November 2021 Monthly Market Report

November 13, 2021

ShowingTime’s Monthly Index: Starting To Level Off With an average of 175 March and April dipped to 128.4 and 84.9, respectively. We see 235.8 in January of this year all the way to 283.8 in March. This has now fallen to 175.5. https://showingindex.stats.showingtime.com/docs/lmu/x/UnitedStates?src=page

 

Taking a look at ShowingTime’s Monthly Index you can see the dip down during the lockdown of the pandemic, the dramatic increase of business in the first part of this year, and now we’re starting to level off. So, we are slowing down, but let’s put that into perspective…

 

ShowingTime Index Over the  Last 5 Septembers 2017 at 111.3, 2018 at 106.9, 2019 at 112.2, 2020 at 184.5, and this year at 175.5. https://www.showingtime.com/showingtime-showing-index/

 

What we are seeing is that while the market is normalizing, we are well ahead of where we were in 2017, 2018, and 2019.

 

Sales NSA in September (548,000) were 2.7% below sales in September 2020 (563,000). Excluding last September (distorted by the delayed selling season), sales NSA were the strongest since 2005!  Bill McBride, Calculated Risk

 

Since the headlines tend to terrify more than clarify, let’s discuss a few headlines you may come across.

 

Realtor.com article “Foreclosures are shooting up – is it a repeat of the early 2000s housing crisis?

 

While foreclosures are up 49% last month (according to ATTOM Data), that is nowhere near where we were in 2019 – a more normal market.

 

Cnbc article: mortgage originations will drop 33% in 2022 as interest rates rise, according to industry forecast

 

Refinance originations will drop in 2020, but that makes sense – in a rising interest rate environment, we will see less refinances.

 

Right now, we forecast mortgage rates to average 3.3 percent in 2022, which, though slightly higher than 2020 and 2021, by historical standards remains extremely low and supportive of mortgage demand and affordability.  Doug Duncan, Senior VP & Chief Economist, Fannie Mae

 

We are seeing a projection for increasing mortgage rates – it will cost more to purchase a home. While mortgage rates are ticking up a little they will remain historically low, and that will support affordability.

 

Mortgage Rates Freddie Mac30-Year Fixed Peaked at 5^% in January 2018 and are projected at 3.2,  3.4, 3.5 and 3.6 in 20201 q4, 2022 q1, and so forth. http://www.freddiemac.com/pmms/pmms_archives.html http://www.freddiemac.com/research/forecast/20211015_quarterly_economic_forecast.page?

 

According to Freddie Mac, mortgage rates were just under 5% in 2018 and they’ve dropped pretty significantly since then. We hit the all-time low at the very end of last year and they’ve started increase again. They are projected to rise to roughly 3.6% by this time next year. As mortgage rates get higher, it becomes more expensive to purchase a home. Mortgage rates aren’t the only thing on the rise for next year – home prices are forecast to appreciate as well.

 

Hoem price forecasts 2022: 7.4% fannie mae, 7% Freddie mac, 5.2% MBA, 5.1% HPES, 3% Zelman and 2.8% NAR for an average of 5.1%.  https://www.mba.org/news-research-and-resources/research-and-economics/forecasts-and-commentary https://cdn.nar.realtor/sites/default/files/documents/forecast-Q4-2021-us-economic-outlook-10-28-2021.pdf https://www.fanniemae.com/research-and-insights/forecast http://www.freddiemac.com/research/forecast/index.page https://pulsenomics.com/surveys/#home-price-expectations

 

Industry experts are averaging out to about 5.1% home price appreciation next year. While appreciation is slowing, it is forecasted to continue to appreciate, just at a slower or more moderate rate (or decelerated rate – not a decline but a slower rate of appreciation). It is going to get more expensive to purchase a home. In addition, supply is low and demand is high, which will also attribute to rising prices.

 

Home Sales Forecast To Increase This  Year and Perform Well Again in 2022  Fannie mae predicts 6.7M in 2021 and 6.6 in 2022, Freddie mac at 6.8M and 6.8M, NAR at 6.8M and 6.8M, and MBA at 6.9M and 7.5M.  https://www.fanniemae.com/media/41126/display http://www.freddiemac.com/research/forecast/index.page https://www.mba.org/news-research-and-resources/research-and-economics/forecasts-and-commentary https://cdn.nar.realtor/sites/default/files/documents/forecast-Q4-2021-us-economic-outlook-10-28-2021.pdf

 

In 2020, we sold 6.5 million homes which was record-breaking. Fannie Mae, Freddie Mac, NAR and MBA are predicting roughly 6.7 to 6.9 million home sales this year for a strong finish, and potentially exceeding that next year.

 

2022 should be another strong year for the housing market.   Mike Fratantoni, Chief Economist & Senior Vice President for Research and Industry Technology, MBA

Homeownership is regarded as causing an improvement in the quality of life of a typical family. It is the most common method for such a family to build wealth…that can be used for retirement or other needs, including helping the next generation. Such wealth creation therefore provides a major social as well as economic benefit.  Don Layton, Senior Industry Fellow Joint Center for Housing Studies Harvard

Unisons 2021 state of the American homeowner. 64% of American homeowners say living  through a pandemic has made their home more important to them than ever  , 83% of homeowners say their home has kept  them safe during the COVID-19 pandemic , and 91% of homeowners say they feel secure,  stable or successful owning a home  https://contentimages.o-prod.unison.com/images/press/2021-Unison-SOTAH-Report.pdf

Taking a look at Unison’s State of the American Homeowner Report, it is obvious that the pandemic has highlighted a lot of non-financial benefits of homeownership as it has changed the features we need or want in our homes. The report also found that 58% of homeowners felt emotionally attached to their home before the pandemic – now that is 70%.

 

Buying a home is not just a financial decision. It's also a lifestyle decision.   Mark Fleming, Chief Economist at First American

 

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