• October 2, 2022

Relief May FINALLY Be On The Way For The American Home Buyer…

According to top economists from government-backed mortgage company Freddie Mac, the housing market is prepared for its “most significant contraction” since 2006, as declining purchase activity makes  “some relief” in prices possible.

“The U.S. housing market is at the beginning stages of the most significant contraction in activity since 2006,’” Len Kiefer, deputy chief economist at Freddie Mac FMCC, +1.82%, tweeted.

“It hasn’t shown up in many data series yet, but mortgage applications are pointing to a large decline over summer, he explained. He said home-purchase mortgage applications are down 40% from their most recent peak in 2021.

In fact, purchase and refinance applications are at their lowest point in 22 years.

Mortgage applications dropped 40% in the early days of COVID-19’s arrival in the United States in spring 2020, according to Kiefer, but “roared back in short order.” The pandemic prompted many Americans to rethink their lives and chevalier their remote work options, sending the national housing market into a frenzy.

In today’s environment, as mortgage rates surge and prices remain sky-high, “such a rebound is unlikely,” Kiefer tweeted. “But neither is the very very slow recovery we saw in 2011.”

After reaching over $500,000 earlier this year, Kiefer remarked that the average conventional mortgage loan size in the United States is now “moderating.” Despite the fact that loan size is down 8% from its recent high, “it’s still up more than 25% from where it was at the start of 2020.”

Mortgage applications, as a data point, “gives you a sense of where the market might be headed,” Kiefer said. “Because that’s the early stages of when people are looking to buy a home. And if the volume of applications falls, that tends to indicate that in a month, month and a half, mortgage originations of home closings will also decline.”

But that doesn’t mean a bubble is about to burst like what we saw in 2006.

Sources: Dailywire, Realestateguru, Yahoo

 

The Daily Allegiant