Economists' Outlook

Housing stats and analysis from NAR's research experts.
  • The number of people applying for mortgages for a home purchase fell in the latest week by 3 percent from the prior week. From a year ago, activity is down by 12 percent. A negative hit to housing affordability from rising home values and from higher mortgage rates has damped home buyer enthusiasm.
  • Fortunately, all-cash sales are still going strong, consistently hovering at about one-third of all transactions.
  • Refinancing activity is on the rise for the 3rd consecutive week as mortgage rates inched lower. However, this business line will feel great pain for much of the year. Refis are off by more than 60 percent this year. There are just not that many mortgages that can be refinanced, particularly as mortgage rates will inevitably rise.
  • An announcement last week by the new boss (Mel Watts) of Fannie and Freddie regulators could meaningfully open up mortgage credit. He has expressed displeasure at the too-stringent mortgage market and seems open to lowering the guarantee fees since Fannie and Freddie are continuing to make good profits after having paid back all of taxpayer bailout money. Depending on how mortgage standards are dialed down, a boost of 5 to 10 percent additional mortgage approvals are a possibility.
  • Opening mortgage credit without an increase in inventory could reignite a bidding war of more buyers without more sellers. It is therefore critical to ramp up housing starts via more accessible construction loans to bring housing supply in line with expected rise in housing demand.

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