Housing Finance at a Glance: Monthly Chartbooks

The November 2020 edition of At a Glance, the Housing Finance Policy Center’s reference guide for mortgage and housing market data, includes updated figures describing the cash-out refinance share, effective guarantee fees charged on new acquisitions, loans in serious delinquency, and mortgage insurance activities.

Housing Supply Falls to Record Low Benefiting Home Sellers

The months’ supply of existing homes fell to an alarmingly low level of 2.5 months in October, threatening to undermine the opportunity of homeownership for many households. The lack of homes alone makes homeownership difficult, but the lower supply also increases home prices, reducing affordability. One subtle reason that sales prices rise when supply is low, is that buyers must pay a higher price relative to the seller’s asking price. This suggests that sellers are benefitting from today’s low supply conditions. However, key supply and demand trends suggest that sellers’ advantage could erode somewhat in the coming months.

The 2.5 months’ supply of homes, reported by the National Association of Realtors (NAR), means that, at the current sales pace, the inventory of homes nationwide will be exhausted in less than 3 months. The recent decline in months’ supply from 4.8 months in May partly reflects a rebound in home sales. After existing home sales volume fell to 3.91 million in May, it then rose by 75 percent to approximately 6.85 million by October. NAR reports, however, that the inventory of homes for sale in October was just 1.4 million, a series low.

Amid shrinking inventory, sales prices have risen. Since May, existing home inventory has fallen by 5.0 percent according to NAR, while sales prices have risen by 1.3 percent according to Urban Institute calculations of Black Knight data. Since January 2012, when housing market activity began to sustainably improve after the sharp decline in the wake of the Great Recession, the inventory of existing homes has shrunk by 47.4 percent, while house prices have risen 56.4 percent.

While the increase in sales prices tells us that demand is high, the sales-price to list-price ratio suggests that buyers are eager to purchase homes. As the inventory of for-sale homes has declined since 2012, the ratio of the sales-price to the list-price has increased. According to Redfin, the ratio of the sales-price to the list-price peaked in September 2020 at 99.4 percent, the latest month of data, a three-percentage point increase since February 2012, the first month of data. Inventory fell by 55 percent over this same period. In other words, as inventory has declined, the average homebuyer is paying a little closer to the sellers’ asking price.

The increase in the ratio of the sales-price to the list-price partly reflects a larger percentage of buyers paying a sales price that exceeds the seller’s list price. As inventory has declined since 2012, the share of buyers paying a sales price above the buyers asking price increased from 18.3 percent to 32.8 percent in September.

The housing market is tilted toward the seller, according to the current data, but that could change. There was a sharp rebound in single-family housing starts in recent months, suggesting that more supply is forthcoming. Additionally, the pace of purchase mortgage applications has moderated in recent months as COVID infections soar and the NAR Housing Affordability Index has fallen from its year ago level. Although the market currently favors sellers, their advantage could inch somewhat closer to balance in the near future.

Past chartbooks:

October 29th chartbook call featuring speaker Ed Golding.
Octobert 2020 
September 2020
August 2020
July 2020
July 29 Chartbook call featuring Amy Crews Cutts; Slides from Amy Crews Cutts and Chartbook Slides
June 2020
May 2020
April 2020
March 2020
February 2020
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