The Mortgage Bankers Association (MBA) recently released its new Builder Application Survey (BAS) that captures mortgage loan application activity on new single-family properties for lenders affiliated with home builders on a monthly basis.

The BAS will track application volume from mortgage subsidiaries of large home builders across the country. Utilizing these data, as well as data from other sources, MBA will be able to provide an early estimate of new home sales volumes. This data also provides information regarding the types of loans used by new home buyers. The sales estimates reported by the Census Bureau on a monthly basis are based on new home sales as recorded at contract signing. Since the mortgage application is typically made around the same time the sales contract is signed, capturing the number of mortgage applications will give an indication of new home sales.

“MBA’s new Builder Application Survey is entirely focused on the new home market. MBA’s Weekly Application Survey, which has been in existence for 23 years, includes a measure of purchase application volume. However, with existing home purchases currently running at ten times the level of new home purchases, the purchase index reported every week is more closely correlated to trends in existing home sales and those sales are reported when the deals are closed, often 45 days or more after the initial contract signing and mortgage application. In contrast, the Census Bureau’s estimate of new home sales is based on initial contract signings, which most often occur around the same time as the mortgage application. This is why we believe the new Builder Application Survey should track closely with, and predict, new home sales,” says Mike Fratantoni, MBA’s Vice President of Research and Economics.

Potential homebuyers may enter the purchase market sooner rather than later as more Americans expect mortgage rates and home prices to climb, according to results from Fannie Mae’s June 2013 National Housing Survey.

The share of respondents who say mortgage rates will go up during the next 12 months jumped 11 percentage points to 57 percent, the highest level in the survey’s three-year history. Meanwhile, consumers’ home price expectations have stayed strong in the face of rising mortgage rates. The share of respondents who believe home prices will go up in the next year also hit a survey high of 57 percent, while those who say prices will go down stayed steady at 7 percent. Although sentiment toward both the current home buying and selling environments retreated slightly, it remains near the survey highs of last month, with 72 percent saying it is a good time to buy and 36 percent saying it is a good time to sell.

“The spike in mortgage rate expectations this month seems to have had an impact on a number of the survey’s indicators and may increase housing activity in the near term by driving urgency to buy,” says Doug Duncan, senior vice president and chief economist at Fannie Mae. “Consumers may recognize that today’s still favorable mortgage rates and homeownership affordability levels will recede over time. Given rising home and rental price expectations and improving personal financial attitudes, more prospective homebuyers may be deciding that now is the time to get off the fence.”

Contrary to a number of observations in the media, the millennial generation is not abandoning homeownership. It has simply been delayed. And, contrary to some reports, the suburbs are not drying up and blowing away from a lack of demand among younger homebuyers. They are changing to accommodate new preferences in housing, transportation, services and entertainment.

Recent research, published in the Journal of the Center for Real Estate Studies by the Center for Real Estate Studies at REALTOR® University, suggests that younger generations continue to aspire to homeownership, but have delayed the buying decision as they strive for economic and employment stability. In fact, according to Lisa A. Sturtevant of George Mason University’s Center for Public Policy in a separate article in the Journal, while “echo boomers (the millennials or Gen Y), in particular, are more likely to live in urban locations and in rental housing…their choices are strongly related to their age. Both the echo boom and baby boom populations are delaying life-cycle events,” says Dr. Sturtevant, “including marriage, childbearing and retirement, which will lead to delays in certain types of moves and housing choices, even if preferences in these demographic cohorts remain relatively unchanged.”

Housing policy at the local, state, and even the national level will certainly be confronted with demographic change, changes in mobility and changes in the requirements future owners and renters place on their housing and community choices. Much of the research recently published by and currently underway at the Center for Real Estate Studies attempts to address issues that the real estate industry and policymakers will face going forward.

As sales improve and prices rebound, another housing component is showing growth: square footage. During the real estate lull, the average home size shrunk. However, while the housing market shows signs of recovery, larger and more luxurious homes are also making a comeback.

Over the past year, the average size of new homes has grown significantly, according to a recent Census Bureau report. 

The report shows that during the recession, the average newly-built home was whittled down to around 2,135 square feet. Industry experts were predicting that our love affair with McMansions had been smitten. Now, it appears as if the flames are being re-stoked, and house size is once again expanding. In 2012, the median home in the U.S. was up 8 percent from 2009, landing at 2,306 square feet. While that's a far cry from “mansion status,” it shows that the size of the ideal living space is growing once again.  Will we see a resurgence of the All American McMansion? Expert opinions show mixed results.

Easy Home Improvements to Help You Breathe Easier

Family Features—Runny nose, itchy eyes and headache. These are just a few ailments suffered by homeowners with poor indoor air quality, potentially as a result of smoke, odors, dust or other contaminants. According to the Environmental Protection Agency, people spend up to 90 percent of their time indoors, where air quality can be two to five times more polluted than the air outside.

While asthma and allergy sufferers, children and the elderly are particularly sensitive to indoor air quality, everyone is impacted by it. Fortunately, a few simple and affordable home improvements can go a long way to benefit your home's air.

Home sales are on their way up; Existing-home sales improved in May and remain solidly above a year ago, while the median price continued to rise by double-digit rates from a year earlier, according to the National Association of Realtors®.

Lawrence Yun, NAR chief economist, says the recovery is strengthening and to expect limited housing supplies for the balance of the year in much of the country. “The housing numbers are overwhelmingly positive. However, the number of available homes is unlikely to grow, despite a nice gain in May, unless new home construction ramps up quickly by an additional 50 percent,” he says. “The home price growth is too fast, and only additional supply from new homebuilding can moderate future price growth.”

Total housing inventory at the end of May rose 3.3 percent to 2.22 million existing homes available for sale, which represents a 5.1-month supply at the current sales pace, down from 5.2 months in April. Listed inventory is 10.1 percent below a year ago, when there was a 6.5-month supply.

Earlier this month, a bipartisan bill was put forth that would liquidate Fannie Mae and Freddie Mac and replace them with a government reinsurer of mortgage securities behind private capital. While the legislation is in the very early stages, there is mounting concern over how it might impact the real estate and mortgage industries.

According to the draft of the bill, Washington-based Fannie Mae and McLean, Va.-based Freddie Mac would be liquidated within five years and the U.S. Treasury would assume responsibility for their existing mortgage guarantees.

The bill is a reflection of a growing consensus in Washington that the U.S role in mortgage finance should be limited to assuming risk only in catastrophic circumstances, explains a June 4 report from Bloomberg News. It also reflects the prevailing view among lawmakers that the two government sponsored enterprises should cease to exist.

Freddie Mac recently released its U.S. Economic and Housing Market Outlook for June showing the effects rising interest rates are having on certain markets around the country and the overall housing recovery. A short preview video and the complete June 2013 U.S. Economic and Housing Market Outlook are available here.

Outlook Highlights

Interest rates for 30-year fixed-rate mortgages have risen about 0.5 percentage points over the past several weeks and are expected to hover around 4.0 percent during the second half of 2013.

According to Don Perron, broker/owner of Realty Executives Select in Lafayette, La., these three simple words are the foundation toward helping clients achieve the American dream of homeownership. And as we make our way through National Homeownership Month, they should be the rallying cry of real estate professionals across the board.

The initiative, which was set in motion by President George W. Bush in 2002, aims to raise awareness of homeownership and encourage more Americans to consider the benefits of owning their own home.

“Owning a home has been a part of the American dream for years,” says Perron. “We, as REALTORS®, need to promote this to potential buyers and help them to understand the process, the financial aspects, and the responsibilities associated with buying and owning a home. But, we also need to work with current homeowners that are struggling to keep their home.”

Home prices are on the rise; the most recent FNC Residential Price Index™ (RPI) shows U.S home prices made a climb of nearly 7 percent from March to April, the largest price acceleration since June 2012.

What is the driving force behind this acceleration? One possible cause may be the rising seasonal demand as we make way into spring and summer. In addition, improved credit availability, low interest rates, and low home prices continue to add momentum to the housing recovery.

Signs of rising mortgage rates – which have been hovering at historical lows in the last 10 months – have likely drawn out additional pent-up demand. Foreclosure activities continue to drop, with distressed sales contributing only 16.0% to total home sales, down from 17.8 percent in March and 21.6 percent a year ago. The median sales-to-list price ratio in April was 95.5, up from 93.7 in January and 92.5 a year ago.