Home sales expected to be lower for February
The level of home sales in February is expected to be down compared to January but higher than a year earlier. That’s according to the propriety Potential Home Sales model from title insurance firm First American.
Its analysis predicts that February 2016’s actual home sales will decline month-over-month as the potential for growth slowed to 1 per cent, from 3.6 per cent in January.
This is due in large part to tight inventories, which is keeping the market from aligning with its potential,” said First American’s chief economist Mark Fleming. “However, this is expected to be a temporary condition and should reverse course as inventories increase with the start of the spring home-buying season.”
“While house price appreciation continues to cool modestly, the limited supply combined with leverage-assisted demand is driving prices higher,” said Fleming. “Actual price appreciation is currently stronger than what is fundamentally supported by market conditions. This leverage-assisted housing inflation could persist if rates remain low.”
Mortgage rates higher again despite Fed freeze
While the Federal exchange may have opted to hold interest rates steady for now, mortgage rates edged higher in the week to Mar 17, the third straight week of increases.
Freddie Mac’s Primary Mortgage Market Survey showed that 30-year FRM’s averaged 3.73 per cent, up from 3.68 per cent a week earlier; 15-year FRM’s were up to an average 2.99 per cent, from 2.96; and 5-year ARM’s averaged 2.93 per cent, up from 2.92 per cent.
Recent rises have brought rates closer to their levels of a year ago when 30-year loans averaged 3.78, 15-year loans averaged 3.06 per cent and 5-year loans averaged 2.97 per cent.
Sean Becketti, Freddie’s chief economist, commented that the rise in mortgage rates was due to Treasury yields rising ahead of the Fed, despite market expectation of a freeze.
Buyers seek affordable options to drive Californian sales
Home sales in California gained in February as buyers sought out more affordable markets in the state. The California Association of Realtors highlighted growing inventory and moderation of home price appreciation as drivers of a 2.6 per cent rise in sales of single-family homes compared with January and a 6.4 per cent gain since February 2015. There were 393,360 sales on a seasonally-adjusted annualized rate.
“While it’s encouraging that home sales were higher from both the previous month and year, it’s important to remember that sales were unusually low in the first quarter of 2015, when the housing market got off to a slow start,” said C.A.R. President Pat “Ziggy” Zicarelli. “Market activity continues to be dampened by low housing inventory as baby boomers stay in their homes longer and new home construction, while improving, falls below needed supplies.”
The statewide median home price was $446,460, down 4.7 per cent from January and up 3.8 per cent from February 2015.