Homes are selling even faster than they were at this time last year as buyers continue to compete in the housing market. Housing inventories are lower as well, down 28% from a year ago. In December 2021, the National Association of REALTORS® reported that existing homes for sale fell to an all-time low.

With fewer listings of homes last week, buyer interest again outpaced homes available, writes Danielle Hale, realtor.com®’s chief economist, in a weekly analysis posted at the site.

“With fewer homes for sale now than this time last year, homes are selling faster and successful buyers have to move quickly,” Hale writes.

Seventy-nine percent of homes sold in December 2021 were on the market for less than a month, according to the National Association of REALTORS®. Properties typically remained on the market for just 19 days in December.

As rents rise at a double-digit pace, renters are looking to homeownership for the safety net of a steady mortgage and hopes of long-term appreciation. Mortgage rates that remain under 4% are also an incentive.

However, the fear of rising rates has driven a “rush on new-home sales as buyers try to sign contracts to lock-in rates and beat further cost increases,” Hale says.

Hale says housing indicators point to additional sellers entering the market this spring, which buyers would welcome as they look for a bigger selection in the housing market. Surveys show that more homeowners are planning to sell over the next 12 months. With single-family home construction at a 1 million–plus pace, inventory is expected to improve in the coming months.

“Additional housing supply is what’s needed to help first-time home buyers and add momentum to the homeownership rate,” Hale says. Source: realtor.com®

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Mortgage Rates Hold at 3.55%

Borrowing costs held mostly steady this week, but how long will the reprieve last?

Mortgage rates continue to follow the trend of the 10-year Treasury yield and have stayed flat over the last three weeks.

As the economic recovery continues through the spring and summer, mortgage rates are expected to resume their upward trajectory, says Sam Khater, Freddie Mac’s chief economist.

But for now, “since mortgage rates are still near historic lows, many people are rushing to benefit from these rates,” Nadia Evangelou, National Association of REALTORS®’ senior economist and director of forecasting, writes on the association’s blog.

Freddie Mac reports the following national averages with mortgage rates for the week ending Feb. 3:

• 30-year fixed-rate mortgages: averaged 3.55%, with an average 0.8 point, unchanged from last week. Last year at this time, 30-year rates averaged 2.73%.
• 15-year fixed-rate mortgages: averaged 2.77%, with an average 0.7 point, dropping from last week’s 2.80% average. A year ago, 15-year rates averaged 2.21%.
• 5-year hybrid adjustable-rate mortgages: averaged 2.71%, with an average 0.3 point, rising slightly from last week’s 2.70% average. A year ago, 5-year ARMs averaged 2.78%.

Freddie Mac reports commitment rates along with average points to better reflect the total upfront costs of the mortgage. Source: Freddie Mac and “Instant Reaction: Mortgage Rates: February 3, 2022,” National Association of REALTORS® Economists’ Outlook blog

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A new survey shows that real estate agents are more confident about the state of the market than many consumers. Seventy-seven percent of home buyers and sellers say they believe there’s a housing price bubble where they live, according to a Redfin consumer survey of 1,500 respondents who plan to buy or sell in the next year. 

On the other hand, less than half—44%—of real estate agents say they believe there’s a housing bubble in their market, with the rest feeling far more confident about the state of the market.

Over the last year, many leading housing economists have said that while housing prices are indeed rising quickly, this isn’t a housing bubble, bearing little resemblance to the booming market conditions that led to a financial crisis in the mid-2000s.

Housing bubbles occur when home prices reach unsustainable growth. They eventually burst when demand can no longer justify the rapidly rising home prices. Sharp price declines can result.

NAR Chief Economist: ‘This Isn’t a Bubble’

But this isn’t 2006. Housing inventories are low, credit remains tight, and lenders aren’t issuing risky loans as they did then.

“Home buyers and sellers are rightfully concerned about how fast prices are rising, especially those who remember the housing market crash during the Great Recession,” says Daryl Fairweather, Redfin’s chief economist. “What we’re going through right now is closer to a ripple in the water than a bubble. Mortgage rates are already going up, which will likely stabilize demand and reduce the risk of a bubble that could burst.”

Home prices are expected to slow in 2022. The National Association of REALTORS® predicts price growth to moderate to 3% to 5% in 2022, much lower than the nearly 16% annual growth existing-home sale prices posted in December 2021. Source: “Are We in a Housing Bubble? Homebuyers Say Yes, Redfin Experts Say No,” Redfin (Jan. 21, 2022)

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Greens may dominate paint firms’ lists of the hottest color of the year, but neutral colors still reign for the largest buyer pool. Eighty-one percent of interior design experts recently surveyed say whites and creams are the best colors to use when selling a house in 2022, according to the Paint & Color Trends 2022 Report conducted by Fixr, a home improvement resource.

“Whites and creams make a neutral, clean, fresh backdrop for many rooms,” according to the report. “You can still include color in your textiles if you want to add personality to the space, but it can make it easier for prospective buyers to see their own furnishings in a space when looking at a white or light-colored wall.”

On the exterior of homes for sale, white is the most frequently recommended color for the second consecutive year, according to Fixr. White received 58% of the vote from designers this year. Off-white also has increased in popularity, nabbing 41% in this year’s survey.

“White and off-white can both make a home look fresh, clean, and new regardless of age,” the study says. “These colors have nearly universal appeal, helping improve the curb appeal of a home and making it more likely to sell in a timely way.”

Source: “Paint & Color Trends 2022,” Fixr.com (2022)

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The housing market remains competitive, but not to the point where home shoppers will overlook some kinds of flaws in a home. Exterior issues, like bad siding or loose bricks, and weatherproofing issues are among the biggest issues that home buyers said would make them pass on a home, according to a survey from HomeAdvisor of more than 1,700 homeowners about their biggest deal breakers.

But home buyers will still pursue homes that simply need some TLC or may have other, smaller flaws that could be flagged on a home inspection report.

Buyers say they are still likely to pursue a home if the home is in a fire zone or has lead paint, radon, or yard or landscaping issues, the study says.

Home buyers are showing a willingness to remodel when needed. The most important factors to them when they buy: price, home size, and an updated kitchen, the study finds.

Source: “Study Reveals Americans’ Homebuying Deal-Breakers,” HomeAdvisor (Jan. 10, 2022)

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Classic white remains the most popular color choice in kitchens, but homeowners continue to experiment with wider palettes for that room and other areas of the home.

“With white kitchens, there’s never a risk of looking dated in a few years, while the sleek minimalistic feel is effortlessly complemented by dark counters or contrasting kitchen accessories,” says Living Cozy, a home design resource, which analyzed global search data about design over the last 12 months.

White also ranked in the three most popular for several rooms in the house that might “benefit from the illusion of more space,” such as pantries, home offices, and laundry rooms, according to the study.

Green is becoming a more common choice in kitchens, ranking second. It has emerged as one of the trendiest colors of 2022 and also ranks within the top three for all interior areas to redecorate in. Shades of sage, olive, and jade are trending, the study shows.

Blue is the third most popular kitchen color of 2022, including shades of teal, turquoise, and light blue

An unexpected color is making more headway in bedroom design: black, according to the Living Cozy study that tracked Google searches. 2022 is seeing a rise in popularity in black-painted bedrooms, including shades of charcoal and dark gray.

In the bathroom, black colors reigned again. In more than 2.2 million worldwide Google searches for bathroom colors in 2021, black was the clear winner, according to Living Cozy.

“Black bathroom ideas are stylish, modern, and chic, and are taking over the traditional chrome and gold colors that have dominated bathroom design for years,” the researchers note. “Bathrooms in 2022 incorporate dark black design elements through fixtures, feature walls, and flooring.”

In the living room, green is trending, according to the study. “Using green in your living room design can be the perfect way to bring an essence of nature indoors without the need for plants,” the designers note. “Layering different shades of green works best, from incorporating dark hues to featuring light pistachio shades.”

Source: “Colors of 2022,” Living Cozy (Jan. 24, 2022)

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Mortgage rates held steady overall this week, a welcome relief to home shoppers who may have been watching them rise week after week since the beginning of the year.

The 30-year fixed-rate mortgage averaged 3.55% this week, Freddie Mac reports.

“Following a month-long rise, mortgage rates effectively stayed flat this week,” says Sam Khater, Freddie Mac’s chief economist. “Recent rate increases have yet to significantly impact purchase demand, as history demonstrates that potential home buyers who are on the fence will often enter the market at the state of rate increase cycles.”

Economists are predicting that mortgage rates will continue to gradually increase over this year. The National Association of REALTORS® predicts rates to average 3.9% by the end of this year.

Freddie Mac reports the following national averages with mortgage rates for the week ending Jan. 27:

• 30-year fixed-rate mortgages: averaged 3.55%, with an average 0.7 point, dropping slightly from last week’s 3.56% average. Last year at this time, 30-year rates averaged 2.73%.
• 15-year fixed-rate mortgages: averaged 2.80%, with an average 0.6 point, rising slightly from last week’s 2.79% average. A year ago, 15-year rates averaged 2.20%.
• 5-year hybrid adjustable-rate mortgages: averaged 2.70%, with an average 0.2 point, rising from last week’s 2.60% average. A year ago, 5-year ARMs averaged 2.80%.

Freddie Mac reports average commitment rates along with points to better reflect the total upfront cost of obtaining the mortgage. Source: Freddie Mac and “Instant Reaction: Mortgage Rates, January 27, 2022,” National Association of REALTORS® Economists’ Outlook Blog

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As the pandemic caused by COVID-19 has continued, more young adults have chosen to move back home with their parents. In 2020, the share of young adults aged 25 to 34 living at home rose to the highest share recorded since 1960: 17.8%, the National Association of REALTORS® reports. That percentage remained high in 2021 at 17%—the second-highest share on record.

“Some young adults may have recently moved back home due to the flexibility of remote work trends and to avoid paying high rents,” writes Jessica Lautz, NAR’s vice president of demographics and behavioral insights, on the association’s blog. “Others may be at a family member’s home due to job losses or while virtually attaining higher education goals. Regardless of the reason, living with family may provide a benefit to potential first-time home buyers.”

About half of young adults surveyed who became first-time home buyers say they were making rent payments to family as they stayed at home.

However, other young adults have been able to live rent-free while they save for homeownership. Living at home could allow them to pay off their debts, improve their debt-to-income ratio, and save for a down payment.

“While living at home may not be an ideal or even a long-term scenario for many families, if prospective first-time buyers can move home before purchasing, this might financially help them save to purchase a home,” Lautz says. “The added flexibility of living with family allows a buyer to better navigate the tight housing market.” Source: “Young Adults Are Returning to Their Family’s Homes, But for How Long?” National Association of REALTORS® Economists’ Outlook blog (Jan. 26, 2022)

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