Multiple offers on properties a growing trend
Frenzied bidding wars were among the most prominent trends to emerge from the US housing market’s pandemic-era boom – but while competition is unlikely to hit those highs anytime soon, could lower interest rates later in the year spur a growing number of bids on single properties?
New single-family home sales ticked slightly upwards at the beginning of the year, although figures were lower than analysts had anticipated (a seasonally adjusted annual rate of 661,000, compared with expectations of 680,000 among economists polled by Reuters).
Pending sales of previously owned homes, meanwhile, dipped by 4.9% that month amid still-high interest rates and borrowing costs that continue to prove prohibitive for many would-be buyers.
Nonetheless, many loan originators across the country have registered a noted uptick in activity compared with the same time last year – including Samantha Shelton (pictured top), founder at Michigan-based Align Lending.
She told Mortgage Professional America that while things unsurprisingly remained quieter than the frenetic days of the pandemic, multiple bids had been a prominent trend in her market in the opening months of the year.
That uptick in activity and thawing mortgage and housing markets have resulted in busy days – as always – for mortgage professionals.
Pending sales of previously-owned homes in the US fell last month by the highest amount since August, according to new National Association of Realtors (NAR) data.https://t.co/ZAqrGjnYWX#mortgageindustry #housingmarket #homesales #houseprices
— Mortgage Professional America Magazine (@MPAMagazineUS) February 29, 2024
“We need to be available in the evenings to answer phone calls and we need to be available on weekends,” Shelton said. “While it’s kind of averaged itself out and we aren’t being overworked in this market, we’re also seeing a lot of what happened last year or even during COVID when rates started falling and we were having a significant number of offers going on one property. That is still happening.
“So for me, I have a lot of phone calls that I take in the evenings and a lot of numbers that I run on the weekends – because time is of the essence. When [buyers] are looking at homes, they tend to move pretty quickly. So we have to be available.”
Consumer confidence continues to grow
While mortgage rates continue to hover well above their pandemic lows, expectations that they’ll dip later in 2024 – with the Federal Reserve also set to begin cutting rates at some point this year – could spur an imminent surge in homebuying interest.
Fannie Mae’s Home Purchase Sentiment Index (HPSI), which measures prospective homebuyers’ levels of optimism towards the market, climbed by 3.5 points in January to 70.7 – its highest level for nearly two years – as expectations of a coming rate cut continued to climb.
Fully 36% of respondents said they expected mortgage rates to fall within the next 12 months, with a further 35% saying they believed rates would stay put – although just 17% of consumers said they believed now was a good time to buy a home.
Supply constraints reducing homebuyer choice
That improving sentiment arrives with housing inventory still mired near historic lows across the US as homeowners remain in place while waiting for rates to dip later in the year.
A lack of supply is among the factors reducing buyers’ options and pushing up the number of bidders on individual properties – and keeping mortgage professionals busy.
“I would say that nights and weekends are the time that clients are more engaged in looking at homes, writing offers, going to open houses,” Shelton said. “So nights and weekends are definitely top of priority right now.”
Still, some good news: a flood of available inventory could be on the way, with Redfin data showing new listings for homes for sale jumped by 12.9% in February compared with the same time last year.
That spike, to 79,354 new listings, marked the biggest annual jump for almost three years – a welcome development for would-be buyers as prices continue to climb.
The median price for existing homes hit $379,100 for all types of houses, a 5.1% annual increase across the country, according to the latest data from the National Association of Realtors (NAR).
The association’s chief economist Lawrence Yun highlighted growing buyer interest in the market. “Multiple offers are common on mid-priced homes, and many homes were still sold within a month,” he noted.
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