New Home Sales Dip Slightly in September, but Remain Strong Going Into Fall

Home construction in Park City, UTGeorge Frey/Bloomberg via Getty Images

The numbers: Sales of new single-family homes fell in September, but the housing market remains poised to buck seasonal trends nonetheless.

New home sales occurred at a seasonally-adjusted, annual rate of 959,000, the U.S. Census Bureau reported Monday. That represents a 3.5% drop from an downwardly-revised pace of 994,000 homes in August. Compared with last year, new home sales are up 32%.

Last month, the government had reported that new-home sales had exceeded an annual rate of 1 million for the first time since 2006. The government uses a small sample size to produce the new-home sales report, which makes it prone to significant revisions like this.

Economists polled by MarketWatch had expected home sales to increase to a median pace of 1.033 million.

What happened: New home sales fell a staggering 28.9% in the Northeast, followed by much smaller declines in the Midwest and the South. Comparatively, the West was the only region to experience an increase in sales with a 3.8% jump.

The decline in September aside, year-to-date new home sales are running nearly 17% ahead of the pace set by this time last year.

The median sales price in July was $326,800, up from August’s median price. The inventory of new homes was 284,000, representing a 3.6-month supply at the current pace of sales. A 6-month supply is considered the benchmark for a balanced market.

The big picture: Although most economists anticipated sales to rise in September, that is an incredibly rare occurrence. An analysis of past sales data by Regions Financial Corp. chief economist Richard Moody found that since the government began tracking this data in 1963, new home sales have only increased between August and September on four occasions.

The number of homes sold but not yet started was up in September from the previous month, a sign that builders are struggling to keep pace with the demand for homes. The monthly decline aside, low mortgage rates continue to fuel demand among buyers. And with the inventory of existing homes for sale dropping to record lows, many buyers will be forced to turn to the market for newly-constructed properties.

By that same token, though, interest rates could come to represent a headwind for the market, Moody said. “Despite the recent strength of sales, affordability is a growing concern, even more so should mortgage interest rates follow yields on longer-term Treasuries higher,” Moody wrote in a research note.

The post New Home Sales Dip Slightly in September, but Remain Strong Going Into Fall appeared first on Real Estate News & Insights | realtor.com®.

Source: realtor.com

Current Mortgage Rates Hold Higher to Start the Week

It’s another week and mortgage rates are holding steady at the levels they moved up to on Friday. It’s a moderate economic calendar this week with some reports in the latter half that could cause rates to adjust. Read on for more details.

Where are mortgage rates going?                                              

Mortgage rates hold higher after strong jobs report

Here we go with yet another week. It’s a slow start for the markets as there’s little significant economic data scheduled for release; however, Friday’s events are still looming large.

Of course, I’m talking about the monthly jobs report for August, which showed that a very solid 201,000 jobs were added to the U.S. economy for that month. More importantly, average hourly earnings ticked up 0.4%, bringing the yearly growth rate to 2.9%–the highest rate since 2009.

The consensus was for an increase of 0.2%, so the strong uptick caught investors by surprise.

The good news caused financial market participants to increase their appetite for risk and move out of bonds and into stocks, pushing long-term treasury yields higher. The yield on the 10-year Treasury note (the best market indicator of where mortgage rates are going) ticked up about seven basis points to 2.94%.

Mortgage rates typically move in the same direction as the 10-year yield and similarly edged higher as we headed into the weekend. Today, mortgage rates are staying close to those levels as there’s little happening in the markets to make them adjust in either direction.

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Lock now before rates move even higher         

Strong economic data pushed mortgage rates up higher on Friday. We’re expecting rates to continue to shift higher as the Federal Reserve gets ready to increase the nation’s benchmark interest rate later this month.

If you’re planning on buying a home or refinancing your current mortgage, we strongly recommend that you do so sooner rather than later. The longer you wait, the more likely it is that you’ll be locking in a higher interest rate and paying more over the life of your loan.

Learn what you can do to get the best interest rate possible.  

Today’s economic data:               

Fedspeak 

  • Atlanta Fed President Raphael Bostic at 11:30am

Notable events this week:       

Monday:   

  • Fedspeak

Tuesday:   

  • NFIB Small Business Optimism Index
  • JOLTS

Wednesday:         

  • PPI-FD
  • EIA Petroleum Status Report
  • 10-Yr Note Auction
  • Beige Book

Thursday:     

  • CPI
  • Jobless Claims
  • Fedspeak

Friday:          

  • Retail Sales
  • Import and Export Prices
  • Fedspeak
  • Industrial Production
  • Consumer Sentiment

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*Terms and conditions apply.

Source: totalmortgage.com

Mortgage Rates Find Some Support After an Ugly Start

Mortgage rates were off to a very bad start this morning, but recovered a portion of what they lost by the end of the day. The specifics depend greatly on the lender in question. Sadly, few if any lenders are still able to offer the rates seen yesterday. To make matters worse, yesterday’s rates were already significantly higher than those seen just one week prior. But how about a big silver lining? One week prior to yesterday, the average lender was offering all-time low mortgage rates. So being “significantly higher” than that still hasn’t been enough to move the average top tier conventional 30yr fixed quote up to 3%. Before covid, 3.125% was the lowest ever 30yr fixed rate! If you’re in the purchase market, 2.75% is still common (2.875% for refis). Lenders continue to be widely stratified

Source: mortgagenewsdaily.com

Mortgage rates remain at record-low levels

After falling to the lowest rate in Freddie Mac’s Primary Mortgage Market Survey’s near 50-year-history last week, the average U.S. mortgage rate for a 30-year fixed loan remained at a survey-low 2.67% this week.

Last week’s announcement of a 2.67% rate broke the previous record set on Dec. 3, and was the first time the survey reported rates below 2.7%.

The average fixed rate for a 15-year mortgage also fell this week to 2.17% from 2.19%. One year ago, 15-year average fixed rates were reported at 3.16%.

“All eyes have been on mortgage rates this year, especially the 30-year fixed-rate, which has dropped more than one percentage point over the last twelve months, driving housing market activity in 2020,” said Sam Khater, Freddie Mac’s chief economist. “Heading into 2021 we expect rates to remain flat, potentially rising modestly off their record low, but solid purchase demand and tight inventory will continue to put pressure on housing markets as well as house price growth.”

Freddie Mac has reported survey-low rates 16 times in 2020, proving beneficial to borrowers looking to buy or refinance a home amid economic turmoil outside of the industry.

Mortgage spreads continue to compress, per Freddie Mac officials, with the 10-year Treasury yield remaining at or above 90 basis points through the beginning of December.

This week’s 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 2.71%, down from last week when it averaged 2.79%. That’s another sharp drop-off from this time last year, when the 5-year ARM averaged 3.46%.

The Federal Open Market Committee revealed earlier this month that the Federal Reserve plans to keep interest rates low until labor market conditions and inflation meet the committee’s standards. Overall, Fed purchases have helped to drive mortgage rates and other loan interest rates to the lowest level on record by boosting competition for bonds.

Higher rates may be around the corner, as the calendar flips to 2021 and the promise of a second COVID-19 stimulus check along with a vaccine reaches consumers. The Mortgage Bankers Association has forecasted rates for 30-year fixed-rate loans rising to an average of 3.2% by the end of 2021.

But if the virus is not controlled in the new year, investors may remain cautious and consumer confidence could wane – keeping rates low, according to the MBA.

The post Mortgage rates remain at record-low levels appeared first on HousingWire.

Source: housingwire.com

New-year optimism reflected in mortgage applications jump

Mortgage applications jumped 16.7% after a 4.2% drop last week, according to the Mortgage Bankers Association.

The jump underlines the seasonality behind last week’s decrease in mortgage rates, as well as the expectation of additional fiscal stimulus from the incoming administration, per MBA Associate Vice President of Economic and Industry Forecasting Joel Kan.

“Booming refinance activity in the first full week of 2021 caused mortgage applications to surge to their highest level since March 2020, despite most mortgage rates in the survey rising last week,” Kan said.

The 30-year fixed mortgage rate climbed two basis points to 2.88%, but the 15-year fixed rate fell to 2.39% — a survey low. The refinance index increased 20% from the previous week and was 93% higher than the same week one year ago.

“Even with the rise in mortgage rates, refinancing did not slow to begin the year, with the index hitting its highest level since last March,” said Kan. “Both conventional and government refinance applications increased, with applications for government loans having their strongest week since June 2012.”

The seasonally adjusted purchase index increased 8% after a 0.8% decrease from last week.

The FHA share of total applications decreased to 9.6% from 10.1% the week prior. The VA share of total applications increased to 15.8% from 13.6% the week prior.

“This is a positive sign of more lower-income and first-time buyers returning to the market,” Kan said.

Here is a more detailed breakdown of this week’s mortgage application data:

  • The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) increased to 2.88% from 2.86%
  • The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) increased to 3.17% from 3.08%
  • The average contract interest rate for 30-year fixed-rate mortgages increased to 2.93% from 2.90%
  • The average contract interest rate for 15-year fixed-rate mortgages decreased to a survey-low 2.39% from 2.40%
  • The average contract interest rate for 5/1 ARMs increased to 2.66% from 2.63%

The post New-year optimism reflected in mortgage applications jump appeared first on HousingWire.

Source: housingwire.com

How COVID-19 is Affecting Mortgages

Coronavirus cases are increasing at a phenomenal rate and sending the economy into free-fall. Every industry will be affected in some way, but the housing market could be one of the hardest hit. Borrowers are struggling to pay their mortgages, lenders are seeing far fewer applications, and we could be just around the corner from a housing crisis akin to the decline of 2008.

So, what’s happening here, how is COVID-19 affecting mortgages and are we likely to see any major issues on the horizon?

How Will COVID-19 Impact Mortgages?

In early March, mortgage rates dropped to an all-time low, hinting at things to come. The rate for a 30-year fixed-term mortgage fell to 3.29%, compared to March of 2019 when rates were 4.14%. That may not seem like much of a difference, but the difference between 3.29% and 4.14% on a $200,000 30-year mortgage is around $35,000.

And this is just the tip of the iceberg; the start of the problem.

Experts predict that rates will continue to fall as we progress through 2020 and COVID-19 continues to wreak havoc on the US economy.

As noted in our recent guide to Coronavirus Mortgage Relief, lenders are already providing lenders with debt relief options to help them manage their mortgage in this difficult time. Foreclosure is expensive and it’s an expense that banks and credit unions can’t afford right now. They want homeowners to pay their bills and keep their homes and they will do everything they can to make that happen.

The federal government is also lending a helping hand by way of the CARES act, and we could see more significant moves on behalf of lenders and the government before the year draws to a close.

In other words, although big moves have been made and huge changes have taken place, all of this could pale in comparison to what happens when the pandemic is eradicated and the rebuilding process begins.

Can You Benefit from this?

If you’re a homeowner tied to a high-interest rate, you could benefit from the current reduced interest rates by refinancing your mortgage. You could do that now and capitalize on the all-time low rates mentioned above or wait to see what happens in the next few months.

In any case, you can get a much lower rate than what you already have and potentially save thousands of dollars over the life of your loan.

It’s not about profiting from a bad situation, it’s about making life easier for yourself so you can navigate through this chaos. If your monthly mortgage payment is reduced, you’ll have more money in your pocket every month, which means you can put more cash towards unsecured debts and your monthly grocery bill.

It also reduces your chances of defaulting and being foreclosed upon in the future.

COVID-19 and the Housing Market

In the spring of 2019, the housing market was booming. It was a good time to invest in bricks and mortar and it seemed like there were some bright years ahead for homeowners and investors. 

In 2020, the shadow of the coronavirus pandemic fell on the country and now, a year on from that boom, the housing market has ground to a screeching halt. No one is selling because no one is buying. The market hasn’t necessarily crashed, but it has paused, and that could cause some huge problems in the near future.

What happens to all the homeowners who were selling their homes before this crisis and wanted to sell during? As soon as the pandemic fades away, they’ll all list their homes at the same time, and they’ll no doubt be joined by countless other homeowners who are selling because of the pandemic.

Once the market reopens, it will be flooded with homes for sale. At the same time, homeowners once ready to buy will now be struggling to deal with the consequences of the pandemic, while others will be hesitant of buying and will want to bide their time. Sellers will get desperate, prices will drop, and it will be a buyer’s market.

It’s hard to predict just how far house prices will fall or even if they will fall at all, but if the last few months are anything to go by, it’s fair to assume that the damage will be considerable.

Could it be a Seller’s Market?

While it seems most likely that post-pandemic USA will be a buyer’s market, it could also go the other way. Millions of Americans could be looking to purchase homes in 2020. If all of them are waiting for the end of the pandemic in the hope that the prices will be lower and the interest rates more favorable, they could overload the market.

Buyers may also be desperate to sink their money into bricks and mortar, believing it to be a safe investment and protection against any future economic issues. After all, when you rent, you’re always at the mercy of the landlord and have few guarantees that your home will still be your home months down the line.

That’s a scary thought in the middle of a pandemic, where it may be difficult, and in some cases impossible, to move into another property on short notice.

To remedy this, renters may be desperate to buy and may jump into the housing market as soon as the chaos dies down. A sudden rush of buyers will send the market in the opposite direction, allowing sellers to jack up their prices. 

COVID-19, Mortgages, and the Future of the Housing Market

Most of which we discussed above is speculation. We can predict the likelihood of it being a buyer’s market and of interest rates falling based on everything that has happened thus far, but we can’t say that it will happen for certain.

COVID-19 has made life very unpredictable. In December 2019, when word of the first Chinese cases began to filter to our shores, few could have guessed that just 3 months later, the world would be in lockdown, everyone would be going crazy for toilet paper, and people would be dying in their droves. 

At the beginning of the outbreak, when Europe was on its knees, President Trump was dismissive of the risks and suggested that everything would be okay, the US would be safe, and the virus would be fleeting. A few weeks later, the United States became the worst affected country and fatalities entered double figures.

It’s a novel pandemic that few predicted, and no one was prepared for, and as things stand it’s less about fighting the disease and more about avoiding it. 

As a result, we can’t be certain that the housing market will decline or that mortgage rates will drop. We just have to wait and see and hope that we all get through this with our lives, properties, and professions intact.

How COVID-19 is Affecting Mortgages is a post from Pocket Your Dollars.

Source: pocketyourdollars.com

Current Mortgage Rates Rise to Start the Week

Here we go with another week. Current mortgage rates have been rising steadily over the past month, a trend that we expect to persist for the foreseeable future.

Inflation data, overseas trade negotiations, and speaking engagements from the Federal Reserve should be the main market movers this week. Read on for more details.

Where are mortgage rates going?  

The market continues to fear rising interest rates

Financial market participants are continuing to grapple with the fear that interest rates will surge in the coming weeks and months, putting stocks in a position to fall for the third consecutive day.

All of the major market indexes are in the red right now with the Dow Jones Industrial Average notably falling 106 points to start the week.

The bond market is closed today so we’ll have to wait until tomorrow to see where yields go, but in the past month we’ve already seen the yield on the 10-year Treasury note (the best market indicator of where mortgage rates are going) continue to hit levels that haven’t been reached in well over five years.

Mortgage rates tend to move in the same direction as the 10-year yield, so we’ve seen rates move higher, albeit at a slower pace, over the past month. The general consensus is that mortgage rates will continue to move higher as we approach the end of the year.

Of course, the economic data still has to match up and we’ll get a couple key inflation readings this week which investors will be closely watching.

If those reports (consumer and producer prices) come in showing inflation rising at a steady pace, we’ll likely see bond yields and mortgage rates rise steadily as they’ve been doing.

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Rate/Float Recommendation                                     

Lock now before rates move even higher          

Mortgage rates have been rising and are expected to continue doing so in the coming weeks and months. If you’re thinking about buying a home or refinancing your current mortgage, we strongly recommend that you do so sooner rather than later in order to lock in the lowest rate possible.

Learn what you can do to get the best interest rate possible.  

Today’s economic data:                   

  • Nothing

Notable events this week:       

Monday:   

  • Nothing

Tuesday:   

  • Fedspeak
  • NFIB Small Business Optimism Index

Wednesday:         

  • PPI-FD
  • Atlanta Fed Business Inflation Expectations
  • 10-Yr Note Auction

Thursday:     

  • CPI
  • Jobless Claims
  • EIA Petroleum Status Report

Friday:          

  • Import and Export Prices
  • Fedspeak
  • Consumer Sentiment

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*Terms and conditions apply.

Source: totalmortgage.com