21 May Well that Sounds Expensive
Good afternoon everybody and happy Friday!
Well, the housing market experienced a much needed break as Existing Home Sales for April came in 2.7% lower than the March. However, unfortunately for those in the market, it is still up 33% from last year. To add insult to injury to all of those trying to find a home in today’s crazy competitive market, the median home price hit an all time high of $341,600 – 19% higher than this time last year. In addition, cash buyers now make up 25% of those in the market. We continue to see the most competitive housing market in US history gain steam.
At the same time, the Biden Administration is still pushing to aid first time home buyers by giving them a $15k credit on their home. While this has not been passed, we do not believe it will make first time home buyers offers more competitive, we believe it will hurt the housing industry and further price out first time home buyers. The US is seeing the largest percent of purchase contracts come in above asking price. If you give first time home buyers an additional $15k, they may win a couple of bids. However, the vast majority of them will still lose to the hundred of thousands of above asking offers and cash buyers just to drive prices even higher.
Mortgage Backed Securities remain in the middle of a large trading range. With talks of when the Fed will pull back on MBS purchasing, we can expect to see rates rise. We are holding a locking bias going into the weekend.