What’s presumed to be the hottest buying season of the year isn’t shaping up to that due to a flurry of factors that are growing into the “perfect storm” to hinder housing, explained Kevin Golden, director of analytics with a la mode, at the Mortgage Bankers Association’s Secondary conference in New York City.
“There’s no economic push to push the housing market,” said Golden.
More on this “perfect storm” below, but for now, here are the numbers that prove housing is stuck in a rut.
The latest appraisal volume numbers from a la mode, an appraisal forms software company that provides its findings exclusively to HousingWire, once again revealed how slow this spring home-buying season is going.
For the week of May 6, which is almost two months into spring, the National Appraisal Volume Index rose by 1.8%.
While this more than erased the 0.4% drop the prior week, the four-week average still decline to a rate of 1.3% from the previous report of 1.9%, where the stronger first week of April week began to drop off.
Appraisal volume is an indicator of market strength and holds some advantages over mortgage applications.
For example, fallout is less for appraisals since they are ordered later in the mortgage process, after credit worthiness is determined, and there are few multiple-orders, by the time an appraisal is conducted.
a la mode captures 50% of the appraiser market – more than 6 million appraisals per year.
Click to enlarge
(Source: a la mode)
Golden explained that there are several variables at work, here. For starters, a mild winter caused there to be no pent-up demand since people were not snowed in, and free to shop for homes.
But, there’s more.
“We have a stagnant economy and have economic numbers on labor that are tough, with a low participation rate,” he said.
Employment growth slowed down in the most recent jobs report with total nonfarm payroll employment only increasing by 160,000 in April, raising questions about the next Federal Open Market Committee Meeting.
This is creating a ripple effect, he said, since there are so many discouraged workers from a protracted soft economy and entry homes are not getting vacated because people aren’t getting promoted, and moving up the property ladder.
Therefore, with no upward movement, First-time homebuyers are left with less inventory to choose from. And making it even harder, shortages then push demand-heavy home prices further out of reach.