Inman

Real estate daily market update: December 27, 2017

AshDesign / Shutterstock.com

 We’ll add more market news briefs throughout the day. Check back to read the latest.

Most recent market news

Tuesday, December 26

Redfin Housing Demand Index fell 6.2 percent from October to November

“Three years of low inventory is taking its toll on buyer demand in terms of tour and offer activity,” said Redfin chief economist Nela Richardson.

“People still want to buy homes, especially before mortgage interest rates increase and prices rise even more. But there just aren’t enough homes for sale, especially at lower- to mid-level prices.”

S&P CoreLogic Case-Shiller Home Price Indices

Click image for press release

“Home prices continue their climb supported by low inventories and increasing sales,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices.

“Nationally, home prices are up 6.2% in the 12 months to October, three times the rate of inflation. Sales of existing homes dropped 6.1% from March through September; they have since rebounded 8.4% in November. Inventories measured by months-supply of homes for sale dropped from the tight level of 4.2 months last summer to only 3.4 months in November.

“Underlying the rising prices for both new and existing homes are low interest rates, low unemployment and continuing economic growth. Some of these favorable factors may shift in 2018. The Fed is widely expected to raise the Fed funds rate three more times to reach 2% by the end of the New Year.

“Since home prices are rising faster than wages, salaries, and inflation, some areas could see potential home buyers compelled to look at renting. Data published by the Urban Institute suggests that in some West coast cities with rapidly rising home prices, renting is more attractive than buying.”

Fannie Mae Q4 2017 Mortgage Lender Sentiment Survey: Mortgage lenders approach 2018 with negative outlook on profit margin, refinance activity

Purchase mortgage demand

Refinance mortgage demand

Easing of credit standards

Mortgage execution

Mortgage servicing rights (MSR) execution

Profit margin

Source: Fannie Mae

“Key trends have persisted throughout this year,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “Lenders who see declining profits outweighed those noting improvements in the bottom line for the fifth consecutive quarter. Three-fourths of those seeing deteriorating profits cite competition as the most important reason — a survey high — compared with only about one-third two years ago.

“This is not surprising given that refinance volume continues to shrink. More lenders reported a pullback in refinance demand from the prior quarter than those who saw an increase, continuing the trend that started at the beginning of the year.

“This finding is consistent with our forecast for a steady drop in refinance originations this year. With the outlook calling for rising interest rates and continued tight housing inventory constraining home sales, increased competition will likely continue to drive lenders’ mortgage business strategies.”

Email market reports to press@inman.com.