&P / Case-Shiller Home Price Index for January came in at the high end of the range of analyst projections.  Both the FHFA House Price and S&P / Case-Shiller Home Price indices continued a strong run that started in late 2014.  Improving home prices may encourage more home owners to sell thereby bringing more supply on the market although the jump in the rate of price appreciation is a cause for concern for home buyers.  (Source: Bloomberg)

What it Means for Mortgage Borrowers

The home price indices reports offer both good and bad news for mortgage borrowers.  The increase in home prices is positive because it reflects and improving housing market as well as borrowers’ ability to obtain mortgages.  Additionally, an increase in home prices typically leads to more home owners selling their properties, increasing the supply available for prospective buyers.  On the flip side, an increase in prices makes homes less affordable for prospective home buyers.  Low interest rates help to offset increasing home prices but more significant price increases in the future could hinder the real estate and mortgage markets.  If you are thinking about buying a home within the next year, review the FREEandCLEAR downloadable Mortgage Process Guide which offers numerous time and money-saving tips.  Additionally, use our INTEREST RATES function to review mortgage rates and fees for lenders in your area and contact lenders to get pre-approved for your mortgage.

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In our effort to cover important trends that affect the mortgage market, FREEandCLEAR keeps a close eye on new home sales, which is the number of newly constructed housing units that are sold in a month.  The new home sales figure is reported separately from the existing home sales figure, which is the number of previously constructed homes that are sold in a month.  The new home sales market is smaller than the existing home sales market but it is still an important indicator for the real estate and mortgage markets.  In addition to reporting the number of housing units sold, the new home sales report also includes information on the supply of units for sale as wells as the median and average new home sales price.  The new home sales report, issued on a monthly basis, includes statistics for the prior month.

Breaking a streak of three consecutive months of positive reports, the new home sales report for April showed that new home sales declined 11.4% in March to 481,000 annualized units, as compared to 543,000 annualized units in February.  The March new home sales figure fell at the bottom end of industry analyst expectations and follows a disappointing April housing starts report to show weakness in the home builder market.  The drop in demand for new homes impacted prices with the March median new home sales price decreasing 1.5% to $277,400.  Driven by the drop in sales and a 4,000 unit increase in inventory, supply as compared to monthly sales increased to 5.3 months in March as compared to 4.6 months in February.  The largest housing region, the South, showed the most weakness, with sales off 15.8%.  The Northeast and West regions also showed declines with the Midwest region being the sole bright spot, with sales increasing 5.9% on the month.  The weak new home sales report is in stark contrast to the strong April existing home sales report which saw a significant jump in activity.  (Source: Bloomberg)

What it Means for Mortgage Borrowers

Although the April new home sales report is disappointing, it is important to highlight that the new home sales market is significantly smaller than the existing home sales market.  Additionally, strong March gains in existing home sales suggest that buyers continue to be active in the real estate market and are able to obtain mortgages to finance their home purchases.  The median new home sales price is approximately 25% higher than the median existing home sales price so buyers could be gravitating toward lower priced properties, at least for March.  Although new home supply increased in March, supply relative to sales remains relatively low and FREEandCLEAR expects home builders to continue to bring new inventory to market.  With low interest rates, increased supply and flat-to-declining home prices, now may be a good time for potential home buyers to look at new homes.  Use the Mortgage Qualification Calculator on FREEandCLEAR to determine what size mortgage you can afford and check out our new and improved Mortgage Process Guide to walk you through the mortgage process step-by-step.

The FREEandCLEAR Mortgage Expert

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At FREEandCLEAR, we follow the Mortgage Bankers’ Association (MBA) mortgage applications index which measures both purchase and refinance applications for mortgage lenders across the country.  An increase in the MBA applications index reflects an increase in mortgage applications while a decrease in the index reflects a decline in mortgage applications.

After falling back last week, the mortgage application index returned to positive territory for the week ended April 17th, continuing a strong run of mortgage activity over the course of March and April.  Home purchase mortgage applications increased 5.0% for the week after declining 3.0% for the prior week.  The refinance applications index increased 1.0% for the week after decreasing 2.0% for the prior week.  The composite mortgage application index, which includes both home purchase mortgages and refinancings, increased 2.3%, reversing a 2.3% decline for the prior week.  Driven by low interest rates, mortgage application activity bounced back nicely and continues to trend positively.  Mortgage rates remained attractive as the average interest rate for conforming loans (mortgage amount less than $417,000) dropped to 3.83% as compared to 3.87% for the prior week.  (Source: Bloomberg)

What it Means for Mortgage Borrowers

It is positive to see mortgage application activity pick up after the slight drop-off last week.  Low interest rates and improving housing supply are pulling home buyers into the market.  Existing home owners are also tempted by low rates but refinancing mortgage application activity has lagged purchase application activity over the past several weeks. Existing homeowners can use our Mortgage Refinance Calculator to determine how much money they can potentially save by refinancing.  Prospective home buyers can use our Mortgage Selector Calculator to determine the mortgage amount and program that are right for them.  Whether you are refinancing or buying a home, use our INTEREST RATES function to keep track of interest rates and fees for lenders in your area.

The FREEandCLEAR Mortgage Expert

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In our effort to cover important trends that affect the mortgage market, FREEandCLEAR keeps a close eye on existing home sales, which is the number of previously constructed housing units that are sold in a month.  The existing home sales figure is reported separately from the new home sales figure, which is the number of newly constructed homes that are sold in a month.  An increase in existing home sales reflects improvement in the housing market while a decrease in existing home sales reflects a weakening of the housing market.  In addition to reporting the number of housing units sold, the existing home sales report also includes information on the supply of units for sale as wells as the median and average existing home sales price.

The existing home sales report, issued on a monthly basis, includes statistics for the prior month.  The report for April 2015 showed that existing home sales in March spiked 6.1% on a month-over-month basis to an annualized 5.19 million units (so if you take the home sales figure for March and multiplied it by twelve), which came in at the top end of industry analyst expectations.  The March increase represented one of the biggest gains in the history of the existing home sales report.  On a year-over-year basis, existing home sales increased a whopping 10.4%.  The increase in sales was seen across all property types with multi-family property sales increasing 11.1% on a monthly basis and single family home sales increasing 5.5% on a monthly basis.  Additionally, sales increased across all geographies with the Midwest leading all regions with a 10.1% growth in sales.   March also saw a modest increase in inventory with annualized existing homes available for sale increasing to 2.0 million from 1.9 million in February.  The increase in home sales was greater than the increase in inventory causing inventory relative to sales to dip slightly to 4.6 months of available supply, down from 4.7 months of supply in February 2015.  The jump in demand led to an increase in prices with the median existing home sales price rising to $212,100, representing a 5.1% increase on a monthly basis and a 7.8% increase on a year-over-year basis.  The strong existing home sales report for March shows building momentum in the housing and mortgage markets.    (Source: Bloomberg)

What it Means for Mortgage Borrowers

The robust existing home sales report shows that home buyers are buying and mortgage lenders are lending.  Low interest rates and gradually growing housing supply are pulling home buyers into the market after several sluggish months.  Although price appreciation makes it harder for buyers to afford homes, an increase in prices should attract more sellers and bring more supply onto the market.  Continued low interest rates help to offset higher prices and make now a good time to start the home buying and mortgage processes.  Prospective buyers can use our Mortgage Selector Calculator to determine what size mortgage they can afford as well as the mortgage program that is right for them.  Additionally, use the INTEREST RATES function on FREEandCLEAR to review rates and fees for lenders in your area to find the mortgage that is right for you.

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A key report that reflects the strength of the housing market is the monthly Housing Starts report released jointly by the U.S. Census Bureau, U.S. Department of Commerce and U.S. Department of Housing & Urban Development.  The Housing Starts report includes two pieces of data: starts and permits.  A housing start is counted when construction begins on a new single or multifamily property.  A permit is counted when a permit is issued by a local government to a property owner or builder to begin construction on a new single or multifamily property. Because construction typically begins soon after a new permit is issued, housing starts and permits are typically highly correlated.

The Housing Starts report issued in April 2015 showed lackluster results for March 2015 after a relatively sluggish report for February.  After declining 15.3% in February due to weather-related challenges, housing starts increased a meager 2.0% to approximately 926,000 annualized units.  The housing starts figure came in below expectations from industry analysts who were hoping for a rebound following the disappointing February report.  Housing starts gains in the Northeast and Midwest were overshadowed by declines in the West and the South, the largest U.S. housing market.  Housing permits also disappointed, declining 5.7% in March to 1.039 million annualized units, as compared to a 4.0% increase in February.  The permit figure also fell below analyst expectations.  In a disappointing sign for the housing market, low interest rates and improved weather failed to lift the Housing Starts report.  This contrasts with other recent market indicators such as the housing market index, new homes sales report and mortgage application index which all showed positive momentum for the mortgage and real estate markets. (Source: Bloomberg)

What it Means for Mortgage Borrowers

As noted above, the Housing Starts report is somewhat of an outlier as compared to more positive recent reports for other mortgage market indicators.  If the Housing Starts report continues to lag, this could result in lower housing supply for potential home buyers.  It is too earlier to jump to conclusions and other market reports suggest that buyers are able to find attractively priced homes and arrange mortgage financing.  Interest rates remain low and nationwide home prices remain relatively steady meaning that now continues to be a good time to get a mortgage and buy a home.  Use the Mortgage Selector Calculator on FREEandCLEAR to determine the what size mortgage you can afford and the mortgage program that is right for you. You can also use our INTEREST RATES function to compare rates and fees for lenders in your area to find the mortgage that is right for you.

The FREEandCLEAR Mortgage Expert

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At FREEandCLEAR, we follow the Mortgage Bankers’ Association (MBA) mortgage applications index which measures both purchase and refinance applications for mortgage lenders across the country.  An increase in the MBA applications index reflects an increase in mortgage applications while a decrease in the index reflects a decline in mortgage applications.

After a three week heater, mortgage applications fell back slightly for the week ending April 10th.  Home purchase mortgage applications declined 3.0% for the week after increasing 7.0% for the week ending April 3rd and 6.0% the prior week.  The purchase mortgage application index had reached its highest level since July 2013 and the setback in the most recent week is small relative to the significant gains in the index for the prior three weeks.  The refinance applications index decreased 2.0% following a 3.0% decline for the week ending April 3rd and a 4.0% increase the prior week.  The composite mortgage application index, which includes both home purchase mortgages and refinancings, decreased a modest 2.3%, following a relatively flat 0.4% increase for the prior week.  Given its robust performance over the past several weeks, the mortgage application index was bound to cool-off eventually.  Mortgage rates remained low and steady as the average interest rate for conforming loans (mortgage amount less than $417,000) barely increased to 3.87% as compared to 3.86% for the prior week.  (Source: Bloomberg)

What it Means for Mortgage Borrowers

A slight pullback in the mortgage application index is not a cause for concern given how strong the market has been over the past month.  If anything, the dip allows lenders to get caught up on processing mortgages.  The high level of market activity demonstrates that prospective home buyers are able to obtain mortgage financing and existing home owners are able to refinance their mortgages.  Low interest rates continue to drive market activity and the Spring home buying season could provide additional momentum for the mortgage market.  Before you apply for a mortgage review our Mortgage Expert Insights to get money and time-saving advice and then check out our Mortgage Qualification and Mortgage Refinance Calculators to determine if now is the right time to buy or refinance.

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The National Association of Home Builders Housing Market Index is one of the key housing market statistics that we track at FREEandCLEAR.  The Housing Market Index incorporates factors such as current and expected new home sales and interest level from potential new home buyers.  It is important to highlight that the index focuses on new home sales, so homes built by builders that have never been lived in before, as opposed to existing home sales, which represents a larger portion of the overall housing market.

The housing market index showed a nice bounce as current and expected new home sales led the index higher.  For April 2015, the Housing Market Index came in at 56 as compared to 52 in March 2015.  Any figure above 50 is considered positive and April represents the 10th consecutive month with the index above 50.  The April figure came in at the high end of industry analyst expectations as continued low interest rates and improved weather drove increased home buying activity.  The future home sales component of the index jumped to 64 from 59, showing home builder optimism for an increase in sales in the Spring home buying season.  As a reflection of current positive market conditions, the present home sales component of the index increased to 61 from 58.  The home buyer traffic component of the index continues to lag the home sales components but bounced back from a multi-month low of 37 in March to 41 in April.  The strong April housing market index report along with recent positive reports on new home sales, pending home sales and mortgage applications show the housing and mortgage markets may finally be building sustainable momentum. (Source: Bloomberg)

What it Means for Mortgage Borrowers

The uptick in the housing market index and other real estate market indicators is positive for mortgage borrowers because it demonstrates that lenders are providing financing to qualified buyers.  As reflected in the disappointing traffic component of the housing market, interest from first-time home buyers continues to be a weak spot.  Even a modest increase in activity from first-time home buyers could have a tremendously positive impact on the real estate and mortgage markets.  If you are a prospective first-time home buyer sitting on the sideline, check out our First-Time Home Buyer Mortgage Cheat Sheet to get up to speed on the mortgage process.  Additionally, interest rates remain at attractive levels and you can use the INTEREST RATES function on FREEandCLEAR to monitor rates and fees for lenders in your area.

The FREEandCLEAR Mortgage Expert

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At FREEandCLEAR, we follow the Mortgage Bankers’ Association (MBA) mortgage applications index which measures both purchase and refinance applications for mortgage lenders across the country.  An increase in the MBA applications index reflects an increase in mortgage applications while a decrease in the index reflects a decline in mortgage applications.

Home purchase mortgage applications jumped for the third consecutive week, increasing 7.0% for the week ending April 3rd as compared to a 6.0% increase the prior week.  The sustained improvement in purchase applications moved the purchase application index to its highest level since July 2013, reflecting meaningful momentum in the home purchase and mortgage markets.  Offsetting the positive news on the purchase front, refinance applications decreased 3.0% as compared to a 4.0% increase the prior week.  The composite mortgage application index, which includes both home purchase mortgages and refinancings, increased a modest 0.4%, following a 4.6% increase for the prior week.  The strong showing by the purchase applications index overshadowed the relatively flat performance by the composite applications index as the Spring buying season and low interest rates appear to be pulling home buyers into the market.  Mortgage rates continue to be attractive as the average interest rate for conforming loans (mortgage amount less than $417,000) dipped to 3.86% as compared to 3.89% for the prior week.  (Source: Bloomberg)

What it Means for Mortgage Borrowers

Three straight weeks of positive performance for the purchase application index suggests that momentum is finally building in the home purchase and mortgage markets.  The drop in refinancing activity is less of a concern as the refinance market saw a huge boost in activity to start 2015.  It will be interesting to see if the strength in the home purchase activity will continue through the Spring home buying season as the home purchase and mortgage markets have been relatively inconsistent over the past several years, unable to gain any sustained momentum.  Home buyers may finally be taking advantage of low interest rates and more reasonable lending standards including more favorable down payment and borrower credit requirements.  With many prospective home buyers, especially first-time home buyers, remaining on the fence, now is a good time to use the FREEandCLEAR Mortgage Qualification Calculator to determine what size mortgage you can afford.  Potential home buyers should also use our INTEREST RATES feature to compare lenders in their area to make sure they get a mortgage with the lowest rate and fees.

The FREEandCLEAR Mortgage Expert

www.freeandclear.com