Just like the price of gasoline, mortgage rates are very slow to come down, but they tend go up like a rocket – and with the surprising employment news today, we’ll probably get back into the mid-3s by Monday. We’ll see if the lowest rates in history were the sole reason why showings rebounded so quickly. From cnbc:
What’s good news for the U.S. economy is suddenly bad news for mortgage rates. A far-better-than-expected May employment report only added to a growing sell-off in the bond market, pushing yields to the highest level since March. Mortgage rates loosely follow the yield on the 10-year Treasury.
Rates have been rising this week, after sitting around a record low for the last two weeks. Friday, the average mortgage shopper may see rates on the 30-year fixed as much as a quarter point higher, according to Matthew Graham, COO of Mortgage News Daily, which runs daily averages from lenders.
For those with top-tier credit and financials, they may only see an eighth of a point increase, but for those with lower scores and down payments, the jump could be as much as 0.375%.
“It’s going to be ugly,” said Graham. “Today is the first time since the Covid-19 market reaction settled down in March that interest rates truly have a reason to panic. Until further notice, this looks like liftoff.”
This is not, of course, the last word in a mortgage market that has been on a rate roller-coaster ride fueled by a massive spike in mortgage delinquencies, an initially confusing and risk-ridden government bailout, and an overstressed loan servicing system. The mortgage bailout has been clarified, with parts rewritten to help servicers, the number of borrowers in forbearance plans is shrinking and mortgage companies are on a massive hiring spree.
Our coronavirus showing disclosure form changes every week (sometimes multiple changes per week) and now it’s literally up to EIGHT pages long. Every buyer has to sign a new form for every house they want to see, in advance, and by electronic signatures only.
But it hasn’t slowed down showings – we are back to where we were last year!
It looks like we are beyond the worst of it, and we’re on our way…..as long as rates stay in the low-3s and nothing really bad happens for the next 2-3 months.
The active and pendings counts have been rising steadily for four weeks, so we can say that the bottom was in mid-April. Here are the weekly numbers for the last two months:
Weekly NSDCC New Listings and New Pendings
There is some concern in the Over-$3,000,000 category. The active inventory jumped +7% this week, and now there are 252 houses for sale, and 23 pendings. But nothing new there!
Showings have steadily improved – here are the percentages off the 2020 weekly average:
April 13: -60.4%
April 19: -41.1%
April 25: -21.7%
It looks like they re-adjust their graph based on the new weekly average.
The top graph shows that on March 28th (the last day of agents being considered non-essential), showings were off about 70% from the weekly 2020 average. Today’s graph only shows the bottom to be at -49% (on April 6th & 12th). So the improvement has actually been better than today’s graph portrays.
Did anyone expect that?
Buyers want to get a jump on the market – plus realtors have to eat.
The governor’s stay-at-home order was issued on March 19th (red line), but showings had already been dropping steadily. Realtors were changed to essential workers on March 28th, but it doesn’t look like agents rushed back to work. The weekly average improved from -68.9% on the 28th to -57.3% yesterday. At least it’s heading in the right direction – we’d like to avoid a complete meltdown if possible.
On average it probably takes at least 2-3 showings minimum to procure a sale. Some homes sell after the first showing, and other take many more visits so averaging 2-3 before finding a buyer is optimistic – but in this era only the highly-motivated buyers are looking in person.
The seven-day moving average was +32% on March 8th, and now the average is -68.7%! This is during the peak showing season too!
But at least the current trend looks like it is flattening out? Hopefully the change of realtors being declared essential workers will mean more activity, but it might be too late already.
This will probably be the death knell for buyer-agents, especially if the ‘rona tightens the supply further, which would cause fewer listings to make it onto the MLS.