mortgage rates Archives

Mortgage Rates Hold Near Record Lows

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates fell again last week, continuing to hover near record lows. Rates fell across all loan categories, including 30-year fixed-rate loans with both conforming and jumbo balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate loans. Consistently low mortgage rates have been a bright spot for the housing market this year, as low inventory and higher prices strain affordability conditions. Between mortgage rates near record lows and a stronger job market, demand for home loans has been higher than at the same time last year, even as conditions have become more challenging. In fact, refinance demand is now 48 percent higher than last year at this time and purchase activity is 10 percent higher than year-before levels. However, lower rates last week weren’t enough to keep mortgage demand from falling from one week earlier. In fact, the Market Composite Index – which measures both refinance and purchase demand – fell 4 percent from the week before. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

Builders Confident In New Home Market

One way to determine the health of any particular housing market is to gauge how many new homes are being built in the area. That’s because new homes add inventory to the market, which plays an important role in moderating price increases and giving buyers more options when looking for a house to buy. For this reason, the National Association of Home Builders surveys builders each month to get a feel for how the new home market is doing. The survey scores builders’ responses on a scale where any number above 50 indicates more builders view conditions as good than poor. In August, the survey found builder confidence up two points from the month before, reaching a score of 60. In particular, the index components measuring current sales conditions and future expectations both increased. Robert Dietz, NAHB’s chief economist, says the overall housing market should continue on an upward path through the end of the year. “Builder confidence remains solid in the aftermath of weak GDP reports that were offset by positive job growth in July,” Dietz said. “Historically low mortgage rates, increased household formations and a firming labor market will help keep housing on an upward path during the rest of the year.” More here.

Home Prices Continue To Rise In Most Metros

The National Association of Realtors’ latest quarterly report found home prices up in 83 percent of the 178 metropolitan areas included in the study. In addition, the national median existing single-family home price was 4.9 percent higher in the second quarter than it was the year before. But though that’s seemingly bad news for buyers, it is an improvement over the first three months of 2016, when 87 percent of metros saw increasing prices and the median price was up 6.1 percent. Lawrence Yun, NAR’s chief economist, says buyers are active in the market but – since there are too few homes available for sale – prices are moving upward. “Steadily improving local job markets and mortgage rates teetering close to all-time lows brought buyers out in force in many large and middle-tier cities,” Yun said. “However, with homebuilding activity still failing to keep up with demand and not enough current homeowners putting their homes up for sale, prices continued their strong ascent – and in many markets at a rate well above income growth.” Because there are fewer houses available for sale, 40 percent of listings sold at or above their list price. In fact, June set a record for the highest share of houses selling above list price. More here.

Americans Say They Prefer Buying To Renting

Fannie Mae’s most recent Home Purchase Sentiment Index finds Americans feeling more optimistic about both the housing market and their income. In fact, the index set a new all-time high in July with each of the six components increasing from the month before. Perhaps most notably, the number of respondents who said they’d prefer to buy if they were going to move jumped to 67 percent, while the number who said they would rent set a new all-time low at 26 percent. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says the trend is being led by younger Americans. “One interesting potential bright note for housing in the July survey is that younger households may finally be shifting toward buying rather than renting in greater numbers,” Duncan said. “Whether the shift in sentiment in July toward buying rather than renting on their next move holds up or is a temporary reaction to their view that rents are on the rise and mortgage rates will be lower, we will see. However, we are getting set to release some additional research in early August showing evidence of a broader move by older millennials in the direction of ownership.” More here.

Pending Sales Hold Steady In June

Pending home sales are an important indicator of the housing market’s health because they measure contract signings, not closings. Since signings typically precede closings by a few weeks, pending sales are seen as a good predictor of where future home sales numbers will fall. In June, the National Association of Realtors found pending sales up just 0.2 percent over the month before. Lawrence Yun, NAR’s chief economist, said there are not enough homes available for sale and it’s preventing interested buyers from taking advantage of otherwise favorable conditions. “With only the Northeast region have an adequate supply of homes for sale, the reoccurring dilemma of strained supply causing a run-up in home prices continues to play out in several markets, leading to the last two months reflecting a slight, early summer cool down after a very active spring,” Yun said. “Unfortunately for prospective buyers trying to take advantage of exceptionally low mortgage rates, housing inventory at the end of last month was down almost 6 percent from a year ago, and home prices are showing little evidence of slowing to a healthier pace that more closely mirrors wage and income growth.” Still, despite contract signings slowing in June, sales of previously owned homes are expected to finish the year at the highest annual pace in 10 years. More here.

Mortgage Rates Increased Last Week

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates rose across all loan categories last week, including 30-year fixed-rate loans with both conforming and jumbo balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate mortgages. The increase slowed mortgage demand, especially refinance activity. Michael Fratantoni, MBA’s chief economist, told CNBC activity has been up-and-down lately, despite the fact that rates are well below where they were last year at this time. “Despite the 30-year fixed mortgage rate being almost 50 basis points lower than a year ago, refinance activity has been extremely sensitive to rate increases as the pool of borrowers who can benefit from refinancing continues to diminish,” Fratantoni said. But it wasn’t just refinance activity, demand for loans to buy homes was also down, dropping 3 percent from the week before. Still, total mortgage application volume is up 42 percent from the same week one year ago. And though that increase can partly be credited to rising refinance demand spurred by declining mortgage rates, home sales are also up over last year. The MBA’s survey has been conducted weekly since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

Housing Market Continues Down Familiar Path

The housing market has been fairly steady for quite a while now. Mortgage rates have stayed low while prices continue to rise. In many markets, there are too few homes available for sale – and though affordability conditions have been affected by increasing prices and tight inventory – an improved job market, low rates, and the growing number of Americans who say they want to buy a house have kept things moving forward. So what should you expect for the rest of this year? Well, according to Fannie Mae’s Economic and Strategic Research Group, more of the same. Doug Duncan, Fannie Mae’s chief economist, says they expect interest rates to remain low through next year helping to support continued gains for the real-estate market. “We still expect moderate housing expansion for 2016. While new home sales have pulled back from their expansion-best, existing home sales rose to the highest level in more than nine years amid the largest year-over-year drop in for-sale inventory since October of 2015,” Duncan said. “Without relief from new construction, housing inventory will likely remain tight, boosting home prices and constraining affordability.” In other words, the housing market should continue to see gains, though they will remain gradual until new home construction picks up and prices begin to moderate. More here.

Existing Home Sales Top Expectations

Sales of previously owned homes were expected to drop in June, following three consecutive months of gains. But, according to new numbers from the National Association of Realtors, home resales beat economists’ expectations and rose 1.1 percent from the month before. The improvement keeps sales at their highest annual pace since February 2007. Lawrence Yun, NAR’s chief economist, says the housing market has had a solid first half of the year. “Existing sales rose again last month as more traditional buyers and fewer investors were able to close on a home despite many competitive areas with unrelenting supply and demand imbalances,” Yun said. “Sustained job growth as well as this year’s descent in mortgage rates is undoubtedly driving the appetite for home purchase.” Mortgage rates still hovering near all-time lows may, indeed, be making a difference – especially where first-time home buyers are concerned. In June, for example, the share of first timers rose 3 percent and is now at its highest point in four years. Regionally, sales were up over last year in three of four regions, with the West running relatively even with one year earlier. Inventory, however, remains a concern. In June, the number of homes available for sale fell 0.9 percent and is now 5.8 percent lower than it was at the same time last year. More here.

Slight Rate Increase Slows Mortgage Demand

The number of Americans requesting mortgage applications fell 1.3 percent last week, according to the Mortgage Bankers Association’s Weekly Applications Survey. The decline was due, in part, to a slight increase in average mortgage rates. The survey found rates up for 30-year fixed-rate mortgages with both conforming and jumbo balances, as well as 15-year fixed-rate loans. Mortgage rates for loans backed by the Federal Housing Administration were unchanged from the previous week. Michael Fratantoni, MBA’s chief economist, told CNBC that refinance volume remains high while purchase demand has been slow since the holiday. “Recent swings in mortgage rates have been relatively muted compared to Treasury rates, although on net both remain below their levels from just prior to the Brexit vote,” Fratantoni said. “Refinances fell slightly with rising rates last week, but the refinance share of 64.2 percent of applications was the highest since February of this year, as purchase volume was slow to come back following the July 4thholiday.” Demand for loans to buy homes, though 16 percent higher than last year, has been hampered by lower-than-normal inventory levels across much of the country. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications.

Builders Still Optimistic About The Market

Because builders have an unique view of the new home market, the National Association of Home Builders tracks their perspective each month as part of their Housing Market Index. The survey has been conducted for 30 years and scores builders’ responses on a scale where any number above 50 indicates more builders view conditions as good than poor. In July, builder confidence was relatively unchanged from the month before, falling one point to 59. Robert Dietz, NAHB’s chief economist, says the market remains poised for growth. “The economic fundamentals are in place for continued slow, steady growth in the housing market,” Dietz said. “Job creation is solid, mortgage rates are at historic lows and household formations are rising. These factors should help to bring more buyers into the market as the year progresses.” Among the survey’s three components, measuring buyer traffic, current sales, and expectations for the next six months, future expectations fell furthest, dropping three points to 66. Regionally, the Midwest, South, and West all continued to post positive numbers, while the Northeast trails behind with a three-month moving average of 39. Builder confidence is considered an important measure of housing’s health due to the important role new homes play in balancing the market. More here.