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Survey: First-Time Buyers to Drive Spring Home Buying Season

Mar. 23, 2015--Sorohan, Mike msorohan@mba.org
The upcoming spring home buying season is expected to be strong, particularly for first-time home buyers, according to the latest Campbell/Inside Mortgage Finance HousingPulse Survey.

The Survey’s Homebuyer Traffic Diffusion Indexes for first-time homebuyers and current homeowners hit levels in February above those seen a year ago. Traffic was strongest from first-time home buyers, with a traffic diffusion index of 61.4 in February compared to 56.8 a year ago. Any reading on the index above 50 indicates increasing traffic.

“Both the data and comments from real-estate agents support expectations for a strong spring/summer buyer season,” said Tom Popik, research director for Campbell Surveys.

The survey reported the first-time home buyer share of home purchases increased for the third consecutive month, reaching 37.3 percent in February, on a three-month moving average. A year go, first-time homebuyers accounted for 33.7 percent of home purchases.

Popik said expectations for rising interest rates could cause potential homebuyers to “get off the fence” and purchase a home in the coming months. He noted recent changes in mortgage financing could also help boost activity from first-time homebuyers; for example, first-time homebuyers are increasingly using FHA mortgages to finance home purchases and will be helped by a reduction to mortgage insurance premiums that recently took effect for the loans. The survey said 38.1 percent of home purchases completed by first-time homebuyers in February were financed with an FHA mortgage.

This morning, Black Knight Financial Services, Jacksonville, Fla., released its First Look Mortgage Monitor report for February data, noting a reversal in January’s jump in foreclosure starts, falling by 15 percent to 79,700, its lowest level since November and the third-lowest level in seven years.

The report said overall, the nation’s inventory of loans in foreclosure continued to fall, down by 315,000 from a year ago, a nearly 30 percent year-over-year decline; the foreclosure inventory dipped below 800,000 for the first time since December 2007.

Mortgage delinquency rates fell also, to 5.36 percent, down by 3.70 percent from January and by 10.24 percent from a year ago, the lowest since summer 2007. The monthly prepayment rate improved by 31 percent from January, and rose by 75 percent from a year ago.

Other report highlights:

• The total foreclosure pre-inventory rate fell to 1.58 percent, a drop of 1.91 percent from January and a decrease of nearly 29 percent from a year ago.

• Number of properties 30 or more days past due, but not in foreclosure fell to 2.713 million, down by 100,000 from January and by 278,000 from a year ago;

• Properties 90 days or more past due but not in foreclosure fell to 1.067 million, down by 45,000 from January and by 175,000 from a year ago.

• The report said states with the highest percentage of non-current loans were Mississippi (13.49 percent); New Jersey (11.67 percent); Louisiana (10.73 percent); New York (10.18 percent); and Rhode Island (9.99 percent). States with the lowest rate of non-current loans were North Dakota (3.41 percent); Colorado (3.49 percent); South Dakota (3.57 percent); Minnesota (3.70 percent) and Montana (3.74 percent).

This Week:

• Monday: Chicago Fed National Activity Index; Existing Home Sales

• Tuesday: Consumer Price Index; FHFA House Price Index; New Home Sales; Richmond Fed Manufacturing Index

• Wednesday: MBA Weekly Applications Survey; Durable Goods Orders

• Thursday: Jobless Claims; Bloomberg Consumer Comfort Index; Kansas City Fed Manufacturing Index

• Friday: Gross Domestic Product; Corporate Profits; U. of Mich. Consumer Sentiment (final); U. of Mich. Inflation Expectations (final)