National Builder Trade In Program - Builder Report - May 2023

BUILDER

R E P O R T

MORTGAGE APPLICATIONS INCREASE AS RATES SOFTEN

The 30-year fixed-rate mortgage (FRM) averaged 6.39% for the week of May 4, according to the results of Freddie Mac’s Primary Mortgage Market Survey.

Rates have ticked down 40 basis points from the prior week and are more than 1 percentage point higher than a year ago, when the 30year FRM averaged 5.27%. This week, mortgage rates inched down slightly amid recent volatility in the banking sector and commentary from the Federal Reserve on its policy outlook,” says Sam Khater, Freddie Mac’s chief economist. “Spring is typically the busiest season for the residential housing market, and, despite rates hovering in the mix-6% range, this year is no different. Interested home buyers are acclimating to the current rate environment, but the lack of inventory remains a primary obstacle to affordability.”

The 15-year fixed-rate mortgage averaged 5.76% for the week of May 4, down from the prior week when it averaged 5.71% and up from the prior year, when it averaged 4.53%.

As rates softened, mortgage rate applications for the week ending May 5 increased 6.3% from the prior week, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. The seasonally adjusted purchase index increased 5% from the prior week. On an unadjusted basis, the purchase index increased 5 3% from the prior week but was 32% lower than the same week in 2022

“Mortgage applications responded positively to a drop in rates last week, as the Fed signaled a potential pause at the current level for the federal funds rate in anticipation of inflation slowing and tightening financial conditions that will slow economic and job growth,”

MAY

2023

says MBA vice president and deputy chief economist Joel Kan. “Lower rates from week to week have helped buyers in the market, but limited for-sale inventory remains a challenge for many home buyers ”

Kan says refinancing activity increased to its highest levels since 2022, but he notes that only a small pool of borrowers can benefit from refinancing at current rate levels

The adjustable-rate mortgage share of activity decreased to 6.8% of total applications, and the FHA share of total applications decreased to 12.1%, according to the MBA. The VA share of applications increased to 12 9% from 11 3% the week prior

The 30-year fixed-rate mortgage ticked down on a week-over-week basis to an average of 6.39%, according to Freddie Mac.

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OUTDOORKITCHENTRENDSFOR YEAR-ROUNDENTERTAINMENT

“Outdoor luxury kitchens are a high growth category,” according to a new study just published this month by the National Kitchen & Bath Association. “Luxury outdoor kitchens have become an expected ‘standard’ for new luxury home builds,” according to the study

According to the 2021 National Association of Realtors’ Home Buyers and Sellers Survey, 20% of the home buyers purchased a new home instead of a previously owned home because of the smart home features and green/energy efficiency

Quality Expectations

Kimberly Kerl of Kustom Home Design in Greenville, South Carolina agrees. Clients are looking toward a level of quality in their outdoor spaces that’s traditionally found inside, she shared “As indoor kitchens have evolved into more luxurious spaces with elevated levels of design, so too have outdoor kitchens,” describing the new outside kitchen standard as “resort-esque.”

Outdoor Technology

Along with indoor-level style and entertaining standards come the expectation of – and need for – enhanced technology. Ian Bryant, operations manager for Jackson, Wyoming-based Premiere SAV technology integration firm, commented that outdoor kitchen clients now expect great lighting, automated shading, smart outdoor appliances and, of course, the necessary technology components to make it all work.

Outdoor Cooking

Bugs aside, “There’s something heartwarming about cooking outside. Not only does one’s outdoor cooking environment provide fresh air and overall good vibes, but there’s an inherent mindfulness when preparing food in nature – especially with fresh produce and herbs at the ready,” shared Jessica Petrino Ball, editorial director at online appliance and fixtures retailer AjMadison (She also noted that there are many options below the luxury level for those without resort-style properties or budgets. “Outdoor kitchens are more attainable than ever before!”)

Outdoor Entertaining

Whenitcomestooutdoorentertaining, “thekeyistolimittripsinandoutofthe house,”advisedtheAjMadisonexecutive. “Everyoutdoorkitchenneedsfourzones: Cooking,cooling(orcoolerstorage), storage,andclean-up.”Outdoorcooking andloungingareasarelikelytobe enhancedwithspeakersystems.