Key Market Indicators as of May 01, 2017
March Home Sales, Q1 Mortgage Origination Volume
New Home Sales –New home sales increased 5.8% m/m to a seasonally adjusted annual rate of 621,000 units in March, and was significantly above the pre-release consensus. Compared to 12 months ago, new home sales were up 16%. Strong demand from homebuyers and very tight supply conditions in the overall housing market fueled demand for new homes. National Association of Realtors reported last week that typical existing homes stayed on the market for just 34 days in March. This made buying existing homes frustrating and likely pushed some potential homebuyers into buying new homes. In addition, prices on new homes are stabilizing, closing the gap over existing homes. In the first three months of 2017, median new home prices were down 1% from a year ago. In contrast, median prices on existing homes have continued to increase at over 6% year-over-year. A narrower price gap likely helped homebuilders capture more demand from potential homebuyers.
Mortgage Origination – Inside Mortgage Finance estimated total mortgage origination of $385 billion for the first quarter of 2017, a 33.6% decline over the prior quarter. Two factors drove the decline in Q1 origination volume. First, higher mortgage rates following the U.S. election sharply reduced borrower incentive to refinance, lowering the refinance volume in Q1. Second, a seasonal pullback in the housing market lowered the purchase origination volume. We believe that expansion in the housing market will continue this year, helping to drive higher origination volume in the purchase market. But if mortgage rates stayed at the current level or increased, refinance origination volume will remain low, resulting in a lower level of total origination.