Single Female First Time Home Buyers Increase to 2011 Levels

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Published Date 10/30/2017

Realtor Report

Single Female First Time Home Buyers Increase to 2011 Levels:

The National Association of Realtors® has released its 2017 Profile of Home Buyers and sellers. Single women were the second-largest segment of the buyer market at 18%, behind married couples, who make up 65% of the market. The percentage of single women, the highest since 2011, is partially attributable to a more favorable job and income prospects.

The survey also found that 92% of all purchases and sales involved real estate agents, leaving just 8% of the transactions were for-sale-by-owner, an all-time low.

The average age of first-time buyers stayed the same, at 32 years, while that of repeat buyers increased slightly from the previous year to 54 from 52 years of age.

First-timers’ income was slightly higher than last year, $75,000 compared to $72,000, while the older repeat buyers reported household income roughly the same: $97,500 compared with $98,000 from the previous year.

Repeat buyers chose houses of the same size from last year, 2,000 square feet, but they paid more for them: $266,500 compared with last year’s average of $250,000.

Most buyers continue to prefer the suburbs; 85% bought in the outlying areas, compared with just 13% remaining in cities. Single-family detached homes retain their preferential position in the inventory, accounting for 87% of the sales for the third straight year. Inventory shortage continues to play a significant part in rising prices; 42% of the buyers paid asking price or higher for their homes compared to 40% last year, but in the western states, 51% paid the list price or higher.

Public perception of the market likely plays a part in these numbers. Although lending standards have remained essentially the same for several years, prospective buyers seem to be more confident in their ability to qualify for a mortgage. The minimum credit standards for conventional loans remains at 620, and 580 for FHA loans. Fannie Mae and Freddie Mac, the investors who buy most mortgages in the U.S., have loosened their qualifying standards slightly, allowing higher debt-to-income ratios than before, allowing more buyers to qualify.

Source: NAR.realtor

This Week's Mortgage Rate Summary

How Rates Move:

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market. This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates or pricing generally goes down. When they fall, mortgage pricing goes up.

Rates Currently Trending: Lower

Mortgage rates are trending lower so far today. Last week the MBS market worsened by -1bps. This caused mortgage rates to move sideways. Mortgage rates were actually very volatile for the week.

This Week's Rate Forecast: Neutral

Three Things: These are the three areas that have the greatest ability to impact mortgage rates this week. 1) Central Bank, 2) Geopolitical and 3) Domestic.

1) Central Bank: Believe it or not, we have a Fed meeting this week. The market keeps talking about a potential December meeting rate hike, but you never hear about the November 1 meeting. That is because unlike the December meeting, this one is not followed by a live press conference with Janet Yellen. Since they just announced their "taper" last time around, look for no change to that plan. The bond market will be looking for forward guidance on rate hikes. The BofE (Bank of England) will also be in the spotlight as they are widely expected to raise their rates.

Fed Chair: We are supposed to learn who President Trump's nomination for Fed Chair on Thursday.

2) Geopolitical: Domestically, we are supposed to get the official Tax Reform bill and will learn what the proposed plan includes. This can have a significant impact on mortgage rates depending on how stimulative bond traders perceive it. Overseas, Spain/Catalonia, as well as North Korea, are still providing upward momentum on long bonds.

3) Domestic: While the markets are expecting a "pass" by the FOMC this week, we have plenty of economic data with the gravitas to shift expectations of their next action with ISM Manufacturing and Services, PCE and Consumer Confidence. But its Friday's Jobs report that will carry the most weight as we look for a major rebound from -33K jobs in the last report to +300K in this report. As usual, Average Hourly Wages will get a lot of attention.

This Week's Potential Volatility: High

There are a lot of events this week that can move mortgage rates and cause volatility. The Fed Chair announcement and the tax plan being the two big ones, but Friday's jobs report could undoubtedly move rates as well.

Bottom Line:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.

Source: TBWS

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