Markets & Economy

Daily market update: June 8, 2017

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Most recent market news

Thursday, June 8

Home Flipping Volume Rises to Nine-Year High in Q1 2017 as Average Flipping Returns Decline for Second Straight Quarter

  • The Q1 2017 U.S. Home Flipping Report shows that 43,615 single family homes and condos were flipped  nationwide in the first quarter of 2017, down 8 percent from the previous quarter and down 6 percent from a year ago to the lowest number of homes flipped since Q1 2015 — a two-year low.
  • Home flips in Q1 2017 accounted for 6.7 percent of all single family home and condo sales during the quarter, up from 5.8 percent in the previous quarter and unchanged from a year ago.
  • One-third (33.3 percent) of all single family homes and condos flipped in Q1 2017 were purchased by the flipper with financing, up from 31.9 percent in Q4 2016 and up from 29.5 percent in Q1 2016 to the highest level since Q3 2008.
  • Among 85 metropolitan statistical areas with at least 90 completed home flips in Q1 2017, those with the highest share originally purchased by the flipper with financing were Colorado Springs, Colorado (69.3 percent); Denver, Colorado (54.8 percent); Seattle, Washington (51.6 percent); Boston, Massachusetts (51.3 percent); and Providence, Rhode Island (47.3 percent).
  • The District of Columbia had the highest home flipping rate in the nation in the first quarter (10.7 percent), followed by Nevada (9.8 percent); Alabama (9.0 percent); Tennessee (8.9 percent); Maryland (8.5 percent); and Missouri (8.0 percent).
  • Homes flipped in the first quarter of 2017 were sold for a median price of $200,000, a gross flipping profit of $64,284 above the median purchase price of $135,716, up from a gross flipping profit of $63,500 in the previous quarter and a gross flipping profit of $59,100 in Q1 2016 — a new all-time high going back to Q1 2000, as far back as the data is available.

Mortgage rates

News from earlier this week

Wednesday, June 7

A Seller’s Market? Consumers Express Diverging Sentiment on Home Buying and Selling in May

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  • The Fannie Mae Home Purchase Sentiment Index® (HPSI) decreased 0.5 percentage points in May to 86.2. The slight decrease can be attributed to decreases in three of the six HPSI components being larger on net than the three increases.
  • Americans expressed greater belief that mortgage rates will go down over the next 12 months, with that component increasing 5 percentage points.

“High home prices have led many consumers to give us the first clear indication we’ve seen in the National Housing Survey’s seven-year history that they think it’s now a seller’s market,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “However, we continue to see a lack of housing supply as many potential sellers are unwilling or unable to put their homes on the market, perhaps due in part to concerns over finding an affordable replacement home. Prospective homebuyers are likely to face continued home price increases as long as housing supply remains tight.”

Mortgage Applications Increase in Latest MBA Weekly Survey

  • Mortgage applications increased 7.1 percent from one week earlier. This week’s results included an adjustment for the Memorial Day holiday.
  • The Market Composite Index increased 7.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 15 percent compared with the previous week.
  • The Refinance Index increased 3 percent from the previous week.
  • The seasonally adjusted Purchase Index increased 10 percent from one week earlier to its highest level since May 2010. The unadjusted Purchase Index decreased 14 percent compared with the previous week and was 6 percent higher than the same week one year ago.
  • The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances and jumbo loan balances both decreased to their lowest levels since November 2016.

Tuesday, June 6

CoreLogic Home Price Insights

“Mortgage rates in April dipped back to their lowest level since November of last year, spurring home-buying activity,” said Frank Nothaft, Chief Economist at CoreLogic. “In some metro areas, there has been a bidding frenzy as multiple contracts are placed on a single home. This has led home-price growth to outpace rent gains. Nationally, home prices were up 6.9 percent over the last year, while rent growth for single-family rental homes recorded a 3 percent rise through April, according to the CoreLogic Single-Family Rental Index.”

Source: CoreLogic Home Price Insights

Source: CoreLogic Home Price Insights

  • Home prices nationwide, including distressed sales, increased year over year by 6.9 percent in April 2017 compared with April 2016 and increased month over month by 1.6 percent in April 2017 compared with March 2017.
  • The CoreLogic HPI Forecast indicates that home prices will continue to increase both year-over-year and month-over-month by 5.1 percent and 0.7 percent, respectively.
  • Both the CoreLogic HPI Single Family Combined tier and the CoreLogic Case-Shiller Index are posting positive, but moderating year-over-year percent changes, and forecasting gains for the next year.
  • Fixed-rate mortgage interest rates are down by one-fourth of a percentage point since mid-March.
  • Nationally, the year over year home price changed by 6.9 percent. Most states experienced increases, except Alaska, Delaware and Wyoming, with the largest gains made in Washington (12 percent) and Utah (10.1 percent).

Monday, June 5

Black Knight’s Mortgage Monitor: Q1 2017 Originations Fall 34 Percent, Led By 45 Percent Drop in Refinance Lending; Despite Recent Rate Softening, Home Affordability Remains Near Post-Recession Low

“Overall, first lien mortgage originations fell by 34 percent in the first quarter of 2017,” said Black Knight Data & Analytics Executive Vice President Ben Graboske. “As expected, the decline was most pronounced in the refinance market, which saw a 45 percent decline from Q4 2016 and were down 20 percent from last year.”

  • Because of the upward interest rate shift seen in Q4 2016, Q1 2017 purchase and refinance originations have both seen significant quarterly declines in volume.
  • Refinance lending among higher-credit-score borrowers saw a quarterly decline of 50 percent.
  • After surpassing their pre-crisis peak for the first time in February, home prices rose another 1.3 percent in March – the largest monthly increase in nearly four years.

Email market reports to press@inman.com.