Volume 108 | September 8, 2022

Guardian Asset Management

Weekly Newsletter

Guardian endeavors to provide you with the latest in housing, industry and market news from Washington D.C. and around the country. It is our goal as your industry partner to be informative, relative and topical.

From the General

Counsel's Desk

High Home Prices, Mortgage Rates Weighing on Housing Sentiment

The Fannie Mae ( OTCQB: FNMA) Home Purchase Sentiment Index^® (HPSI)decreased 0.8 points in August to 62.0, its sixth consecutive monthly decline, as high home prices and elevated mortgage rates continue to weigh on consumer sentiment, particularly home-selling sentiment. Despite the relatively small aggregate change, the HPSI experienced significant volatility among four of its six components, including those measuring consumer perceptions of homebuying and home-selling conditions, as well as expectations regarding the future direction of home prices and mortgage rates.

U.S. Foreclosure Market Report, which shows there were a total of 34,501 U.S. properties with foreclosure filings — default notices, scheduled auctions or bank repossessions — up 14 percent from a month ago and up 118 percent from a year ago.

Mortgage demand drops further

as interest rates shoot back to June high

In June the average rate on the 30-year fixed shot over 6% briefly, and that was enough to turn the once-hot housing market on its heels. Rates pulled back in July and August, but the damage was already done. Now rates are heading past 6% yet again, causing already beleaguered mortgage demand to fall even further.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 5.94% last week from 5.80% the previous week, for loans with a 20% down payment, according to the Mortgage Bankers Association. That was the weekly average, but there were a few days when the rate rose above 6% on another survey from Mortgage News Daily.

As national population growth sits at a record low, domestic migration was the key component of population change on state and local levels in 2021, according to demographic findings of Harvard University's State of the Nation’s Housing report released in June.

As the report’s interactive population change map shows, population grew in most states with net domestic inflows, —meaning more people moving into the state than out, not including immigrants— while population typically shrank in states with net domestic outflows. In most states, domestic migration outpaced net international immigration and natural population change, both of which were declining in recent years before falling sharply in the first year of the pandemic.

Americans are deeply pessimistic

about the housing market

Home prices have started to drop, but the decline has not been significant enough to slow a growing pessimism about the housing market.

Fannie Mae’s Home Purchase Sentiment Index (HPSI), which tracks the housing market and consumer confidence to sell or buy a home, dropped by 0.8 points in August to 62, marking its sixth consecutive decline. The government-sponsored enterprise attributed high home prices and mortgage rates to the decline, particularly weighing on home-selling sentiment. Year over year, the index is down 13.7 points.

On the seller side, 35% said it was a bad time to sell, rising from 27% in July. About 59% said it’s a good time to sell, dropping from the previous month’s 67%. 

“The share of consumers expecting home prices to go down over the next year increased substantially in August. Accompanying this, HPSI respondents reported a significant decrease in home-selling sentiment,” said Doug Duncan, Fannie Mae’s senior vice president and chief economist.