The housing market in America has exploded over the past year. According to the carefully tracked S&P CoreLogic Case-Shiller US National Home Price NSA Index, home prices rose 19.5% in September from the same month last year. August’s figure was 19.8%. The city with the largest increase among the 20 subways tracked by the research was Phoenix at 33%.
What fueled the increase? One reason for this is low mortgage rates. In recent years, a 30-year fixed mortgage often carried an interest rate of less than 3%. Another reason is that Americans have moved from expensive coastal cities like New York, Los Angeles, and San Francisco to cheaper cities inland. These are often identified as having a better quality of life. In part, the ability to move is due to the COVID-19 pandemic trend of working from home. People are no longer tied to the office locations they once visited.
Ironically, the rush of people to move to smaller towns has driven up prices in these places. Inventories have gone down and there are fewer homes for buyers.
The mortgage picture has changed considerably in recent months. ATTOM, a leading real estate research firm, recently released a study titled “Mortgages Decline at an Unusually Rapid Rate Across the United States in the Third Quarter of 2021”.
His study found that 3.59 million mortgages on residential properties were taken out in the third quarter. This is an 8% decrease from the same quarter a year ago. The report points out that “this was the first time since at least 2000 that lending activity has declined in the second and third quarters, which generally correspond to peak buying periods.”
The number of purchases involving mortgages and refinancing has declined. The level of home equity lines of credit has increased. What does it mean? ATTOM researchers believe the housing boom is “cooling off”. If so, it would break a multi-year trend that began when the housing market began to recover from the Great Recession.
There was a wide range of new home loan rates from city to city and state to state. ATTOM looked at two levels of market size. The first were those with populations over 200,000 and with at least 1,000 total loans in the third quarter. The other was cities with over a million people.
Of all the cities in both population groups, the one with the largest decline in lending activity was Pittsburgh, where it was down 53.2%.
Click here to find out more about the most expensive cities to buy a house.