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March 6, 2023

The Breakdown:

Housing Data Moving in the Right Direction

Last week we received some key housing data, with the Case Shiller Home Price Index and Federal Housing Finance Agency (FHFA) Hose Price Index, as well as the January Pending Home Sales data. Let's start with the appreciation data.

Home price appreciation data continues to contradict claims of a housing crash. The Case-Shiller Home Price Index, which is known as the standard measure of appreciation, reported a 5.8% annual increase in December. The FHFA House Price Index, which excludes cash buyers and jumbo loans and measures single-family homes, reported an impressive 6.6% annual increase in December.

While both indexes reported a monthly decrease of less than 1% this is quite different from the 20% housing crash claims. When adjustments are made for seasonal market trends, home appreciation is down 2.7% from its peak last June. Additionally, it is important to note that major cities account for the majority of the decline.

Pending Home Sales are a key indicator of future market health, and the latest report showed a higher-than-expected increase of 8.1% in January. While sales were still down 24% from January 2022, this was a much-needed boost to get us moving in the right direction. This is especially impressive given that January is not known to be a stong month in the housing market, and an indicator that buyers are responding positively to the lowering mortgage rates.

While we did see a bump in rates last month, a continuation of the downward inflation trend could drive rates down even further. If that happens, you can expect another impressive month of housing activity.

This week's economic news will be dominated by jobs data, with ADP’s Employment Report and the Bureau of Labor Statistics Jobs Report for February. Stay tuned for next week's breakdown!

FHA Mortgage Insurance Premium Reduction!

We've got great news for all prospective FHA borrowers! The US Dept. of Housing and Urban Development (HUD) has finally announced their long-awaited reduction in Mortgage Insurance Premiums.

This change will affect purchases on or after March 20th. This is the first MIP reduction since 2015 and right in time for the purchase season!