Closing Complex Loans Faster With a Digitized Client Workflow

Join us for a discussion on changes in market demographics, suppliers and how focusing on customer experience and a few simple steps during the mortgage loan process can close deals 3x faster.

engage.marketing event: All eyes on purchase

To help power your business forward, we’re bringing together the smartest minds in purchase mortgage marketing to share the insights, tactics and strategies that set leaders apart.

Home appraisal’s ugly history and uncertain future

This is Part I of a deep dive into the home appraisal industry. Today we explore the origins of the appraisal industry and its current lack of diversity.

The digital journey starts at acquisition

Download this white paper to learn how to build a tech-enabled acquisition strategy that will directly contribute to a lender’s ability to maximize profitability and remain competitive.

Politics & Money

New home sales moderating right on cue

Resist the urge to make this a sign of a housing crash

When economic data goes parabolic, there is usually a story behind it. Housing data tends to be very sticky, so when housing numbers first fell and then went parabolic in 2020, we were witnessing one of the most extraordinary swings in data ever recorded in human history.

This chart from September 2020 is an excellent example of this behavior last year.



With that said, these parabolic moves are destined to moderate, and it is important not to over-read this moderation. This has been my theme since the summer of 2020, and back in September, I wrote this article about new home sales being hot, but not bubbly.

As I wrote then: “Don’t be surprised and lose faith if we get some negative revisions in our new home sales data as these last few prints were beyond normal hot.”

With new home sales, extremely short-term moves in the headline data in either a positive or negative direction, typically gets revised back to the opposite direction. You may recall that in 2018, big headline negative prints were eventually revised slightly higher, so the headline prints weren’t as bad as they seemed. Now it’s the other way around; new home sales went parabolic, we have seen some negative revisions, and sales are just working their way back to a more normalized trend.

In time, all housing data moderates to a trend, don’t make a mistake most novice housing people make by making this anything else more than that.




When looking at new home sales, always keep your eye on the prize, and that is the monthly supply data for new homes.

When the monthly supply is 4.3, and below, life is excellent for the builders. This is especially true when the 3-month average is 4.3 months or below. Currently, inventory is at 4.3 months with a three-month average of 4.03 months of supply, so it’s looking pretty good.

Once inventory goes above 4.3 months, especially if the 3-month average is between 4.4 – 6.4 months, think of that as just OK for the builders. This would not be a stop sign – but the builders are going to be less enthusiastic.

We want to stay away from 6.5 months or higher; this is a red flag for housing, and that has happened twice since 2018. Both times, construction was pulled back. However, for now, all is good. Housing starts still have room to grow as long as new home sales are growing.

Sales and housing starts during 2008-2019 were historically low, so we weren’t working from an overheated expansion level. Once mortgage rates rise, this sector gets hit the hardest; we are far from that conversation.

On another housing topic, 2021 has started well for the MBA purchase application data. I was looking for trend growth between 1% -11% this year up until March 18. The last four weeks on a year-over-year basis looks like this: +16% +15% +10% +3%. We are averaging about 11% trend growth right now, and remember, this data looks out 30-90 days.

2021 has started well for the existing home sales market.

Leave a comment

Most Popular Articles

Fannie Mae, and the housing market’s inflation problem

Another month of steadily increasing home prices and insatiable demand led Fannie Mae’s Economic and Strategic Research Group to alter many of its 2021 predictions – in particular, its outlook on the symbiotic relationship between the housing market and inflation measures.

Jun 16, 2021 By

Latest Articles

Doug Duncan and the housing market’s supply conundrum

The housing market has suffered due to high material prices, spend-anything buyers & a lack of supply. A return to normalcy will require big changes. HW+ Premium Content

Jun 18, 2021 By
3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please