Monthly Archives: May 2015

Sellers’ Market Drives Pending Sales to 2006 Levels

April saw the highest number for pending sales in nearly nine years the National Association of Realtors® (NAR) said today.  The Pending Home Sales Index (PHSI) increased 3.4 percent compared to a slightly upwardly revised March number, 108.7.  The Index was 14.0 percent above its level in the previous April representing the largest annual increase since it rose 15.1 percent year-over-year in September 2012.

NAR notes that it was the fourth straight month the PHSI, which is based on contracts signed for home purchases, had increased compared to the previous month and it has risen year-over-year for eight consecutive months.  In April it was at its highest level since May 2006 when it stood at 112.5.

Lawrence Yun, NAR chief economist, says the steady gains in contract activity each month this year highlight the fact that buyer demand is strong. “Realtors® are saying foot traffic remains elevated this spring despite limited – and in some cases severe – inventory shortages in many metro areas,” he said. “Homeowners looking to sell this spring appear to be in the driver’s seat, as there are more buyers competing for a limited number of homes available for sale.”

Adds Yun, “As a result, home prices are up and accelerating in many markets.”

Sales of existing homes fell in April but Yun says he expects a rebound heading into the summer.  The likelihood of meaningful gains however will depend on an increase in inventory and evidence of moderating price growth to offset rising interest rates.   “The housing market can handle interest rates well above 4 percent as long as inventory improves to slow price growth and underwriting standards ease to normal levels so that qualified buyers – especially first-time buyers – are able to obtain a mortgage.”

The PHSI was up in all four regions with the Northeast and Midwest especially strong.  The Northeastbounced back after four straight months of decline with a 10.1 percent gain in April to 88.3, 9.4 percent higher than in April 2014.

In the Midwest the index increased 5.0 percent to 113.0 in April, and is 13.3 percent above the previous year.  Pending home sales in the South rose 2.3 percent to 129.4 and are up 14.8 percent year-over-year.  The index in the West inched up 0.1 percent in April to 103.8, and is 16.4 percent above a year ago.

Total existing-home sales in 2015 are forecast to be around 5.24 million, an increase of 6.1 percent from 2014. The national median existing-home price for all of this year is expected to increase around 6.7 percent. In 2014, existing-home sales declined 2.9 percent and prices rose 5.7 percent.

The Pending Home Sales Index is a leading indicator based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.  An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined.


Mortgage Rates Slightly Lower

Mortgage rates were just slightly lower in most cases today.  Last Friday, rates did a bit better than the underlying market weakness would have suggested, and now today, they’ve done a bit worse than the underlying strength would suggest, leaving them right about where they should be if the past two business days never happened.  The most prevalently-quoted conventional 30yr fixed rate remains 4.0% with some lenders continuing to offer 3.875%.  In most cases, the differences in rates over the past few days will only be seen in the form of varying closing costs as opposed to changes in the actual contract rate.

Despite the gentle movement since Thursday, the past few weeks have seen more than their fair share of volatility.  In terms of the bigger picture, rates have made several attempts to move lower after spiking in early May, but each time they’ve quickly run out momentum.  Underlying market conditions are once again signaling abounce attempt is underway, but it’s not safe to plan on the good times continuing until/unless we see several days in the near future with even stronger improvements.

New Homes Sales Recover Some of March Losses

New home sales beat most analyst expectations in April,rising 6.8 percent to a seasonally adjusted annual rate of 517,000 units and posting a 26.1 percent gain over the annual pace of 410,000 units in March 2014.  Despite the increase, April sales did not erase the 11.4 percent drop in new home sales reported in March although those sales were revised up from 481,000 to 484,000.  The consensus expectation from Econoday for April sales was 509,000 units.

On a non-seasonally adjusted basis sales of new homes nationwide were estimated at 49,000 units.  More than half of sales (26,000) were in the South.

The median price of a new home sold during the month was $297,300 compared to $274,500 in April 2014.  The average sales price was $341,500, up from $325,100 one year earlier.

At the end of the reporting period there were a seasonally adjusted estimate of 205,000 newly constructed homes available for sale.  At the current rate of sale this would be a 4.8 month supply compared to 5.1 months in March and a 5.6 month supply in April 2014.

Sales of new homes in the Northeast were down 5.6 percent from March and 0ff 19.0 percent from a year earlier.  Sales surged in the Midwest, up 36.8 percent for the month and 20.0 percent higher than in April 2014.  The South saw a month over month increase of 5.8 percent and year-over-year of 26.4 percent. The West fell back by 2.3 percent from March but sales were 39.8 percent higher than a year earlier.

Mortgage Rates Inch Lower Ahead of Holiday Weekend

Mortgage rates moved tentatively lower today.  The pace was only slightly better than yesterday when it was all but undetectable.  To those expecting more improvement based on trading levels in the bond markets that drive rates, it might seem a bit frustrating.  Understandably though, lenders tend to err on the side of caution ahead of an extended holiday weekend.

But, why be tentative due to extended weekends?  In other words, what is it about the long weekend that makes mortgage rates a bit higher than they would normally be?  There are a few reasons, but one of the easiest to understand is the fact that markets can move more over a 3-day weekend, all other things being equal.  The greater the potential volatility, the greater the cost to protect against it.  That cost is passed on directly in the form of slightly higher rates.

The average lender is still quoting conventional 30yr fixed rates of 4.0% on top tier scenarios.  The rate itself hasn’t changed this week, meaning recent improvements have been in the form of slightly lower closing costs.  A few lenders are at 3.875% and fewer still are at 4.125%.

Construction Numbers Highest Since 2007, Crushing Expectations

Residential construction numbers soared in April after a dismal March and both the number of residential permits issued and housing starts easily outpaced the expectations of analysts surveyed earlier by Reuters.  The numbers were especially strong in the Northeast region as its unusually harsh winter ended.  The construction data was provided in a joint release from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development

Permits for residential construction were issued at a seasonally adjusted annual rate of 1,143,000 units, an increase of 10.1 percent from the slightly downgraded (from 1,039,000 units) March estimate of 1,038,000 units.  Analysts had forecast permits at 1.06 million units.  The current estimate is an increase of 6.4 percent from the 1,074,000 units permitted in April 2014.

There were 666,000 permits issued for single family construction during the month, up 3.7 percent from March’s 642,000 permits.  Construction was authorized for 444,000 units in buildings with five or more units compared to 370,000 units in March, an increase of 20.0 percent.

On a non-seasonally adjusted basis there were a total of 105,000 permits issued during the month compared to 91,300 in March.  Permits for single family construction rose from an estimated 57,500 in March to 64,000.

Housing starts nationally jumped by 20.2 percent from a month earlier to a seasonally adjusted annual rate of 1,135,000.  Analysts had expected a rate of 1.02 million.  The March estimate of housing starts was revised from 926,000 to 944,000.  On an annual basis starts were 9.2 percent higher than a year earlier when the estimate was 1,039,000 units.

Single-family construction was begun on an estimated 733,000 units, an increase of 16.7 percent from the revised (from 618,000) March estimate of 628,000.  Construction was begun on 389,000 units in multi-unit buildings, up from 295,000 in March.

The month-over-month improvement in starts was even more apparent after looking at non-seasonally adjusted numbers.  April starts were estimated at 103,600 compared to 78.800 in March.  Single family starts numbered 69,200, up from 53,200

Housing units were completed at a seasonally adjusted annual rate of 986,000, a 20.4 percent jump from the previous month’s estimate of 819,000 (revised down from 823,000), and 19.4 percent more completions than in April 2014 when 826,000 units were completed.

Single family completions in April were at the rate of 688,000 units, a 14.5 percent increase from March and up 15.2 percent from a year earlier.  There were an estimated 288,000 multi-family units completed.

On a non-seasonally adjusted basis completions nationwide were estimated at 76,100, 53,600 of which were single family units.

At the end of the reporting period there were an estimated 853,000 housing units under construction nationwide, 363,000 of them single-family homes.  There were 134,000 permits outstanding for which construction had notyet begun, including 62,000 single-family permits.

The surge in numbers in the Northeast covered all phases of construction. Permitting rose 38.8 percent over March and 57.0 percent compared to a year earlier.  Starts were up by 85.9 percent compared to March and 52.1 percent on an annual basis and completions increased by 73.3 percent and 42.5 percent respectively.

In the Midwest permits declined by 1.3 percent compared to March and 7.5 percent from a year earlier.  Housing starts however rose 27.8 percent month-over-month but remained 10.5 percent lower than in April 2014.  Completions were up 82.5 percent for the month and were 51.6 percent higher than a year earlier.

The South posted a 9.9 percent increase in permits from March and 1.3 percent from April 2014. Starts were down 1.8 percent for the month but 3.5 percent above those the prior year. Completions were up 2.2 percent from March and 7.4 percent year-over-year.

Permits were up 3.0 percent in the West compared to March and 3.4 percent higher than the previous April.  Starts jumped by 39.0 percent and 14.9 percent for the two earlier periods.  Completions were 13.9 percent higher than in March and 16.8 percent above the April 2014 level.


TRUTH ABOUT INTERNET MORTGAGE COMPANIES ! a lot of horror stories about people using web based lending sites like quicken loans and lending tree. Here’s the truth (potential home buyers need to do their homework).

Example 1. LENDING TREE – is a LEAD generating service. They sell the information they gather to lenders and  brokers.  If the first company they sell this information wants to pay premium they will be the only lender who receives the lead. Otherwise  Lending Tree will sell the lead to up to 3 more lenders/brokers. Borrowers  using Lending Tree get the luck of the draw regarding how good (or >bad) the  offers are that they receive.

2. QUICKEN LOANS – This company charges $400.00 and states they can complete a mortgage for you, then 65% do not qualify or close and the $400.00 is non-refundable (Don’t ever pay an up front fee for an application.

Sal Criscuolo

“The Mortgage Expert”

NMLS# 65070 


O: 718.869.4795

Mortgage Rates Catch a Break, but It’s Small

Mortgage rates finally caught a break today.  This is quite a welcome development (indeed, yesterday’s commentary pointed out that no breaks were being caught!), but the magnitude of the improvement left something to be desired.  Still, we’ll take what we can get at the moment.  For most borrowers, today’s improvement will simply decrease the closing costs associated with the rates they were already being quoted.  For conventional 30yr fixed loans, the average lenders remains at 4.0% for top tier borrowers.  A few of the most aggressive lenders (emphasis on few) are at 3.875% while more than a few are up at 4.125%.

Today’s positivity creates a natural question: is this the beginning of a bigger bounce?  We may well have asked the same question late last week after two days of improvement on Thursday and Friday.  The consensus at that time was that we’d need to see more evidence of strength before considering that it was anything other than a correction given the massive momentum heading toward higher rates.  Now today, with the past 3 trading sessions resulting in successive 2015 highs for rates, this one minor bounce back is also clearly not enough to suggest anyone lower their guard or abandon their lock bias.

Unfortunately, there is no way to know which day will be THE day when the bigger bounce begins to happen.  It very well could be today, and betting accordingly would have a big payout, but it would take an extreme level of risk tolerance–not to mention ‘willingness to lose money if you’re wrong’–to gamble on that being the case.  Recent and long-term history suggest that the best course of action is to lock until the tenor of the market has decidedly shifted.

Purchase Applications Fare Better Amid Rising Rates

Rising interest rates took a toll on mortgage applications again during the week ended May 8.  The Mortgage Bankers Association said that its Market Composite Index a measure of overall mortgage application volume, was down 3.5 percent on a seasonally adjusted basis from the week ended May 1 and down 3.0 percent unadjusted.  It was the third straight losing week for both the adjusted and unadjusted composites.

Most of the drop was because applications for refinancing lost 6 percent from its index level the previous week.  Fifty-one percent of all mortgage applications were for refinancing compared to 52 percent the week before.  This was the smallest share of applications for refinancing since May 2014.

Applications for home purchase mortgages were almost flat compared to the previous week.  The seasonally adjusted Purchase Index dipped by 0.2 percent and the unadjusted index was up a scant 0.1 percent compared to the week ended May 1.  The unadjusted purchase Index was 12 percent higher than at the same time in 2014.  Applications for purchase mortgages set a new high dollar mark for the second week in a row rising to an average of $298,500.

The FHA share of total applications decreased to 13.8 percent from 14.0 percent and the VA share was unchanged at 11.9 percent. The USDA share of total applications increased to 0.9 percent from 0.8 percent the week before.

Both contract and effective rates were higher for all loan products than during the preceding week and all contract rates hit their highest levels since March.  The average contract rate for conforming 30-year fixed-rate-mortgages (FRM) with loan balances of $417,000 or less increased to 4.00 percent from 3.93 percent.  Points rose to 0.36 from 0.35.

Jumbo 30-year FRM, loans with balances over $417,000, had an average rate of 3.99 percent, an 8 basis point increase from the previous week.  Points jumped to 0.33 from 0.24.

The share of applications that were for adjustable rate mortgages (ARMs) rose from 51 to 52 percent during the week while the average rate for 5/1 ARMs increased to 3.00 percent from 2.87 percent.  Average points increased to 0.46 from 0.33.

Mortgage Rates Keep Pushing 2015 Highs

Mortgage rates moved disconcertingly higher again today, despite the fact that underlying market levels actually improved during the day.  Guaranteeing rates in such a volatile environment is expensive for lenders.   The result is yet another high for 2015.  The average lender is quoting conventional 30yr fixed rates of 4.0% on top tier scenarios.  Just a few short weeks ago, the average rate was 3.625%.  That makes this the most abrupt move higher in roughly 2 years, with the last notable example being the mid-2013 ‘taper tantrum.’

Motivations are different this time around.  While much of the media attention is on the prospects for a Fed rate hike, the recent volatility has much more to do with Europe.  That’s a rather esoteric and illogical topic for many rate-watchers in the US, but that makes it no less real.  Europe has been having a significant impact on domestic rates at various times for the better part of 5 years when the first leg of the Greek drama surprised markets.  Greece is still a factor in Europe’s woes to this day, but the bigger issue is overall European economy and the role of the oh-so-new European quantitative easing program.

Rates fell around the world (but especially in Europe) throughout 2014 as markets prepared for the likelihood that the European Central Bank would embark on a Fed-style quantitative easing program.  Even after QE began in Europe, rates continued to fall.  In short, markets hadn’t quite accounted for the full effect of the bond buying.  But now that European rates seem to have bottomed out in April, market participants are wondering if that will be the big bounce.

If it is indeed the big bounce, it spells doom for US mortgage rates in the 3’s.  Of course mortgage rates aren’t determined by Europe, but they are determined by the prices of mortgage-backed securities (MBS).  The problem is that MBS take heavy cues from US Treasuries and US Treasuries can’t help but be affected by their interdependent role with other big players in global bond markets, and collectively, Europe is the biggest player apart from the US.  In other words, there’s a clearly-delineated domino effect leading from Europe to mortgage rates in the US, and although other factors are contributing, that’s the primary reason we’re back into the 4’s.

If Europe’s trajectory changes, and somehow manages to get back on it’s previous track, our fortunes stand their best chance of changing as well.  Even if our fortunes don’t change in the long term, there can still be short term pockets of correction that provide great opportunities to lock rates.  Unfortunately for now, every day is a good day to lock rates simply because we don’t have any recent track record of stability.  Every ‘tomorrow’ could see a big move higher in rates, and that will continue to a bigger risk than normal (because there’s ALWAYS SOME risk that rates will rise tomorrow) until the current trend changes.

Mortgage Rates Surge Back to 2015 Highs

Mortgage rates moved quickly back to their recent highs today as investors race to reposition for a perfect storm of risks.  The biggest risk is that European bond markets are changing course after the epic run to all time lows over the past year and a half.  Even if this isn’t a major reversal, investors are treating it as a possibility for now.  That means they’re getting rid of bond market holdings as quickly as possible, which pushes prices lower and rates higher.  Because US rates are interconnected with European rates, the selling spree is being felt on mortgage rate sheets at home.  Most lenders are back to their highest recent rates, meaning the average conventional 30yr fixed  quote is up to 4.0% for top tier scenarios.

It’s important to understand that if the current move really does turn out to be the big bounce in Europe that things could get much worse.  It’s equally important to understand that if markets were already firmly convinced of that, things would already BE much worse.  They’re not convinced, but they’re considering it more seriously than at any other time since the long move toward lower rates began in 2014.  It’s a high risk environment in terms of what you can lose by floating.  It’s also a high reward for those who float and happen to be right.  For the average borrower, floating here is not worth the risk, as rates could easily move .125% higher on any given day before lenders are even open for locks.