With inventory of existing homes at historic lows and a rise in interest rates thanks to the Federal Reserve, housing inventory for 2017 is almost certain to rise. For prospective sellers that means that if you were planning to sell your home this year, it’s time to get cracking.
Housing inventory has been below normal for more than two years now. That’s been true of new homes and existing homes, and the forecast for the new year is not a whole lot better.
According to data from the National Association of Realtors (NAR), the inventory of existing homes for sale had dropped more than 9% year over year from November 2015 to November 2016, to a total of 1.85 million, the lowest total since 2000.
New home building has picked up since reaching a trough of about 350,000 seasonally adjusted single-family home starts in early 2009. But the number of starts has yet to reach 1 million a month, a level it held reasonably steadily from the early 1990s until about 2008.
Housing prices rose nationally by around 6% in 2016, but the expected increase in 2017 ranges from 3% to 5%.
Real-estate website Trulia, prepared a list of six reasons to get your house on the market now, rather than waiting for the spring selling season to arrive.
We’ve already discussed this one in general, but if you live in an area where buyers are thick on the ground getting listed now could result in a quick sale.
Generally speaking, buyers looking to purchase a home in the dead of winter are doing so because they have to, and the sooner the better.
Spring begins early in warm markets
Warm weather brings out buyers and spring starts early in a wide swath of the country. Don’t miss it.
Lower-priced houses move first
According to Trulia this is due to first-time buyers who have been saving for a down payment will add a tax refund to the pile and go shopping early for that first home.
A new administration in Washington
Possible political changes as a result of a Trump administration could have an impact on both buyers and sellers. If you think the effect on you personally is going to be negative, get the house listed soon.
More interest rate hikes
The Fed has all but promised more interest rate increases in 2017. Buyers who are stretching to meet debt-to-income ratios won’t be able to wait.
What Happened to Rates Last Week?
Mortgage backed securities (FNMA 3.50 MBS) gained +91 basis points (BPS) from last Friday’s close which caused fixed mortgage rates to move slightly lower from the prior week.
It was our second consecutive week with a skeleton crew of bond traders and with very thin volumes that skewed upward momentum in the MBS market. While rates did decline slightly, a large portion of the gains in MBS pricing were not passed on to originators as the gains were not reflective of normal market.
We had another holiday shortened session with really only three days of trading. We saw strong demand for our 5 year and 7 year Treasury note auctions as traders booked some profits in the stock market and parked their funds in shorter term notes ahead of the long weekend and new year.
Consumer Confidence: The trend upward in Consumer Confidence that started after the election continues. The December reading jumped to 113.7 which beat our forecasts calling for 105.5. November was revised upward from 107.1 to 109.4
Manufacturing: The bell-weather Chicago PMI was lighter than expected (54.6 vs est of 57.0). But really any reading above 50 is positive for the economic outlook. Its the fourth strongest reading that we have seen in 2016.
What to Watch Out For This Week:
The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.
It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets. Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.
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