Greetings!
First, we wish everyone a Happy New Year. Fingers crossed, it will be a healthy and peaceful one. Next, we must recap at least some of the housing news that crowded into the last two weeks of 2021.
Home sales were mixed. November’s new home sales looked better than they really were, with a surprisingly robust 12.4% increase, because of revisions that resulted in 170,000 fewer sales the previous two months. The bottom line, sales were at an annual rate of 744,000 which, despite November’s surge, were 14.0% lower than sales a year earlier.
Existing home sales posted their third consecutive gain in November, up 1.9% to an annual rate of 6.46 million units. This is still lower, by 2.0%, than the 6.59 million sales in November 2020.
Pending sales, which reflect contracts signed for home purchases and is a leading indicator of existing sales over the next one or two months, retrenched from a 7.5% gain in October, falling 2.2%.
Taking Inventory
Lawrence Yun, chief economist for the National Association of Realtors (NAR) said “Buyer competition alone is unrelenting, but home seekers have also had to contend with the negative impacts of supply chain disruptions and labor shortages this year. These aspects, along with the exorbitant prices and a lack of available homes, have created a much tougher buying season.”
Inventories continue to be a major issue for buyers. Existing home inventories remain near record lows; 1.1 million units were available at the end of November, an estimated 2.1-month supply. New home sales look much better, 402,000 were available for sale. Of those, however, only 39,000 were ready for occupancy while 253,000 were under construction and ground was not yet broken for the remaining 110,000.
Conforming Loan Limits Increase
The limit on conforming mortgages was adjusted higher this week. The new base limit is $670,000, an 18% increase from the 2021 limits. Conforming loans in “high cost” areas are capped at $970,800. These loans are generally less expensive than “jumbo” loans, so the increases could be a boon for many buyers and refinancers.
Also, this week, the Federal Housing Finance Agency (FHFA) announced an increase in the “upfront fees” for some Fannie Mae and Freddie Mac loans. Those affected are high balance loans, those exceeding the new base limit, and loans for second homes. Increases on high balance loan fees will range from 0.25% and 0.75% and second home fees will rise by 1.125% to 3.875%. The differences reflect the loan-to-value ratio.
These increases will not take effect until April 1, so there is plenty of time to arrange for a purchase or refi. Call, text or email us for more information.
