Climbing Mortgage Rates Reach 4-Year High

Climbing Mortgage Rates Reach 4-Year High
Freddie Mac   article by Daily Real Estate News | February 16, 2018

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Mortgage rates continued to inch higher this week, marking the sixth consecutive week for borrowing cost increases for home shoppers.

“Wednesday’s Consumer Price Index report showed higher-than-expected inflation; headline consumer price inflation was 2.1 percent year-over-year in January, two-tenths of a percentage point higher than the consensus forecast,” explains Len Kiefer, Freddie Mac’s deputy chief economist. “Inflation measures were broad-based, cementing expectations that the Federal Reserve will go forward with monetary tightening later this year. Following this news, the 10-year Treasury reached its highest level since January 2014, climbing above 2.90 percent. Mortgage rates have also surged.”

After jumping 10 basis points last week, the 30-year fixed-rate mortgage rose 6 basis points to 4.38 percent, its highest level since April 2014.

Freddie Mac reports the following national averages with mortgage rates for the week ending Feb. 15:

  • 30-year fixed-rate mortgages: averaged 4.38 percent with an average 0.6 point, rising from last week’s 4.32 percent average. Last year at this time, 30-year rates averaged 4.15 percent.
  • 15-year fixed-rate mortgages: averaged 3.84 percent, with an average 0.5 point, increasing from last week’s 3.77 percent average. A year ago, 15-year rates averaged 3.35 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 3.63 percent, with an average 0.4 point, rising from last week’s 3.57 percent average. A year ago, 5-year ARMs averaged 3.18 percent.

Source: Freddie Mac; REALTOR® Magazine Online, Daily Real Estate News 021618

Mortgage Rates Keep On Pressing Higher

Mortgage Rates Keep On Pressing Higher
Freddie Mac article by Daily Real Estate News | February 9, 2018

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The 30-year fixed-rate mortgage reached its highest average since December 2016, Freddie Mac reports. This is the fifth consecutive week that mortgage rates have been on the rise, increasing borrowing costs for home shoppers heading into the spring buying season.

Following a turbulent Monday, financial markets settled down with the 10-year Treasury yield resuming its upward march. Mortgage rates have followed,” says Len Kiefer, Freddie Mac’s deputy chief economist. “Will higher rates break housing market momentum? It’s too early to tell for sure, but initial readings indicate housing markets are sustaining their momentum so far.”

Freddie Mac reports the following national averages with mortgage rates for the week ending Feb. 8:

  • 30-year fixed-rate mortgages averaged 4.32 percent, with an average 0.6 point, rising from last week’s 4.22 percent average. Last year at this time, 30-year rates averaged 4.17 percent.
  • 15-year fixed-rate mortgages averaged 3.77 percent, with an average 0.5, up from a 3.68 percent average last week. A year ago, 15-year rates averaged 3.39 percent.
  • 5-year hybrid adjustable-rate mortgages averaged 3.57 percent, with an average 0.4 point, increasing from last week’s 3.53 percent average. A year ago, 5-year ARMs averaged 3.21 percent.

Source: Freddie Mac; REALTOR® Magazine Online, Daily Real Estate News 020918

Nationally: Cash Sales Soar to Post-Recession High

Nationally: Cash Sales Soar to Post-Recession High
National Association of Home Builders article by Daily Real Estate News | January 29, 2018

Cash sales accounted for 8 percent of new-home sales in the fourth quarter of 2017, matching a high that has not been seen since 2014, the National Association of Home Builders reports on its Eye on Housing blog. Cash sales make up an even larger share of existing-home sales—about 20 percent in December, according to the National Association of REALTORS®.

Cash hardly makes up the bulk of financing options for buyers, however. The share of new homes financed with conventional mortgages has dropped slightly from 73.2 percent to 72.7 percent. In the fourth quarter of 2017, 12.9 percent of new-home buyers used FHA loans. The share of sales financed with FHA-backed mortgages has dropped 4 percentage points since reaching a peak in the second quarter of 2015.

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“Different sources of financing serve distinct market segments, which is revealed in part by the median new-home price associated with each,” the NAHB reports. “In the second quarter, the national median sales price of a new home was $321,100. Split by types of financing, the median prices of new homes financed with conventional loans, FHA loans, VA loans, and cash were $347,800, $233,900, $294,400, and $349,300, respectively.”

Source: “Cash Sales Tie Post-Recession High,” National Association of Home Builders’ Eye on Housing blog (Jan. 26, 2018); REALTOR® Magazine Online, Daily Real Estate News 012918

Mortgage Rates Continue to Inch Upwards

Mortgage Rates Continue to Inch Upwards
Freddie Mac | January 26, 2018

Fixed-rate mortgages increased again this week, the third consecutive week to see a rise.

“Rates keep climbing,” says Len Kiefer, Freddie Mac’s chief economist. “The 10-year Treasury yield reached its highest point since 2014 reflecting expectations of broad-based economic growth. Mortgage rates, in turn, followed the surge in Treasury yields. The 30-year fixed rate mortgage jumped 11 basis points to 4.15 percent, its highest level since March of last year.”

Home buyer affordability will be a challenge, with mortgage rates moving higher and robust house price gains across the country, Kiefer adds.

Freddie Mac reports the following national averages with mortgage rates for the week ending Jan. 25:

  • 30-year fixed-rate mortgages: averaged 4.15 percent, with an average 0.5 point, increasing from last week’s 4.04 percent average. Last year at this time, 30-year rates averaged 4.19 percent.
  • 15-year fixed-rate mortgages: averaged 3.62 percent, with an average 0.5 point, increasing from last week’s 3.49 percent average. A year ago, 15-year rates averaged 3.40 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 3.52 percent, with an average 0.4 point, increasing over last week’s 3.46 percent average. A year ago, 5-year ARMs averaged 3.20 percent.

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Source: Freddie Mac; REALTOR® Magazine Online, article by Daily Real Estate News 012618

Nationally: Why Sales Fell Short at Year’s End

Nationally: Why Sales Fell Short at Year’s End
National Association of REALTORS®   article by Daily Real Estate News | January 24, 2018

Existing-home sales in 2017 surged to the best year for sales in 11 years, the National Association of REALTORS® reported Wednesday.

Total existing-home sales—which include completed transactions for single-family homes, townhomes, condos, and co-ops—rose 1.1 percent in 2017 to a 5.51 million sales pace. The sales pace surpassed 2016’s 5.45 million, which had been the highest pace since 2006.

However, the end-of-the-year sales numbers were overcast somewhat by a slower sales pace in December. Existing-home sales decreased 3.6 percent in December month over month to a seasonally adjusted annual rate of 5.57 million.

“Existing sales concluded the year on a softer note, but they were guided higher these last 12 months by a multistreak of exceptional job growth, which ignited buyer demand,” says Lawrence Yun, NAR’s chief economist. “At the same time, market conditions were far from perfect. New listings struggled to keep up with what was sold very quickly, and buying became less affordable in a large swath of the country. These two factors ultimately muted what should have been a stronger sales pace.”

Closings scaled back in most areas of the country in December due to affordability and inventory woes, Yun adds. “Affordability pressures persisted, and the pool of interested buyers at the end of the year significantly outweighed what was available for sale,” Yun says.

Market Snapshot for December

Here are some key highlights from NAR’s latest housing report:

  • Home prices: The median existing-home price for all housing types in December was $246,800, which is 5.8 percent higher than a year ago.
  • First-time buyers: First-time home purchasers comprised 32 percent of sales in December, up from 29 percent in November.
  • Days on the market: Forty-four percent of homes sold in December were on the market for less than a month. Properties typically stayed on the market for 40 days in December, down from 52 days a year ago.
  • All-cash transactions: All-cash sales comprised 20 percent of transactions in December, which is down slightly from 21 percent a year ago. Individual investors, who make up the bulk of cash sales, accounted for 16 percent of the homes sold in December, up from 14 percent a year ago.
  • Distressed sales: Foreclosures and short sales made up 5 percent of sales in December, down from 7 percent a year ago. Broken out, 4 percent of December’s sales were foreclosures and 1 percent were short sales.
  • Inventory: Total housing inventory fell 11.4 percent in December to 1.48 million existing homes available for sale. Inventory is now 10.3 percent lower than a year ago. Unsold inventory is at a 3.2-month supply at the current sales pace, which is the lowest level since NAR began tracking such data in 1999.

“The lack of supply over the past year has been eye-opening and is why, even with strong job creation pushing wages higher, home price gains—at 5.8 percent nationally in 2017—doubled the pace of income growth and were even swifter in several markets,” Yun explains.

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Source: National Association of REALTORS®; REALTOR® Magazine Online, Daily Real Estate News 012418

Builders Reveal Top 10 Biggest Concerns

Builders Reveal Top 10 Biggest Concerns
National Association of Home Builders   article by Daily Real Estate News | January 17, 2018

House Construction 103Homebuilding is still falling short in many markets in alleviating the shrinking inventories of homes for sale. But builders are blaming the construction shortfall on several factors.

Builders revealed the following top 10 “significant” problems they expect to face in 2018, according to the National Association of Home Builders and Wells Fargo Housing Market Index:

  1. Cost/availability of labor: 84%
  2. Building material prices: 84%
  3. Cost/availability of developed lots: 62%
  4. Impact/hook up/inspection or other fees: 60%
  5. Local/state environment regulations and policies: 45%
  6. Inaccurate appraisals: 42%
  7. Federal environment regulations and policies: 42%
  8. Difficulty obtaining zoning/permit approval: 42%
  9. Gridlock/uncertainty in Washington making buyers cautious: 42%
  10. Development standards (parling, setbacks, etc.): 38%

Once again for 2018, builders said the cost and availability of labor is their chief concern. The number of builders who are reporting this as a problem is growing. In 2017, 82 percent of builders said cost and availability of labor was their top concern; the percentage has grown to 84 percent of builders heading in 2018.

The availability of labor started growing as a problem among builders since 2011. In 2011, just 13 percent of builders rated labor as a significant problem, but by 2012, the percentage jumped to 30 percent and has ever since continued to increase each year.

“Both the availability of labor and lots highlight the expected constraints of a recovering housing market,” the NAHB reports.

Source: “Building Materials Prices and Labor Access Top Challenges for 2018,” National Association of Home Builders’ Eye on Housing blog (Jan. 16, 2018); REALTOR® Magazine Online, Daily Real Estate News 011718

Mortgage Rates Ring in New Year With a Dip

Mortgage Rates Ring in New Year With a Dip
Freddie Mac   article by Daily Real Estate News | January 5, 2018

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Borrowers kicked off 2018 with a mortgage rate drop. The 30-year fixed-rate mortgage is now down a quarter of a percentage point from a year ago.

“Treasury yields fell from a week ago, helping to drive mortgage rates down to start the year,” says Len Kiefer, Freddie Mac’s deputy chief economist. “The 30-year fixed-rate mortgage fell four basis points from a week ago to 3.95 percent in the year’s first survey. Despite increases in short-term interest rates, long-term interest rates remain subdued.”

The spread between the 30-year fixed-rate mortgage and five-year hybrid adjustable-rate mortgage is at the lowest since 2009, Kiefer says.

Freddie Mac reports the following national averages with mortgage rates for the week ending Jan. 4:

  • 30-year fixed-rate mortgages: averaged 3.95 percent, with an average 0.5 point, dropping from last week’s 3.99 percent average. Last year at this time, 30-year rates averaged 4.20 percent.
  • 15-year fixed-rate mortgages: averaged 3.38 percent, with an average 0.5 point, dropping from last week’s 3.44 percent average. A year ago, 15-year ARMs averaged 3.44 percent.
  • 5-year ARMs: averaged 3.45 percent, with an average 0.4 point, falling from last week’s 3.47 percent average. A year ago, 5-year ARMs averaged 3.33 percent.

Source: Freddie Mac; REALTOR® Magazine Online, Daily Real Estate News 010518