New-home sales increase to a one-year high

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1. New-home sales increase to a one-year high

US new-home sales increased unexpectedly by 9.6% to an annualized rate of 683,000 in March, reaching the highest level in a year. This suggests that easing mortgage rates are helping the housing market stabilize.

Regionally, sales were up in the Northeast, the Midwest, and the West on a month-over-month basis. The South was the only region to fall on a monthly basis, recording a 5.4% drop.

• As homeowners remain hesitant to list their properties in the current rate environment, buyers are turning to the new-home market. The construction of new homes is helping to address the shortage of available homes, but the current supply still remains limited.

Builder optimism has improved for four consecutive months, and new construction now constitutes a third of the housing inventory, which is roughly three times the historical norm. The median sales price of a new home rose 3.2% from a year earlier to $449,800.

Source: U.S. Census Bureau

2. Lenders not liable for actions of appraisers

The MBA filed an amicus brief on Friday expressing concern over the CFPB and DOJ's attempt to determine a liability standard for lenders in cases of alleged bias by third-party appraisers.

• The MBA argues that lenders should not be held liable for the actions of appraisers, who are neither employees nor agents of the lender. This comes in response to a Maryland case where an appraiser is being sued, as well as the lender, loanDepot, for alleged racial bias.

“Our members have a substantial interest in this case because there is no existing legal authority to hold a lender liable for the acts of a third-party appraiser. In fact, the liability that does exist is for improperly interfering with an appraiser’s independent judgment,” MBA President Bob Broeksmit said.

While acknowledging that appraisal bias is unacceptable, the MBA claims the DOJ and the CFPB are trying to impose requirements on lenders beyond the existing legal framework.

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4. 18% of adults plan to buy a house in the next 12 months

According to the latest Housing Trends report by the National Association of Home Builders, a record-breaking 18% of American adults plan to buy a house in the next 12 months. This is the highest share ever for the survey.

According to the report, relatively lower interest rates in the first quarter of 2023 pushed more first-time home buyers to enter the market: 71% of all prospective buyers reported this would be their first time buying a home, up from 61% in the final quarter of 2022.

The share of adults with plans to buy a home in the next 12 months rose in all regions of the country between the final quarter of 2022 and the first quarter of 2023: Northeast (11% to 19%), Midwest (10% to 14%), South (14% to 17%), and West (14% to 23%).

5. US agencies warn against AI bias

In an interagency statement, US agencies including the CFPB, DOJ's Civil Rights Division, FTC, and EEOC have warned that automated systems have the potential to perpetuate bias, and companies offering such products can be held accountable for wrongdoing.

The agencies highlighted the risks of non-representative datasets and lack of transparency in AI decision-making, calling for companies to take responsibility for their use. The CFPB has previously warned lenders that not explaining their rationale when denying credit applications is a violation under the ECOA.

The bureau plans to roll out a rule to ensure AI systems in residential real estate have basic safeguards against discrimination.

6. Outside interest: Trade school sign-ups rise

Recent data from the National Student Clearinghouse Research Center shows a rise in trade school enrollment, particularly in mechanic, repair, construction, and culinary courses.

• The shift is attributed to the financial practicality of trade schools, as public universities are around twice as expensive, and private colleges are ten times more costly than technical education.

Moreover, trade school graduates are more likely to find employment in their fields of study. Many of these jobs pay well, with 30 million positions offering $55k+ per year, and they do not require a four-year degree, according to Georgetown University's Good Jobs Project.

☀️ See you on Friday!

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