Blog posted On December 28, 2020
Last week, mortgage rates remained relatively unchanged and continue to touch historic lows. This week, the S&P CoreLogic Case-Shiller home price index is scheduled for release on Tuesday. The weekly mortgage application survey will come out on Wednesday. Also scheduled for release Wednesday is the pending home sales index.
The S&P Case-Shiller home price index tracks changes in the value of homes involved in two or more sales transactions across 20 major metropolitan areas throughout the country. Though the data lags by a month, it is still used to gauge home price appreciation trends. In September, home prices rose at a seasonally adjusted, monthly rate of 1.3%. Year-over-year, the index was up 6.6%. The largest increases in home prices occurred in Phoenix, Seattle, and San Diego, while the smallest increases were in New York and Dallas. “Housing prices were notably – I am tempted to say ‘very’ – strong in September,” says Craig J. Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices.
The Mortgage Bankers Association (MBA) weekly mortgage application survey tracks week to week changes in the submission of new purchase and refinance mortgage applications. For the week ending 12/18, mortgage applications submissions saw a composite increase of 0.8 %. Though purchase application submissions decreased 5%, refinance application submissions increased 4%. "There are still signs of relative strength in the housing market as 2020 ends. However, housing affordability will be worth monitoring next year,” said Joel Kan, MBA's associate vice president of economic and industry forecasting.
The pending home sales index tracks changes in the number of homes that are under contract but not yet closed. In October, pending home sales dropped 1.1%, though year-over-year, they are still up 20%. The drop in pending sales might signal that the sales surge earlier in the pandemic might be tapering off.
When home prices appreciate, homeowner equity increases as well. Because home price appreciation is on the rise, the average homeowner has gained roughly $17,000 in equity during the pandemic. Though purchasing a home might seem like a large investment now, it could actually help you earn money down the road. If you are interested in learning more about the benefits of home equity, let us know.