Market Forecast January 2020
Markets are closed today in observance of the Dr. Martin Luther King Jr. Holiday. Important housing reports scheduled for this week include the Federal Housing Finance Agency (FHFA) house price index and the existing home sales report. The Mortgage Bankers Association (MBA) will release its weekly mortgage application survey on Wednesday.
The MBA weekly mortgage application survey tracks week to week changes in new purchase and refinance mortgage applications. For the week ending 1/10, new purchase application submissions jumped 16.0% and refinance application submissions climbed 43.0% for a composite increase of 30.2%, an exceptionally strong start for 2020.
The FHFA house price index tracks changes in the value of homes financed through conventional mortgage loans. This data subset is smaller than the data surveyed through the Case-Shiller home price index but is still used to gauge home price appreciation trends. In October, the FHFA house price index increased 0.2% month-over-month and 5.0% year-over-year.
Existing home sales or resales account for approximately 90% of real estate transactions. In November, existing home sales fell 1.7% month-over-month to a seasonally adjusted annual pace of 5.35 million. Although buyer demand is strong, shoppers are competing over limited listings. The inventory of homes for sale has dropped to a 3.7-month supply, well below the 6-month supply needed for a balanced market.
Housing professionals are expecting an early home buying season this year, with today’s historically low mortgage rates. If you plan on buying a home this year, get preapproved for mortgage financing before you start shopping. A competitive market likely means multiple offers and you want your offer to stand out to the seller.