Current Climate


Current Climate – March 2020

The U.S. housing market is on a roll, currently valued at $30.7 trillion. Six million+/- homes,
were sold last year and $1.6 trillion in first mortgages issued.

Of the total market value, approximately $11 trillion consists of mortgage loans and $19.7 trillion is homeowner equity.

The Fed reports that mortgage lending experienced its biggest quarter in 14 years in Q4 2019.

Mortgage originations rose in each quarter of 2019, from $344 billion in Q1 to $474 billion in Q2,
and $528 billion in Q3, ending the year with $752 billion in mortgage originations in Q4 for a 118.6% increase over Q119.

In total, origination volume exceeded expectations, hitting $2.1 trillion for the year.

The NAHB Housing Market Index (HMI) revealed that builder sentiment increased 5 points to 75
in December, marking the highest reading since 1999.

Coincidentally, the U.S. homeownership rate rose to its highest level in six years in Q419.
The share of Americans who own their own home rose to 65.1% from 64.8% the year prior, the highest rate since Q3 2013.

For perspective, the all-time high of 69.2% was in 2004, largely considered to be the peak of the subprime mortgage lending era.

Homeownership rates were highest in the Midwest at 69.5%,
followed by the South at 66.7%, the Northeast at 62.3%, and the West at 60.3%.

Total existing home sales were at a seasonally adjusted annual rate of 5.46 million in January,
increasing for the second consecutive month and 9.6% year-over-year.

The median existing home price for all housing types was $266,300 in January, up 6.8% year-over-year.
Prices increased in every region, from 5.2% year-over-year in the West, to 11.5% in the Northeast.

Housing inventory at the end of January stood at 1.42 million units, down 10.7% from a year prior,
its lowest level since 1999, reflecting a 3.1-month supply at the current sales pace.

On average, properties remained on the market for 43 days in January, down from 49 days in January 2019;
42% of homes sold in January 2020 were on the market less than a month.

First-time homebuyers were responsible for 32% of all home sales in January, up from 29% the year prior.
Individual investors and second home buyers were responsible for 17% of sales transactions, essentially flat year-over-year.

According to Freddie Mac, the average rate for a 30-year, conventional, fixed-rate mortgage dropped to 3.51% to its lowest level in three years in the last week of January, 95 basis points below the 4.46% rate for the same week a year prior.

The National Association of Realtors’ (NAR) Pending Home Sales Index (PHSI) increased 5.2% to 108.8 in January,
reportedly the second-highest monthly figure in over two years.

Meyers Research New Home Pending Sales Index (PSI) came in at 118.4 in January, reflecting a 13.1% year-over-year increase.
San Francisco, Los Angeles, and Denver experienced the most significant growth rates, up 37.8%, 36.9%, and 35.4%, respectively.

The U.S. Census Bureau reports that sales of new single-family houses in January 2020 were at a seasonally adjusted rate of 764,000, reflecting an 18.6% year-over-year increase.

Inventory of new homes for sale stood at 324,000 representing a 5.1-month supply at the current sales pace,
while the median new home sales price ($348,200) increased 14% year-over-year.

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