Home Price Growth to Wane Soon; Delinquencies to Remain Up Until 2022

A roundup of news and information from around the web about real estate, personal finance, and the economy.

Home Prices Up 14%, But Price Growth May Wane Soon

The median home sale price increased 14% year over year to $319,769—the highest on record, according to a new report from Redfin. The 14% jump was the largest since August 2013.

Since the four-week period ending July 5, home prices have increased 6.5%. Over that same period in 2018 and 2019, prices declined an average of 4.2%

Below are other key housing market takeaways for 434 U.S. metro areas during the four-week period ending September 27:

The median asking price of new listings was up 12.8% from a year earlier. This growth rate has been declining since the four-week period ending August 30, when it peaked at 15.7%.
Pending home sales climbed 30% year over year.
New listings of homes for sale were up 5% from a year earlier. Year-over-year growth in new listings have been above 5% since the four-week period ending August 16.
Active listings (the number of homes listed for sale at any point during the period) fell 28% from 2019 to a new all-time low. The rate of year-over-year supply declines has remained consistent at this level for the past few months.
45.8% of homes that went under contract had an accepted offer within the first two weeks on the market. This has also held relatively steady for the last 17 weeks.
The average sale-to-list price ratio, which measures how close homes are selling to their asking prices, rose to 99.4%—an all-time high and 1.2 percentage points higher than a year earlier.
For the week ending September 27, the seasonally adjusted Redfin Homebuyer Demand Index was up 34.8% from pre-pandemic levels in January and February.
Mortgage applications decreased 2% week over week during the week ending September 25. For the week ending October 1, 30-year mortgage rates fell to 2.88%. Rates have been below 3% since late July.

Read the rest of the report here.

At Current Rate of Improvement, Delinquencies Will Remain Above Pre-Pandemic Levels Until 2022

Loss Mitigation and High Levels of Equity Help Mitigate Foreclosure Risk

The Data & Analytics division of Black Knight, Inc. has released its latest Mortgage Monitor Report, based upon the company’s industry-leading mortgage performance, housing, and public records datasets. This month’s report found that—after tracking relatively closely to the deterioration and recovery timelines of recent natural disasters—the trend lines of COVID-19’s impact on mortgage performance have begun to diverge.

As Black Knight Data & Analytics President Ben Graboske explained, while this divergence suggests a prolonged recovery period may lay ahead, there are several mitigating factors which together could help lessen the size of a follow-on wave of foreclosures.

Highlights of the report include:

After tracking closely to the recovery pattern following natural disasters in early months, the trend lines of COVID-19’s impact on mortgage performance have begun to diverge and indicate a longer recovery period ahead
Carrying forward the 3-month average rate of improvement since mortgage delinquencies peaked in late May shows that delinquencies will remain above pre-pandemic levels for another 19 months
The same trend would result in more than 1 million excess delinquencies in March 2021 when the first wave of forbearances reach their 12-month expiration period
While 90-day delinquencies typically peak 3-4 months following natural disasters, we have now seen five months of continual increases in such serious delinquencies albeit more moderately in August than in prior months
Of the 6.1 million homeowners who have been in COVID-19-related forbearance plans, 41% (2.4M) have since exited, with the vast majority of those borrowers currently performing; of those who remain past due, 267,000 are in active loss mitigation with their lenders
Just 54,000 loans are past due and not in active loss mitigation, and 70% of these were already past due in February before the pandemic began to impact mortgage performance
Record levels of equity continue to help mitigate foreclosure risk, with only 9% of homeowners in forbearance having less than 10% equity in their homes

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September Is No Longer the Best Time to Buy a Home

Homes Sold Faster in September Than in August for the First Time Since 2016

September is typically the best time of year to buy a home because there are usually more homes for sale, less competition from other buyers, and lower home prices—but that is not the case this year, according to Realtor.com’s September Monthly Housing Trends Report. Instead, a pandemic-fueled buying spree has led to an unusually competitive fall homebuying season where typical buyers are paying roughly $20,000 more for a home and face 25% more competition than at the start of the year.

“Many buyers tend to put their home search on hold after the start of the school year, but remote learning and the desire for more space continued to fuel buyer interest in September,” said Danielle Hale, chief economist, Realtor.com. “Unseasonably high buyer interest coupled with historically low inventory and favorable mortgage rates are creating a perfect storm in the housing market. While this is good news for anyone looking to sell their home, it has created tremendous competition among buyers.”

Last year the best time to buy a home was the week of Sept. 22-28 and if 2020 was following the same pattern, it would have been Sept. 20-26. During this week, the housing market has typically cooled down, but this year:

Listings are down 21% compared to the start of the year. Typically, there are 17% more homes available in September than at the start of the year.
Homes cost about $20,000 more than expected. Home prices are usually up about 10% in September, but this year they are up 17% compared to the start of the year.
Homes are selling 12 days faster than expected. Homes usually sell 25% faster than the start of the year, but in 2020 they sold 39% faster.
There are 25% more buyers in the market compared to the start of the year. Usually, there are only 9% more buyers in the market compared to the start of the year.

Learn more here.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.