After finding a house to buy and having your offer accepted, the home buying process really kicks into gear. There are several steps that have to be cleared before a pending sale is completed and your loan has closed. For example, this is the time when the home will be inspected and appraised. It is also the period during which the financial side of the transaction will be finalized. This takes time, as anyone who’s been through the process before knows. But what about first-time home buyers? How long should they expect between making an offer and getting their keys? According to Ellie Mae’s Millennial Tracker, the average time it took millennial borrowers to close conventional purchase loans in February was 44 days, which was slightly higher than the previous month. Joe Tyrrell, Executive Vice President of Strategy and Technology for Ellie Mae, says time to close is increasing as the share of home purchase loans grows. The percentage of purchase loans is on the rise with millennials continuing to enter the home buying market for their first or maybe even second purchase, Tyrrell said. The increase in days-to-close we saw in February is relative to the percentage increase in […]
Last Friday, the U.S. Bureau of Labor Statistics reported that import prices increased by 0.6 percent over the month of March. This was entirely led by a 6.4 percent increase in fuel prices. However, this is lower than February’s increase, which was nearly 10 percent. It should be noted that fuel prices can be extremely volatile, and dropped by over 12 percent in November and December of last year. While fuel prices have been increasing this year, nonfuel import prices dipped down by 0.2 percent and have remained relatively stable for several months. In the meantime, export prices increased in March, by 0.7 percent. This increase was mainly led by agricultural exports, but nonagricultural exports such as industrial supplies increased in price as well. Export prices for finished goods were slightly down over the month. More here.
Since your mortgage will likely be among your biggest monthly bills, you’ll want to give some thought to how much of your income you’d be comfortable putting toward it. Conventional wisdom says that you shouldn’t spend more than 30 percent of your income on housing. Historically, Americans’ mortgage payments have been closer to 21 percent of their income, according to Zillow. These days, it’s even lower. At the end of last year, the mortgage payment on a typical home required about 17.5 percent of the median income. Of course, that also depends on where you live. For example, the percentage of income you’d spend on a mortgage payment in Cleveland is about half of what the typical New Yorker spends. Wherever you are, you should consider your household expenses, income, and prospective payments before heading out to find a house. This will help you avoid buying more than you can comfortably afford. More here.
According to the Bureau of Labor Statistics, the unemployment rate remained at 3.8 percent in March from the month before. While 196,000 jobs were added, this wasn’t enough to offset the number of people who became unemployed. The total number of unemployed persons stayed the same from the month before at 6.2 million. The number of long-term unemployed person remained unchanged as well. The industries that added the most jobs were healthcare and professional/technical services. Other industries that had notable employment gains were computer services, architectural and engineering services, and in consulting services. The average workweek was little changed, and the average hourly earnings for employees on payroll ticked up by 4 cents. While the massive gains in employment last year have slowed down, employment is at least remaining stable. If the strong job market continues, this could drive the economy for months or even years to come. More here.
According to the Mortgage Bankers Association’s Weekly Applications Survey, mortgage applications surged by 18.6 percent from the week earlier. Refinance activity surged even more than new mortgage applications. In fact, refinance activity was up 39 percent from the weak earlier and purchase demand rose 3 percent. Demand for loans to buy homes is now 10 percent higher than at the same time a year ago. Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting, says that the recent loan activity is due to lowering interest rates. There was a tremendous surge in overall applications activity, as mortgage rates fell for the fourth week in a row with rates for some loan types reaching their lowest levels since January 2018, Kan said. News of favorable mortgage rates comes at the right time for potential spring homebuyers and will help relieve some of the affordability concerns that caused home buyer traffic to slow last fall. More here.
New numbers from the U.S. Census Bureau and the Department of Housing and Urban Development show new home sales reached an 11-month high in February. In fact, sales rose 4.9 percent over the previous month, beating economists’ expectations and rising above numbers from last year at the same time. There was also a revision to January’s estimate, which added nearly 30,000 sales to initial reports. Regionally, new home sales surged in the Midwest and Northeast, while remaining relatively flat in the South and West. Overall, the numbers were encouraging, as it shows home buyers are returning to the market after rising mortgage rates slowed activity last fall. Since then, however, rates have retreated. Buyers have taken notice, and demand for homes is increasing. If softening prices continue through the spring and summer season, homebuyers can expect to find improved affordability conditions and a more balanced market. Also in the report, the median sales price of new homes sold in February was $315,300, which is a 3.6 percent drop from last year. More here.
Last Friday the U.S. Bureau of Economic Analysis reported that personal income increased by 0.2 percent in February. Similarly, disposable income (the money left over after taxes) increased at the same rate. While a fifth of a percent is not much, it’s good news after January saw a decrease in both personal income and disposable personal income. Increases in wages and salaries were mostly responsible for the increase in income. There was also an increase in government social benefits and proprietor’s income. However, there was a decrease in personal interest income. This means that people are earning less money from interest sources such as their bank account, but are receiving enough money from wages/salaries and government benefits to offset the decrease. The economy may be slowing down from the large increases in personal income seen last year, but at least we’ve recovered from the small losses in January. More here.
If you’re a prospective home seller, you’re probably thinking about upgrades, renovations, and remodeling projects. Making your home appealing to home buyers is important when it’s time to sell. But how do you choose which projects are smartest for your money? According to a recent analysis by Zillow, there are some easy answers. For example, though kitchens are one of the more important rooms in the house, they aren’t necessarily the best place to start upgrading. Because they’re so central to the way we live, they also involve a lot of individual preferences. Potential home buyers may not agree with your choices. Since it’s an expensive job that may not help lure home buyers, it doesn’t offer much bang for your buck. A better route is to go with exterior projects like landscaping or new paint. They’re less expensive but go a long way, and so does a modest bathroom update. Replacing the toilet, tub, sink, and fixtures can make your home more appealing to home buyers and won’t break the bank. More here.
Productivity is one of them many indicators of how well the economy is doing. It is a measure of how efficient businesses are by comparing the input of labor and resources to the output of goods and services. When productivity rises, that means businesses are operating more effectively. According to recent numbers form the Bureau of Labor Statistics, business productivity rose 1.8 percent from Q4 2017 to Q4 2018. This was led by a 3.7 percent leap in output and a 1.9 percent increase in hours worked by employees. Essentially, employees are working more than they did a year ago, and similarly, businesses are producing more on average. Not all industries are the same, however. Manufacturing only had a 1 percent increase in labor productivity and a 2.9 percent increase in output. While hourly compensation increased for all industries, real hourly compensation (which is adjusted for inflation) actually decreased slightly for employees in manufacturing jobs. More here.
If you’re doing it right, the first step in the home buying process will be talking with your mortgage lender. Your mortgage lender is the one who can tell you if you’re able to buy and how much you’ll be able to spend. Should you find a house to purchase, you won’t get very far without first going over the numbers and figuring out what you may be approved to borrow. Some of those calculations will be determined by your financial situation, debts and income. Another variable will be based on credit standards. According to the most recent Mortgage Lender Sentiment Survey from Fannie Mae, credit standards are easing which means it’s getting easier to get a mortgage. In fact, the survey found that lenders on net continued to report easing lending standards at a modest pace across all loan types. That’s good news for prospective homebuyers. According to Doug Duncan, Fannie Mae’s chief economist, it’s helping push expectations for this year’s selling season. Lenders’ improved demand outlook going into this spring selling season bodes well for our forecast of relatively flat mortgage volume following the double-digit drop in 2018, Duncan said. More here.