Dip in Rates Provides ‘Stability’ for Home Sales

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Mortgage Update: Dip in Rates Provides ‘Stability’ for Home Sales
Borrowers saw a little relief from recent increases. Mortgage rates dropped slightly last week, with the 30-year fixed-rate mortgage averaging 4.59 percent, Freddie Mac reports.

8-12-18 Interest Rates

“This stability is much needed for home sales, which have crested because of the multiyear run up in prices, tight affordable inventory, and this year’s higher rates,” says Sam Khater, Freddie Mac’s chief economist. “Going forward, the strong economy will support the housing market, but with affordability pressures mounting, further spikes in mortgage rates will lead to continued softening in home price growth.”

While home prices are still climbing and rates are up from 3.90 percent a year ago. “Some prospective buyers are definitely feeling an affordability crunch,” Khater says.

“The ongoing supply crunch affecting much of the country worsened for most of the second quarter, as the growing number of interested buyers in many markets overwhelmed what was already a meager level of available listings,” says NAR Chief Economist Lawrence Yun. “With not enough homes for sale, multiple bids caused prices to rise briskly and further out of the reach of some prospective buyers.”

Prices for single-family homes rose in 90 percent of the markets NAR analyzed (161 out of 178 metros) in the second quarter. Thirteen percent—or 24 metros—saw double-digit increases; San Francisco and San Jose, two of California’s largest cities, posted a median sales price above $1 million.
Freddie Mac reports the following national averages with mortgage rates for the week ending Aug. 9:

• 30-year fixed-rate mortgages: averaged 4.59 percent, with an average 0.5 point, dropping from last week’s 4.60 percent average. Last year at this time, 30-year rates averaged 3.90 percent.
• 15-year fixed-rate mortgages: averaged 4.05 percent, with an average 0.5 point, falling from last week’s 4.08 percent average. A year ago, 15-year rates averaged 3.18 percent.
• 5-year hybrid adjustable-rate mortgages: averaged 3.90 percent, with an average 0.3 point, falling from last week’s 3.93 percent average. A year ago, 5-year ARMs averaged 3.14 percent.

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