The job market continues to show improvement, and interest rates remain historically low, yet the homeownership rate in the U.S. remains near a 50-year low.

The National Association of Realtors released a new white paper titled, “Hurdles to Homeownership: Understanding the Barriers” which lays out five reasons for the low homeownership rate. NAR released its paper in recognition of National Homeownership month at the Sustainable Homeownership Conference at the University of California, Berkeley.

“The decline and stagnation in the homeownership rate is a trend that’s pointing in the wrong direction, and must be reversed given the many benefits of homeownership to individuals, communities and the nation’s economy,” NAR President William Brown said. “Those who are financially capable and willing to assume the responsibilities of owning a home should have the opportunity to pursue that dream.”

The research, commissioned by NAR, was prepared by Rosen Consulting Group, and jointly released by the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley Haas School of Business.

“Low mortgage rates and a healthy job market for college-educated adults should have translated to more home sales and upward movement in the homeownership rate in recent years,” NAR Chief Economist Lawrence Yun said. “Sadly, this has not been the case.”

“Obtaining a mortgage has been tough for those with good credit, savings for a down payment are instead going towards steeper rents and student loans, and first-time buyers are finding that listings in their price range are severely inadequate,” Yun said.

Here are what NAR says are the five main barriers to homeownership:

Post-foreclosure stress disorder:

There are long-lasting psychological changes in financial decision-making, including housing tenure choice, for the 9 million homeowners who experienced foreclosure, the 8.7 million people who lost their jobs and the young adults who witnessed the hardships of their family and friends, NAR explained.

Mortgage availability:

Credit standards did not normalize after the Great Recession, NAR’s study showed. Borrowers with good-to-excellent credit scores are not getting approved at the rate they were in 2003, prior to the period of excessively lax lending standards.

The growing burden of student loan debt:

Young households are repaying an increasing level of student loan debt that makes it extremely difficult to save for a down payment, qualify for a mortgage and afford a mortgage payment, especially in areas with high rents and home prices. NAR found in a survey released last year, student loan debt is delaying purchases from Millennials and over half expect to be delayed by at least five years.

Single-family housing affordability:

Lack of inventory, higher rents and home prices, difficulty saving for a down payment and investors weighing on supply levels by scooping up single-family homes have all lead to many markets experiencing decaying affordability conditions, the study showed. Unless these challenges subside, RCG forecasts that affordability will fall by an average of nearly nine percentage points across all 75 major markets between 2016 and 2019, with approximately 5 million fewer households able to afford the local median-priced home by 2019.

Single-family housing supply shortages:

Fewer property lots at higher prices, difficulty finding skilled labor and higher construction costs are among the reasons cited by RCG for why housing starts are not ramping up to meet the growing demand for new supply.

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NAR: Here are 5 reasons for low homeownership rate

The number of single-family homes built-for-rent fell slightly at the start of 2017, falling to 6,000 for the quarter. Over the last four quarters, total production of this type of housing was 33,000 homes.

According to data from the Census Bureau’s Quarterly Starts and Completions by Purpose and Design and NAHB analysis, the market share of single-family homes built-for-rent, as measured on a one-year moving average, stood at 4.1% of total starts as of the first quarter of 2017.

Given the small size of the market segment, the quarter-to-quarter movements are not typically statistically significant. The current market share remains higher than the historical average of 2.8% but is down from the 5.8% reading registered at the start of 2013. This class of single-family construction excludes homes that are sold to another party for rental purposes. It only includes homes built and held for rental purposes.

With the onset of the Great Recession and the ongoing declines in the homeownership rate, the share of built-for-rent homes rose. Despite the current elevated market concentration, the total number of single-family starts built-for-rent remains low in terms of the total building market.

Of course, the built-for-rent share of single-family homes is considerably smaller than the single-family home portion of the rental housing stock, which is 35% according to the 2015 American Community Survey. As homes age, they are more likely to be rented. Thus, the primary source of single-family rental homes is not construction but the existing housing stock. In fact, from 2005 to 2015, 56% of the gains in the rental housing stock were due to single-family homes.

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http://eyeonhousing.org/2017/05/decline-for-single-family-built-for-rent-construction/

March buyers blew the roof off housing markets as they heeded warnings about the limited supplies of home for sale and found houses in record time.  National monthly market reports on March transactions chronicled surge of sales as the spring season kicked off and tens of thousands of new listings turned over in a matter of days.

“We expected a seasonal uptick in sales this time of year and March certainly met and somewhat exceeded that expectation,” said RE/MAX CEO Dave Liniger as the months supply in RE/MAX’s latest National Housing Report fell below 3 months in March for the first time in history.

“Calendars might say spring is only a week old but we’re already in the thick of the most frenzied home buyer season on record,” concurred realtor.com’s Javier Vivas. Redfin reported its fastest March on record for home sales since it began tracking this data in 2010.

Every report told the same story.  The plunge in days on market was breathtaking as buyers gobbled up new listings as fast as they hit MLSs. In NAR’s existing home sales report, days on market fell from 45 days in February to 34 days in March, on realtor.com from 90 to 68,, on RE/MAX from 71 to 64, on Redfin from 60 top 49.

Prices Outpace Incomes’

The three year inventory drought coupled with the spring surge in demand pushed prices even ither than

109.1 million full-time wage and salary workers were $830 in

the first quarter of 2016 (not seasonally adjusted), the U.S. Bureau of Labor Statistics reported today.

This was 2.7 percent higher than a year earlier

March Market Reports at a Glance

*These data are not sales but valuations for all homes based on Zillow’s AVM.

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http://www.realestateeconomywatch.com/2017/05/march-sales-new-listings-were-off-to-the-races/

Contracts to buy previously owned U.S. homes jumped to a 10-month high in February, pointing to robust demand for housing ahead of the busy spring selling season.

The report on Wednesday from the National Association of Realtors suggested higher home prices and mortgage rates were having little impact on the housing market for now, underscoring the economy’s resilience despite an apparent slowdown in growth in the first quarter.

The NAR said its Pending Home Sales Index, based on contracts signed last month, surged 5.5 percent to 112.3. That was the highest reading since April and the second best showing since May 2006.

“This bodes well for home sales this spring,” said Misa Batcheller, an economic analyst at Wells Fargo Securities in Charlotte, North Carolina.

Contract signing last month was likely boosted by unseasonably warm temperatures. The gains reversed January’s 2.8 percent drop. Pending home contracts become sales after a month or two, and last month’s surge implied a pickup in home resales after they tumbled 3.7 percent in February.

Economists had forecast pending home sales rising 2.4 percent last month. Pending home sales increased 2.6 percent from a year ago.

U.S. financial markets were little moved by the data as investors assessed comments from Federal Reserve officials on further interest rate increases this year. Chicago Fed President Charles Evans, one of the U.S. central bank’s most consistent supporters of low interest rates, said he supported additional monetary policy tightening this year.

The Fed raised its benchmark overnight interest rate by a quarter percentage point earlier this month and has forecast two more rate hikes this year. The dollar was trading higher against a basket of currencies while U.S. stocks were mixed. U.S. government bond prices rose.

TIGHT INVENTORIES

Demand for housing is being driven by a strong labor market, which is generating wage increases, as it nears full employment. Sales activity, however, remains constrained by tight inventories, which are driving up home prices.

“The good news is that warm winter weather has led to a surge in construction that will hopefully result in a bloom of new homes for sale this spring,” said Joseph Kirchner, senior economist at realtor.com.

A report on Tuesday showed home prices increased 5.7 percent in January on a year-on-year basis. The NAR expects sales of previously owned homes to increase 2.3 percent this year to around 5.57 million units.

Existing homes sales increased 3.8 percent last year. Housing market strength suggests an apparent sharp slowdown in economic growth early in the first quarter is likely temporary.

The Atlanta Fed is forecasting gross domestic product increasing at a 1.0 percent annualized pace in the first quarter. The economy grew at a 1.9 percent rate in the final three months of 2016.

Given labor market strength, economists expect only a modest impact from higher mortgage rates. The 30-year fixed mortgage rate is currently at 4.23 percent, below a more than 2-1/2-year high of 4.32 percent hit in December.

In a separate report on Wednesday, the Mortgage Bankers Association said applications for home purchase loans rose 1.2 percent last week from the prior week. It was the fourth increase in the past five weeks.

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http://www.reuters.com/article/us-usa-economy-idUSKBN1701XS

Freddie Mac (OTCQB: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS^®), showing average fixed mortgage rates moving higher for the eighth consecutive week.

News Facts

• 30-year fixed-rate mortgage (FRM) averaged 4.30 percent with an average 0.5 point for the week ending December 22, 2016, up from last week when it averaged 4.16 percent. A year ago at this time, the 30-year FRM averaged 3.96 percent.

• 15-year FRM this week averaged 3.52 percent with an average 0.5 point, up from last week when it averaged 3.37 percent. A year ago at this time, the 15-year FRM averaged 3.22 percent.

• 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.32 percent this week with an average 0.4 point, up from last week when it averaged 3.19 percent. A year ago, the 5-year ARM averaged 3.06 percent.

Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage. Visit the following link for the Definitions. Borrowers may still pay closing costs which are not included in the survey.

Quote
Attributed to Sean Becketti, chief economist, Freddie Mac.

“A week after the only rate hike of 2016, the mortgage industry digested the Fed’s decision and this week’s survey reflects that response. Following Yellen’s speech last Wednesday, the 10-year Treasury yield rose approximately 10 basis points. The 30-year mortgage rate rose 14 basis points to 4.30 percent, reaching highs we have not seen since April 2014.”

The Federal Reserve Board reported that consumer credit outstanding grew by a seasonally adjusted annual rate of 7.0% over the third quarter of 2016, 0.6 percentage point faster than the 6.4% rate of growth in the second quarter. There is now $3.71 trillion in outstanding consumer credit.

Growth in the outstanding amount of consumer credit overall reflected an increase in both revolving and non-revolving credit. Revolving credit is largely composed of credit card debt while non-revolving credit includes both student and auto loans. Over the third quarter, revolving credit rose by 7.6% and now totals $2.73 trillion while non-revolving credit climbed 5.2% reaching $979 billion.

Growth in consumer credit has been accelerating on a quarter-over-quarter basis in 2016. According to Figure 1, since falling to 5.6% growth in the first quarter of 2016, each subsequent quarter has experienced a faster rate of growth. In the second quarter of 2016, growth rates of both revolving and non-revolving credit recorded higher rates of growth relative to the first. However, in the third quarter, growth in non-revolving credit accelerated again while the growth of revolving credit decelerated.

Information from the most recent iteration of the Federal Reserve Board’s Senior Loan Officer Opinion Survey (SLOOS) provides some insight into the slowdown in the growth of revolving credit over the quarter. The SLOOS, among other questions, asks banks, who are the largest holder of revolving credit debt, about the supply and demand for credit card debt. In the most recent iteration, the SLOOS also asked about the likelihood of a respondent’s bank approving an application for a credit card to a borrower with a given FICO score now relative to 3 months ago. The FICO score options were 620, 680, and 720 and all other borrower characteristics were to remain “typical”*.

Figure 2 above depicts the results from the SLOOS, with these numbers, help with HMRC debt should be sought out for. The “Net” is the difference between the percentage of banks reporting that they were “More likely” now than 3 months ago to approve the credit card application and the proportion of banks that were “Less likely” to do so. On net, banks were less likely to approve a credit card application for a prospective borrower with a FICO score of 620 and were more likely on net to approve an application for prospective borrower with a FICO score of 720. At a FICO score of 680 banks were neutral on net, the same portion of banks reported both more likely and less likely to approve a credit card application for a borrower with that credit score.

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http://eyeonhousing.org/2016/11/non-mortgage-consumer-debt-accelerates/

Existing home sales, as reported by the National Association of Realtors (NAR), increased 2.0% in October and reached the highest pace since February 2007. In October sales increased for the second straight month, and were up 5.9% from the same month a year ago. Total existing home sales in October increased to a seasonally adjusted rate of 5.60 million units combined for single-family homes, townhomes, condominiums and co-ops, up from an upwardly adjusted 5.49 million units in September.

October existing sales increased in all four regions, ranging from 2.8% in the South to 0.8% in the West. Year-over-year, October sales also increased in all regions, ranging from 10.4% in the West to 1.4% in the Northeast.

Total housing inventory decreased slightly by 0.5% in October, and remains 4.3% lower than its level a year ago. At the current sales rate, the October unsold inventory represents a 4.3-month supply, compared to a 4.4-month supply in September.

The October all-cash sales share increased to 22% from 21% in September, but was down from 24% one year ago. Individual investors purchased a 13% share in October, down from 14% in September and unchanged from a year ago. The first-time home buyer share was 33% in October, down a point from the solid September report, but above the first-time buyer share of 31% in October 2015. Distressed sales, comprised of foreclosures and short sales, increased to 5% in October from 4% in September, which was the lowest rate since NAR launched that series in 2008.

The October median sales price of $232,200 was 6.0% above the same month a year ago, and represents the 56th consecutive month of year-over-year increases. The median condominium/co-op price dropped for the fourth consecutive month to $220,300 in October, but was up 6.2% from the same month a year ago.

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http://eyeonhousing.org/2016/11/existing-sales-revival/