By Qiong (June) Zhang
National Overnight Average Rates
NATIONAL OVERNIGHT AVERAGE RATES
30 year fixed
15 year fixed
* Data source:
By Qiong (June) Zhang
On the heels of a choppy first
quarter, federally controlled mortgage-finance giants Fannie Mae and
Freddie Mac have cut their forecasts for the U.S. housing market’s
performance in 2014.
Duncan, Fannie’s chief economist, said Monday that he now expects
builders to start construction on 1.05 million housing units this year,
down 50,000 from Fannie’s forecast earlier this year. He cited
constraints on credit and labor.
Last week, Freddie cut its forecast for home sales in 2014 to 5.5 million from a prior estimate of 5.6 million.
“Tight
inventory may pose a significant challenge for home buyers in many
markets across the country, which may result in higher home prices and
sales being lower than expected,” said Frank Nothaft, Freddie’s
economist.
forward, projects and purchases delayed by bad weather could pop up in
coming housing reports. While dropping affordability will continue to
trim some sales, mortgage rates do remain relatively low, home-price
growth is expected to slow down and some banks are easing standards for
By Qiong (June) Zhang
U.S. sales of
new homes rebounded in January to the fastest pace in more than 5
years, offering hopes that housing could be regaining momentum after a
slowdown last year caused by rising interest rates.
Sales of new
homes increased 9.6% in January to a seasonally adjusted annual
rate of 468,000. That was
the fastest pace since July 2008.
had fallen 3.8% in December and 1.8%t in November, leading
to worries that the housing recovery could be losing momentum.
The median price of a new home sold in January was up 3.4% from a year ago to $260,100.
sales gain was led by a 73.7% surge in sales in the Northeast.
Sales were up 11% in the West and 10.4% in the South. The
only region to see a sales decline was the Midwest where sales fell 17.2%.
Sales for all of 2013 rose to 428,000, the highest point in five years and an increase of 16.3% from 2012.
Economists expect sales to grow more in 2014 although they do not expect the gain to be as robust as the 2013 increase.
increases are expected to moderate in 2014 as well. The Standard &
Poor’s/Case-Shiller 20-city home price index rose by a healthy 13.4% in last year. That was the largest calendar gain in eight years.
National Association of Realtors reported last week that sales of
existing homes plummeted in January to an annual rate of 4.62 million
units. That was down 5.1% from the December pace.
average rate on a 30-year mortgage rose to 4.33% last week, up
from 4.28& the previous week. Rates surged about 1.25% points from May through September, peaking at 4.6%.
economy is also expected to show greater strength with many analysts
expecting overall growth to climb to close to 3% this year, up
from just 1.9 percent in 2013.
By Qiong (June) Zhang
Confidence among U.S. home builders held in January near its highest
level in eight years, indicating the residential real-estate market will
continue to contribute to economic growth in 2014.
National Association of Home Builders/Wells Fargo builder sentiment
gauge fell to 56 from 57 in December.
Builder confidence fell in
two of four regions, led by a seven-point drop in the South. The index
also fell in the Midwest and rose in the Northeast and West.
Borrowing Costs
costs for homebuyers, which have been climbing since May, were largely
unchanged for the week ended Jan. 9, with the average 30-year,
fixed-rate mortgage at 4.51%, down from 4.53% the week
before. A year ago, the average rate was 3.4%, according to Freddie Mac.
A strengthening housing market and low interest rates have boosted builders, suppliers and lenders. The outlook remains positive even with a plunge in mortgage refinancing
and slowing growth in home values. And despite the rise in , and interest rates over the past year, housing is still very affordable.
to show housing starts dropped to a
990,000 annualized pace in December after surging to a more than
five-year high of 1.09 million the prior month, according to the median
forecast of economists surveyed before figures from the Commerce
Department. It would still mark the best back-to-back months since 2008.
By Qiong (June) Zhang
Mortgage rates slipped last week but few doubt their long-term trajectory is an upward one. Fannie Mae economists Doug Duncan and Mark Palim
stopped by the Barron’s offices this week to talk about rising rates and their impact on the housing market.
They looked back at the last two
periods of rising mortgage rates prior to last year: in 1994-95 when
rates rose by 240 basis points over a 24-month period, and in
when rates rose by 180 basis points over a period of 19 months. In both cases they found that home prices continued to rise but the rate of increase slowed. At the same time the number of homes sold either fell or flattened, while the use of adjustable-rate mortgages, or ARMs, spiked.
What’s different this time, Duncan
notes, is that rules for underwriting mortgages, particularly ARMs, have
changed, becoming more strict in the wake of a financial crisis that
was largely caused by terrible mortgage underwriting standards. Palim
says the market should become less volatile as a result of these tighter
rules. Duncan sees the 30-year
fixed-rate mortgage rate rising to 5.0% by the end of 2014, and he
expects the pace of home price increases to be just half of year’s pace,
while existing home sales should rise by about 1.8%.
详细历史记录请参看：Rates History
By Qiong (June) Zhang
The economy is brightening as 2014 arrives — but that could signal higher borrowing costs for homebuyers as the Federal Reserve scales back its efforts to lower interest rates and the chance of higher inflation increases.
Lenders were offering
30-year fixed-rate mortgages this week at an average of 4.53%, up from
4.48% last week and the highest since September.
The interest rate for a 15-year fixed loan averaged 3.55%, up from
3.52% last week. The start rate for adjustable loans fixed for the first
five years was 3.05% compared to 3% a week ago.
Freddie Mac, the government-supported issuer of bonds backed by
mortgages, asks lenders about the terms they are offering to solid
borrowers with at least 20% down payments or 20% home equity for those
refinancing their loans. The borrowers would have paid less than 1% of
the loan amount in lender fees and discount points to obtain the rates.
“Mortgage rates edged up to begin the year on signs of a stronger
economic recovery,” Freddie Mac chief economist Frank Nothaft said in a
statement. An index of pending home sales turned positive in November
after declining for five months, he noted, and consumer confidence rose
in December.
详细历史记录请参看：Rates History
By Qiong (June) Zhang
Home prices in most U.S. cities are increasing more slowly than
earlier in the year, and consumer confidence is rising, in dual signs
that expectations of a stronger economy in 2014 are taking root.
Conference Board’s Consumer Confidence Index rose 6.1 points in
December, to 78,1, recouping almost all of the drop it sustained during
the October government shutdown, the board reported on Tuesday.
The Standard & Poor’s/Case-Shiller 20-city home price index rose 0.2% from September to October. Prices have risen 13.6% over the past 12 months, the fastest since Feb. 2006.
increases are moderating because the wave of foreclosed properties that
sold cheaply in 2010 through early 2012 has largely crested, Sterne
Agee economist Lindsey Piegza said. Conditions now may lead to a
stronger push in new home construction next year, Barclays economist
Cooper Hawes said.
Investors are getting more confident as well. A new survey by State Street Global Exchange said its investor confidence index
rose to 95.9 in December, up 4.7 points from November’s revised reading
By Qiong (June) Zhang
Flat screens and espresso makers? No, turns out
that consumers should have been buying mortgages on Cyber Monday. By the
end of the day, the average rate on the commonly used 30-year-fixed
mortgage was 4.5%, its highest point since mid-September,
according to . It was 3.36% a year ago.
Home prices were up 12.5% in October, according to the
latest reading from CoreLogic. While the gains are beginning to slow,
the sharp move up this year has rattled the housing recovery.
Despite rising
rates, several mortgage products are available, and you may be able to
reduce your monthly payment a bit if you have clean credit and a solid
down payment. In today’s market, of course, those are big ifs. While
housing price gains had been viewed as a sign of recovery, most are now
saying that a slowdown going into 2014 is a good thing.
Taking a collective breath will help some during the
slow winter season, but buyers should beware that spring could bring
not just higher prices but higher mortgage rates. The days of the 3
percent 30-year fixed are clearly over.
详细历史记录请参看：
By Qiong (June) Zhang
Signed contracts to buy existing homes fell for the fifth straight
month in October, as the government shutdown added to an overall
slowdown in the U.S. housing market. So-called pending home sales eased
0.6% from an upwardly revised September reading and are down 1.6% from October 2012, according to the National Association of
Realtors. This is the lowest sales pace since December 2012.
Regionally,
gains in pending home sales in the Northeast and Midwest were stronger,
while the South and West saw deeper declines. Sales rose 2.8%
month-to-month in the Northeast and 1.2% in the Midwest. Sales
slipped 0.8% in the South from September and in the West the
decline was steepest, with 4.1% fewer buyers signing contracts.
While the Realtors’ survey,
showed a big drop in the usually investor-heavy West,
another report saw investors returning to the market in October after
stepping back earlier in the year.
After surging to 23% of the
market in February, investors made up just 16.6% of home buyers
in August, according to Campbell/Inside Mortgage Finance. Over the past
two months, however, that share has climbed back to 17.4%
By Qiong (June) Zhang
U.S. home prices rose in August from a year
earlier at the fastest pace since February 2006. But the price gains
slowed in many cities from July, a sign that the spike in prices over
the past year may have peaked.
The Standard & Poor’s/Case-Shiller 20-city home price index rose
12.8% over the 12 months ending in August. That’s up from 12.4% in July from a year earlier. All 20 cities showed year-over-year
gains (The Case-Shiller 20-city index covers roughly half of U.S. homes).
However, a measure of month-over-month prices for the 20 cities rose
just 1.3% in August. That’s’ down from a 1.8%
month-over-month gain in July. And 16 of the 20 cities reported more
modest price increases in August than in July.
Prices in Las Vegas rose 29.2% from a year earlier, the
fastest pace in the nation. But they are still 47% lower than
they were before the housing market collapsed.
Prices in Denver and Dallas hit record levels in August. None of the
other cities have returned to where they were before the real estate
Average home prices are only back to mid-2004 levels and 22% below their April 2006 peak.
And many of the cities are seeing their gains slow.
Prices in San Francisco increased 0.9% in August, down from a 2.2% monthly increase in July.
Despite rising for 26 straight months, prices in Detroit are still lower than they were in January 2000.
Contingent Macro Advisors economists Maninder Sibia and Steven Wood
said housing inventory was only 83% of normal levels. They expect
the supply to increase as rising prices encourage home owners to put
their houses on the market.
By Qiong (June) Zhang
The Mortgage Bankers Association (MBA) released its weekly report on
mortgage applications last Wednesday morning, noting a decrease of 0.6% in
the group’s seasonally adjusted composite index. Mortgage loan rates dropped across the board
last weeks.
The average mortgage loan rate for a conforming 30-year fixed-rate
mortgage decreased from 4.46% to 4.39%. The rate for a jumbo 30-year
fixed-rate mortgage fell from 4.51% to 4.43%. The average interest rate
for a 15-year fixed-rate mortgage fell from 3.53% to 3.51%. All three
loan types have fallen to their lowest levels since June.
The contract interest rate for a 5/1 adjustable rate mortgage loan remained unchanged at 3.25%.
详细历史记录请参看：
By Qiong (June) Zhang
U.S. housing prices rose 8.5% through August even as higher mortgage rates hurt demand. Though home prices continue to rise, real estate research from Zillow finds evidence the housing market is cooling. The pace of home value
appreciation slowed in the third quarter to 1.2%, about half the pace of
the second quarter of this year. And as Stan Humphries, chief economist
at Zillow, tells — that’s “a
pretty good thing.” Why?
“We have been wanting to see a little bit of moderation in the pace
of home value gains because they’ve been rising at a very fast pace off
the bottom. And in order to get back to a normal pace we need to start
to see things moderate,” he tells us. “The normal pace in the housing
market looks more like 3.5% [growth in values] a year, so in the past
several months we’ve been rising at almost twice that pace.”
Zillow’s research also finds the larger decreases in home value
appreciation came in markets that they’ve been watching as potential
bubbles – including San Francisco, San Diego and Los Angeles. So is
Humphries confident we’re staving off any bubbles at this point? He says
Home affordability is also declining. A new report
finds it’s harder for a median-income household to afford a
median-priced home in all of the country’s top 25 real estate markets
this year compared to a year ago. That’s because home prices have risen
close to 16% along with mortgage rates while income has not kept pace
(income has risen by about 3%).
By Qiong (June) Zhang
US new home sales jump 7.9% in August to 421K, biggest one-month gain since January.
That comes after sales plunged 14.1% in July to a 390,000 annual
The rebound in sales could ease worries that higher mortgage rates
have started to dampen sales. Home builders
remain more confident in the market than they’ve been in 8 years.
New-homes sales were 12.6% higher in August than a year ago. The number of new homes available for sale rose 3.6% from July
to 175,000.
The median price of a new home sold in August fell 0.7% from July to $254,600.
Sales rose in all but one region of the country in August, increasing
19.6% in the Midwest, 15.3% in the South and 8.8%
in the Northeast. Sales plunged 14.6% in the West, the second
straight month of double-digit declines.
Many economists say the housing recovery should withstand the recent
rate increase. Mortgage rates are still quite low by historical
standards.
By Qiong (June) Zhang
The Mortgage Bankers Association (MBA) released its weekly report on
mortgage applications Wednesday morning, noting an increase of 5.5% in
the group’s seasonally adjusted composite index, following a rise of
11.2% for the previous week. Mortgage loan rates once again fell
slightly across the board last week.
The average mortgage loan rate for a conforming 30-year fixed-rate
mortgage decreased from 4.75% to 4.62%. The rate for a jumbo 30-year
fixed-rate mortgage fell from 4.83% to 4.66%. The average interest rate
for a 15-year fixed-rate mortgage fell from 3.81% to 3.68%.
The contract interest rate for a 5/1 adjustable rate mortgage loan dropped from 3.54% to 3.39%.
Interest rates came down slightly last week and purchase applications
rose sharply. This is the second consecutive weekly gain in
applications and the second consecutive drop in mortgage loan rates.
详细历史记录请参看：
By Qiong (June) Zhang
U.S. home resales hit a 6-1/2 year high in
August as buyers flocked back to the market to lock in cheap borrowing
costs amid rising mortgage rates, a signal of continued strength in the
housing market recovery.
The National Association of Realtors said on Thursday existing home
sales increased 1.7% to an annual rate of 5.48 million units last
The Federal Reserve cited tighter financial conditions as one reason
for its decision this week not to taper its stimulus program aimed at
supporting growth, a surprise to investors and economists who had
expected it to scale back bond-buying. Slower asset purchases would have
pushed mortgage rates even higher.
The months’ supply remained below the 6.0 months that is normally
considered as a healthy balance between supply and demand. The U.S.
housing market had been impacted by tight supplies in some parts of the
Investors bought 17% of homes in August, with first-time buyers accounting for 28% of the transactions.
By Qiong (June) Zhang
You don’t usually find clearance sales on real estate. But the last two years are beginning to look like the deal of a lifetime for anybody who bought a home.
That dynamic may now be changing as home prices surge by
double-digits, interest rates rise and the whole housing bust recedes
into the past. The latest sign that the buyer’s market is ending is a
convincing improvement in foreclosures. Sales of foreclosed homes now
account for about 12% of home sales. That’s down from 17% a year ago and 37% in 2009, the low point of the
housing bust.
With fewer foreclosures, there’s less of a discount on distressed
homes, and firmer prices overall. In 2009, foreclosed homes sold for
about 25% less than their estimated value. Today, they
sell for about 8% less than their estimated value. Prices
bottomed out in the first half of 2012 and are now rising by about 12% year over year.
There’s some evidence now that trade-up buyers are finally, well,
trading up. Sales of lower-priced entry-level homes that might typically
appeal to first-time buyers are falling, possibly because new buyers
are still struggling to get credit. But sales of higher-priced homes
that would typically appeal to second- or third-time buyers are rising.
This comes at the same time that 30-year mortgage rates have spiked
from about 3.5% in April to more than 4.5% now. The median
sales price of a home, around $214,000, is now high enough for the
typical seller to turn a small profit on the sale, which comes in handy
for families that are turning around and buying another house.
That’s why the end of the buyer’s market isn’t the end of the housing
recovery. Rising prices ought to lure more sellers to put their homes up for sale,
increasing the supply of homes and putting a check on rising prices.
By Qiong (June) Zhang
New housing data released Tuesday could give
prospective home buyers the motivation to make a bid on that home or
condo they’ve been eyeing. Home prices in the 20 cities tracked by the
rose 12.1% in June versus the same month in 2012. In May prices jumped 12.2%, the biggest increase since March 2006.
Prices in Denver and Dallas reached new all-time highs in June but
property values for all of the 20 cities included in the index posted
monthly and annual gains.
Home buyers in particular are feeling a “sense of immediacy” to
purchase homes before prices and mortgage rates rise even more. Mortgage rates are still hovering near record lows but have been
steadily climbing higher. Last week the average rate on a 30-year mortgage touched a two-year high of 4.58%, up from 3.35% in early May
according to Freddie Mac ( ).
The housing market’s momentum will continue despite rising prices and a decline in new home sales.
The Commerce Department announced this week that new home sales in July fell 13.4% — the lowest level in nine months.
By Qiong (June) Zhang
“Existing Home Sales Spike in July,” blares the headline from the National Association of Realtors. The organization’s
enthusiasm is understandable as the latest data shows the pace of home
buying in July not only came in better than expected and at the best
level since November 2009, but more importantly rose in the face of
sharply higher borrowing costs.
Beyond the 17% annual gain in sales, the NAR also reports that the
median price for used homes rose nearly 14% to to $213,500, marking the
17th consecutive month of annualized gains, and leaves the benchmark
just 7% shy of its all-time high set in July 2006.
In the wake of this evidence, and the certainty that the Fed will
soon began to reel in its $1 trillion annual asset purchase program
(perhaps as early as next month), a huge obstacle in the way of higher
interest rates has just been moved.
To be fair, as strong as the July housing data was, even the NAR says
the unexpected jump may have been partly due to people who were finally
motivated to jump off the sidelines and act.
By Qiong (June) Zhang
Confidence among U.S. homebuilders is at its highest
level in nearly 8 years, fueled by optimism that demand for new
homes will drive sales growth into next year.
The brighter sales outlook is the latest sign pointing to a sustained
pickup in construction in coming months and comes as applications for
permits to build single-family houses are at a 5 year high.
The National Association of Home Builders/Wells Fargo builder
sentiment index released Thursday jumped to 59 this month from 56 in
July. It was the fourth consecutive monthly gain.
Steady hiring, rising home prices and still-low mortgage rates are
encouraging more people to buy homes. New-home sales jumped 8.3%
in June to a seasonally adjusted annual rate of 497,000, the fastest
pace in 5 years.
Applications for permits to build single-family homes rose for the
third straight month in June to 624,000, the highest since May 2008.
That suggests home construction should rebound in the coming months.
Many of the large, publicly traded homebuilders have been reporting
sharp growth in completed sales and new-home orders this year. And sales
for privately held U.S. homebuilders are up 18% over the past
year, according to data provider Sageworks Inc.
On a regional basis, confidence grew in the West, Midwest and South, but was unchanged among builders in the Northeast.
By Qiong (June) Zhang
resales unexpectedly fell in June after two straight months of hefty
increases, but a surge in prices to a five-year high suggested the
housing market recovery remained on course.
The National Association of Realtors
said on Monday home sales fell 1.2% to an annual rate of 5.08
million units.
The median price for a previously owned home soared 13.5% from a year ago to $214,200, the highest since June 2008. The inventory
of unsold homes on the market rose 1.9% from May, pushing the
months’ supply to 5.2.
Distressed
properties – which can depress prices because they typically sell at
deep discounts – accounted for only 15% of sales last month.
Foreclosures and short sales, had
made up 18%of sales in May.
In another sign of underlying strength, properties are selling more
quickly. A home’s median time on the market in June was 37 days. That
was down from 41 days in May and 70 days a year ago.
Before the market collapsed in 2006, it usually took about 90 days to
sell a home.
First-time buyers accounted for 29% of the transactions, far
below the 40% to 45% economists and real estate
professionals view as ideal.
Investors, who have been the main drivers of sales, bought 17% of the homes in June. That was down a touch from 18% in May and 19% a year
Cash sales accounted for 31% of transactions in June, down from 33% in May.
By Qiong (June) Zhang
Mortgage rates used to be the least of home buyers’ worries. But a recent interest-rate spike is turning the factor of rising home-loan rates into a widespread concern.
Rates on 30-year fixed-rate mortgages averaged 4.37% for the week
ending July 18, according to Freddie Mac’s weekly survey of conforming
mortgage rates. That’s down slightly from the average a week earlier,
but up more than a percentage point from early May.
Of the respondents who plan to buy a home someday, 13% said a
mortgage rate of 4% would be too high and 20% said a mortgage rate of 5%
was their limit. Another 22% said rates would have to reach 6% to
discourage them from buying a home
Many in the mortgage industry think the Federal Reserve may still be buying bonds, helping mortgage rates
to stay low, for the next three years or so.
While fixed-rate loans have experienced
large swings, adjustable-rate mortgages haven’t been quite as volatile. People
planning to live in a home for no more than five to seven years might
view an ARM as a good choice, since they will likely move before the
rate resets.
Don’t panic if you’re home shopping right now. Rates might not be at the bottom, but they’re still very low.
Better yet, by getting
preapproved before you’ve even started home shopping, you can get a
sense for how the lender treats you and decide whether you want to stick
with them until closing.
By Qiong (June) Zhang
Mortgage rates have suddenly jumped from
near-record lows and are adding thousands of dollars to the cost of
buying a home.
In the short run, the spike in mortgage rates might be causing more
people to consider buying a home soon. Rates are still low by historical
standards, and would-be buyers would want to lock them in before they
rise further.
But eventually, more expensive home loans could price some people out
and slow the housing market’s momentum.
Mortgage rates are rising because they tend to track the yield on the
10-year Treasury note, a benchmark for most long-term interest rates.
A buyer who locked in a 3.35% 30-year rate in early May on a $200,000
mortgage would pay $881/month, according . The same
mortgage at a 4.46% rate would run $1,008/month. The difference: $127 more a month, or $45,720 over the lifetime of the loan.
The rate hike comes at a critical time. Low mortgage rates have
helped fuel a housing recovery that has kept the economy growing
modestly despite higher taxes and steep federal spending cuts.
By Qiong (June) Zhang
Rising interest rates have hit mortgages big time.
Rates on 30-year, fixed-rate home loans spiked 0.53 percentage points to an average of 4.46% this week — the largest weekly increase in more than 26 years, according to mortgage giant Freddie Mac.
The 30-year loan, which stood at 3.35% as recently as early May, is at its highest level since July 2011.
Rates for 15-year loans, popular with homeowners refinancing their mortgages, jumped 0.46 percentage points to 3.5%.
An extra percentage point(0.53) will cost homebuyers with 30-year,
fixed-rate mortgages $56 more a month for every $100,000 they borrow.
The sudden jump in rates is
driven by uncertainty over whether the Federal Reserve’s economic
stimulus program, called quantitative easing(QE), will continue, according
to Keith Gumbinger , a mortgage information provider.
The recent rate rise might not be enough to discourage most buyers.
详细历史记录请参看：
By Qiong (June) Zhang
Signed contracts to buy previously owned homes rose to the highest level in six years. Rising interest rates may be causing some buyers who were on the fence to get in quickly before they are priced out.
The Pending Home Sales Index from the National Association of Realtors
rose 6.7% in May from April, and is now up 12.1% from a
year ago. A shortage of homes for sale has weighed on the market this
year, even as demand increases. Contracts to buy newly built homes rose
to a five-year high in May, according to the U.S. Census.
The average rate on the 30-year fixed conforming mortgage is up about
100 basis points from the beginning of May to around 4.5%. The
rate spike the most in the past week, before these May contracts were
Pending sales were highest in the West, where prices jumped the highest. .
The index in the West rose 16% monthly but is just 1.1%
higher than it was a year ago, due to limited inventory.
index was unchanged in the Northeast in May month-to-month, but was
14.3% higher from a year ago. In the Midwest, sales jumped 10.2% monthly and were 22.2% higher than in May 2012. The South saw a 2.8% monthly gain, and is 12.3% above a year ago.
By Qiong (June) Zhang
New home sales rose 2.1% last month compared with April to a seasonally adjusted annual rate of
476,000, the highest level since July 2008, the Commerce Department reported Tuesday.
The median price of a new home sold in May was $263,900, up 3.3% from a year ago.
The sales gains in May were led by a 40.7% increase in the
Midwest followed by a 20.7% gain in the Northeast. Sales were
also up 3.6 % in the West but they fell 9%
in the South.
The National Association of Realtors reported last week that sales of
previously occupied homes surpassed 5 million in May. It was the first
time that’s happened in 3 1/2
years. The last time sales had exceeded 5 million was in
November 2009, a month when the pending expiration of a home-buying tax
credit briefly inflated sales.
The National Association of Home Builders/Wells Fargo
builder sentiment index rose in June to 52, up from 44 in May. That was the highest reading in more than seven years and the largest
monthly increase in more than a decade.
By Qiong (June) Zhang
The housing recovery continues to pick up steam, as home prices jumped in April, and new home sales hit a five year high in May.
But a recent increase in mortgage rates could soon put the brakes on housing.
The S&P/Case-Shiller home price index was up 12.1% in April,
compared to a year ago, in the 20 top real estate markets across the
nation. That was the biggest annual jump in prices in seven years.
Prices climbed 2.5% from March, posting the biggest one-month rise in
the 12-year history of the index.
According to a
separate government report: new homes sold in May is the best reading since July 2008. The pace of sales was up 2.1% from April, and up 29% from a year
The median price of a new home sold in May was $263,900, down 3.1%
from April. Even with the monthly decline, new home prices were up 10.3% from a year
A drop in foreclosures, coupled with a tight supply of homes for sale and mortgage rates that hit record lows, have fueled the rebound in housing over the last 11 months.
By Qiong (June) Zhang
New home construction rose less than expected in May. The Commerce Department said last week housing starts rose 6.8% to a seasonally adjusted annual rate of 914,000 units versus expectations of 950,000.
Reuters reports this miss likely reflects labor and material constraints. CNBC Real Estate reporter Diana Olick adds to the list a lack of land and a supply chain for homebuilders that wasn’t ready for this pick-up in demand. But Olick also suggests the holdup in construction may be intentional.
“Believe it or not we’re hearing
from some builders – self-admittedly – that they are slowing production
of new homes because they want to take advantage of these rising home
prices,” Olick tells The Daily Ticker
in the accompanying interview. “In the last new home sales report we
actually saw a huge spike in new home sale prices, and they like that.
Of course they want to sell the homes for more money so they’re actually
keeping the supplies lean in some cases.”
And bigger picture there is the question of if the recovery is real
and sustainable. All of the data showing a recovery in housing is
arguably built on a foundation including massive Federal Reserve support
in the form of monetary stimulus.
For April, existing home sales improved modestly but fell short of
expectations of 4.98 million units, increasing 0.6% to 4.97
million units. NAR said sales remained below underlying demand because of limited inventory and tight credit.
By Qiong (June) Zhang
Freddie Mac reports rates for home financing are just
shy of 4% this week, the highest since the week of April 12,
What’s different this time around, according to Doug Duncan,
chief economist at Fannie Mae, is that mortgage rates aren’t going back down.
Duncan says he does
think the Fed will work hard to try to prevent rates from going further
up from here and may try to hold them here through the end of the year.
Fannie Mae just released its mid-year economic outlook and sees a
strengthening housing market pushing the economy forward at a lethargic
2.1% rate in 2013.
One interesting change Duncan says they’ve found through a survey
Fannie Mae conducts is a jump in home sellers’ confidence. Forty percent
now say it’s a good time to sell a home – a huge jump over last month
and last year. This matters, according to Duncan, because five of eight
people who are going to buy a house have to sell one first.
Tight housing supply has helped to fuel recent price gains in
housing. One concern is that if people do start selling their homes,
supply will increase and home price gains could slow down.
Duncan says this dynamic “will eventually slow the pace of price increase, but not until next year.”
By Qiong (June) Zhang
Mortgage rates moved to within a hair of the 4% barrier this week, according to mortgage giant Freddie Mac.
The average rate for 30-year, fixed rate loans rose 0.07%
point to 3.98%, and is up 0.63% point since the week of May 2.
Rates have not been this high since the week of April 12, 2012.
The recent improvement in the employment picture should result in
more home buying, which would pressure rates even higher. Rates have
also been going up because the Federal Reserve has signaled that it
might cut back on buying mortgage-backed securities.
The increase will boost monthly mortgage payments for homebuyers by
about $33 for every $100,000 borrowed.
But the soaring rates create a double whammy for would-be home
buyers, with home prices also on a rapid rise — up more than 10% in the
12 months ended March 31, according to the S&P/Case-Shiller
national home price index.
If both trends continue, it could put a damper on a housing market still in a struggle to put the bust behind it.
By Qiong (June) Zhang
Contracts to buy previously
owned U.S. homes rose to their highest level in three years in April,
but a shortage of properties for sale could slow down the momentum.
The National Association of Realtors said on Thursday
its Pending Home Sales Index, based on contracts signed last month, rose
0.3% to 106.0, the highest reading since April 2010.
Contracts, which become sales after a month
or two, had increased 1.5% in March.
Although mortgage rates spiked last week to their
highest level in a year amid heightened speculation the Fed will soon
start to scale back monetary stimulus, economists do not believe higher
borrowing costs would derail the housing recovery.
About a third of home resales are cash transactions.
Contracts were up 10.3% compared to April last year.
Last month, home resale contracts rose in the Northeast and Midwest. Contracts fell in the South and West.
Categories
Blue Taste Theme created by