Housing Finance at a Glance: Monthly Chartbooks

The February 2020 edition of At A Glance, the Housing Finance Policy Center’s reference guide for mortgage and housing market data, includes includes updated figures describing first lien mortgage originations, the shares of loans in serious delinquency and foreclosure, and mortgage insurance activity.

The Inventory of Most Affordable Homes Falls to A New Low

Mortgage rates appear to be boosting the housing market. In January 2020, Fannie Mae’s Home Purchase Sentiment Index, which measures consumers’ housing related attitudes, intentions and perceptions, rose 1.3 points 93.0. The improvement was helped by a growing share of consumers saying they expect mortgage rates to remain steady.

However, the already low supply of homes for sale continues to fall. According to our calculations from Zillow data, the months’ supply of homes available for sale declined to 3.4 months in November 2019 down from an average of 5.5 between 2013 and 2014, a period when the for-sale inventory was largely steady (figure 1). This means that, at the current sales pace, the available inventory would be exhausted in about three-and-a-half months.

The decline in the months’ supply reflects a drop in the for-sale inventory, particularly the inventory of the most affordable homes. Data compiled by Zillow indicates that the total number of home sales in November 2019 - 438,257 -- was 22 percent greater than the average monthly sale between 2013 and 2014 of 358,453. In contrast, the total for-sale inventory in November 2019 of 1.35 million was 24 percent less than its average between 2013 and 2014 of 1.80 million.

Comparing the inventory of for-sale homes in November 2019 to the average between 2013 and 2014, we see differences in the rate of decrease over three price tiers. The inventory of homes in the top third tier fell by 20 percent in November 2019 compared to the 2013-14 average, the middle tier fell by 26 percent but the bottom tier fell the most by 31 percent. At 299,496 as of November 2019, the for-sale inventory of bottom-tier homes was below 300,000 for the first time since at least 2013.

In a strong housing market with limited supply, one would expect very few listings to receive price cuts. In fact, the share of price cuts has been fairly steady, albeit slightly above its 2013 level. It ticked up in 2018, due to affordability concerns stemming largely from higher mortgage rates, and declined slightly in 2019.

However, the percentage price cut has consistently shrunk as home prices have risen and months’ supply has contracted. In January 2013, the median price cut for homes with a price cut was 4.2 percent on a 12-month moving average basis. By December 2019, it was 2.7 percent.

Lower rates amidst a strong housing market helps both buyers and sellers. For potential buyers, today’s reduced rates support housing demand, but the resulting improvement in affordability from reduced rates can be offset by the lack of inventory. For sellers, the pressure to cut the list price is contained and a home’s final sale price may not be too far below its list price.


Past chartbooks:

January 29th Chartbook call featuring Bob Broeksmit and Mike Fratantoni.
January 2020

December 2019
November 2019
October 2019
September 2019
August 2019
July 2019 (watch the July 29 chartbook call with guest Richard Green)
June 2019
May 2019
April 2019 (watch the April 29 chartbook call with guest Dave Stevens)
March 2019
February 2019
January 2019 (watch the January 30 chartbook call with guest Dave Stevens)

December 2018
November 2018
October 2018
September 2018
August 2018
July 2018
June 2018
May 2018
April 2018 
March 2018
February 2018
January 2018

December 2017
November 2017
October 2017
September 2017 
August 2017
July 2017
June 2017
May 2017
April 2017 
March 2017
February 2017
January 2017

December 2016
November 2016
October 2016
September 2016
August 2016 
July 2016
June 2016
May 2016
April 2016
March 2016
February 2016
January 2016 

December 2015
November 2015
October 2015
September 2015
August 2015
July 2015
June 2015
May 2015
April 2015
March 2015
February 2015
January 2015

December 2014
November 2014
October 2014
September 2014
August 2014
July 2014
June 2014
May 2014
April 2014
March 2014
February 2014
January 2014

December 2013
November 2013
October 2013