Redfin: Home sales up 24%, biggest gain on record

Real estate brokerage Redfin reported year-over-year home sales surged 24% in October, marking the largest gain on record, “fueled by an extreme imbalance” between home buying demand and the supply of homes for sale.

The number of homes sold in October was up from the previous year in all 85 of the largest metro areas tracked, with the largest gains in Bridgeport, CT (+71%), Elgin, IL (+54%) and New Haven, CT (+54%).

New listings rose just 12% from a year earlier, while pending sales increased 36% from October 2019, further intensifying the inventory crunch, according to the October 2020 Housing Market report, which includes Redfin data back through 2012.

“October very well may have been the hottest the housing market gets this year. Buyers who stepped away from the market at the beginning of the pandemic had been making up for lost time, which sent prices skyrocketing,” said Redfin chief economist Daryl Fairweather. “As we enter a winter wave of the pandemic, “housing demand will likely lose a bit of steam until 2021, cooling the market from red-hot to just hot.”  

The national median home price rose 14.2% year over year to $335,900 in October, posting the second-largest annual increase on record. Up to 35% of homes sold above list price, up from 22% a year earlier and the highest since 2012.  

The only metro area where prices fell from a year earlier was Honolulu (-0.8%). The largest price increases were in Bridgeport, CT (+39%), Memphis, TN (+30%) and Newark, NJ (+24%).

Right now is a short window of opportunity where buyer competition likely will not be as intense as it was in October, explained Fairweather, while sellers may benefit from listing their home for sale in 2021.

Ellie Mae: October interest rates dip below 3%

Interest rates hit 2.99% in October, down from 3% on all loans in September 2020, according to the latest Ellie Mae Origination Insight Report. This is the first time rates have dropped below 3% since Ellie Mae (now part of ICE Mortgage Technology) began tracking this data in 2011.

Month-over-month, the 30-year note rate for VA loans dropped to 2.75%, down from 2.78% in September. The 30-year rate on FHA loans held at 3.01%, and conventional loan rates dropped from 3.02% to 3.01% in October.

Refinances continued to rise representing 60% of total closed loans in the month, up from 51% in October 2019, while purchase loans dropped two percentage points to 40%.  

“The market clearly remains ripe for refinances …indicating that homeowners are still looking to capitalize on the opportunity to reduce their monthly payments,” said Joe Tyrrell, president, ICE Mortgage Technology.

Tyrrell added that “FICO scores remain high and conventional loans represent 82 percent of all closed loans this month. Homeowners should continue to educate themselves on the various available products to determine what best fits their needs,” and how those needs will change due to the pandemic and the presidential election.

Ellie Mae’s Origination Insight Report reviewed a sampling of loans initiated 90 days prior in June 2020 to calculate an overall closing rate of 76.7% in October 2020.

ATTOM: Purchase mortgages power Q3 lending

The ATTOM Data Solutions Third Quarter 2020 U.S. Residential Property Mortgage Origination Report revealed 3.25 million residential mortgages originated nationwide, up 17% from Q2 2020 and 45% from Q3 2019, to the highest level in 13 years.

The total dollar volume of residential mortgages originated in Q3 2020 reached an estimated $974.1 billion, up 20% from Q2 2020 and 52% year over year, to the highest point since 2005 – fueled by interest rates below 3% for 30-year fixed-rate loans.

“The home-loan industry got even busier in the third quarter of 2020, with the housing market still operating as if the recession brought on by the pandemic didn’t exist. Buyers and owners, lured by low mortgage rates, kept lining up for loans at levels not seen in more than a decade,” said Todd Teta, chief product officer at ATTOM Data Solutions. “The one difference in the third quarter was that purchase lending beat out refinance activity for the first time in more than a year.”

ATTOM analyzed recorded mortgage and deed of trust data for single-family homes, condominiums, townhomes, and multi-family properties of two to four units.

On a quarterly basis, purchase mortgages grew faster than refinance loans for the first time in more than a year, the report notes. Lenders issued roughly 1.05 million home-purchase mortgages in Q3 2020, up 28% quarter to quarter and 25% year over year – totaling $336.3 billion in Q3 2020, up 35% from the prior quarter and 36% from a year ago.

Refinance activity continued to surpass purchases but increased at a slower pace. The number of refinancing loans increased 16% from Q2 2020 to 1.96 million – bringing the dollar volume up 15%, to $587.6 billion.

Meanwhile, the volume of home equity lending continued to decline. The number of home equity lines of credit (HELOCs) originated on residential properties was 244,555 in Q3 2020, down 7.1% from Q2 2020 and down 28.7% from a year earlier to the lowest level since 2014.

Residential HELOC mortgage originations decreased from Q2 to Q3 2020 in 58.3% of metropolitan statistical areas.

As in previous reports, Teta cautioned however that the pandemic “and other factors could come together and halt the market boom.”

For example, the overall rise in home lending during Q3 2020 resumed as the pandemic continued spreading throughout the nation damaging major sectors of the economy; While the national unemployment rate fell in Q3 2020 but remained more than twice as high as it was when the pandemic began in March.

“In the meantime, the third quarter stands out as another banner quarter for lenders,” he said.

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