Tepid housing market conditions persist: Optimal Blue

By Housing News

Signs
of
a
“stagnant
late-spring
housing
market“
emerged
in
June
as
U.S.

home
prices

declined
for
the
first
time
this
year
and
purchase
mortgage
locks
fell
by
8%
year
over
year.

That’s
a
key
takeaway
from
the
June
2024

Market
Advantage
report

released
Wednesday
by


Optimal
Blue
.
The
report,
which
covers
the
20
largest
U.S.
metro
areas,
shows
that
the
average
home
purchase
price
of
$478,800
in
June
was
down
about
$1,500
compared
to
May.
The
volume
of
locked
loans
(including
purchases
and
refinances)
rose
2%
from
the
prior
month
when
accounting
for
fewer
days
of
production
in
June.

“Despite
an
improvement
in
interest
rates,
purchase
activity
was
subdued
in
June,”

Brennan
O’Connell
,
director
of
data
solutions
at
Optimal
Blue,
said
in
a
statement.
”However,
many
homeowners
with
higher

rates


particularly
those
who
closed
on
their
mortgage
in
the
last
12
to
18
months

jumped
at
the
opportunity
to
refinance,
even
for
a
small
reduction
in
monthly
payments.

“This
behavior
speaks
to
the
ongoing
inventory
and
affordability
challenges
consumers
are
experiencing.
As
we
look
toward
the
back
half
of
2024
and
the
potential
for
rate
relief
from
the
Fed,
purchase
lock
counts
will
provide
insight
into
if
and
when
production
will
turn
the
corner.”

Optimal
Blue
noted
that
a
pullback
in
mortgage
rates,
which
ended
June
at
6.938%
for
30-year
conforming
loans,
drove
a
significant
increase
in

refinances
.
Rate-and-term
refis
jumped
39%
from
May
to
June,
while
cash-out
refi
activity
was
up
11%
during
the
month.
The
average
loan
size
in
June
was
down
slightly
to
$374,200.

Locked
loan
volumes
dropped
by
double
digits
during
the
month
in
most
of
the
metro
areas
analyzed,
although
the
declines
were
less
severe
in
cities
like
Boston
(-4.7%),
Baltimore
(-5.7%),
Los
Angeles
(-7%)
and
San
Francisco
(-7.3%).

Conforming
loans
comprised
55.9%
of
all
locks
last
month,
although
that
share
was
down
by
2.5%
percentage
points
compared
to
June
2023.
Nonconforming
loans
and

U.S.
Department
of
Veterans
Affairs

(VA)
loans
have
seen
their
market
shares
increase
over
the
past
year
to
13.5%
and
11.7%,
respectively.

Pull-through
rates

the
percentage
of
locked
loans
that
are
funded

have
had
divergent
paths
over
the
past
year.
Lenders
had
an
82%
pull-through
rate
on
purchase
loan
locks
in
June,
up
140
basis
points
from
the
same
month
in
2023.
But
only
58.5%
of
locked
refinances
were
funded,
down
467
basis
points
during
the
year.

 

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