Will Lower Rates Escalate Sales?

The real estate industry will soon see what kind of impact weeks of declining mortgage rates have had on home sales. Will it provide the boost some experts are predicting?

Since early November, the 30-year fixed-rate mortgage has fallen nearly half a percentage point, from 4.94 percent to 4.45 percent, at the end of this week. This could provide an important incentive for potential home buyers to make a move. The 30-year rate, which didn’t budge in the latest week of reporting, was on a downward trend for six consecutive weeks prior. Existing-home sales in November were already bouncing back from unusually low volume in the summer months, gaining 1.9 percent month over month, due largely to stability in the overall economy, according to data from the National Association of REALTORS®. But when NAR’s data for December existing-home sales is released next Tuesday, it may reveal whether lower mortgage rates have escalated sales gains.

Freddie Mac reports the following national averages for the week ending Jan. 17:

  • 30-year fixed-rate mortgages: averaged 4.45 percent, with an average 0.4 point, unchanged from last week’s average. Last year at this time, 30-year rates averaged 4.04 percent.
  • 15-year fixed-rate mortgages: averaged 3.88 percent, with an average 0.4 point, dropping from last week’s 3.89 percent average. A year ago, 15-year rates averaged 3.49 percent.
Source: Freddie Mac; “The slowing U.S. housing market may have finally bottomed,” Yahoo! Finance (Jan. 17, 2019)

Loan Rates Fall to 9-Month Lows

Mortgage rates posted more drops this week, lowering the borrowing costs of potential home shoppers and refinancers. “Lower mortgage rates combined with continued income growth and lower energy prices are all positive indicators for consumers that should lead to a firming of home sales,” says Sam Khater, Freddie Mac’s chief economist.

Freddie Mac reports the following national averages for the week ending Jan. 10:

  • 30-year fixed-rate mortgages: averaged 4.45 percent, with an average 0.5 point, falling from last week’s 4.51 percent average. Last year at this time, 30-year rates averaged 3.99 percent.
  • 15-year fixed-rate mortgages: averaged 3.89 percent, with an average 0.4 point, dropping from last week’s 3.99 percent average. A year ago, 15-year rates averaged 3.44 percent.
Source: Freddie Mac

Who Will Shape the 2019 Market?

The most popular names in transactions show that women, millennials, and Hispanics are shaping up as dominating forces in the housing market, according to a new analysis from realtor.com®. Ten of the top 20 and seven of the 10 fastest-growing buyer first names are mostly millennial female names, researchers found. Home deeds that contained predominantly millennial first names rose 5.3 percent year over year. Home sales associated with traditionally Hispanic first names increased 4.1 percent year over year.

Hannah, Austin, Alexis, Logan, and Taylor—three of which are predominantly female names—were the five fastest-growing first names on home sales deeds in 2018. Their frequency saw an average increase of 22 percent from 2017. However, the first names of Michael, John, David, James, and Robert remained the top five first names on sale deeds by sheer volume, but those names have decreased 3 to 5 percent since 2017, according to the study.

Source: “Women, Millennials, and Hispanics Will Shape the Future of Housing,” realtor.com® (Jan. 9, 2019)

Here Comes a Buyer’s Market

A power shift is occurring in the housing market with more negotiating power landing on the buyer’s side.

The National Association of REALTORS® recently reported an uptick in inventory entering more markets as more homeowners put their homes up for sale. Plus, buyers are having more choice, prompting some sellers to lower their asking prices due to the added competition, according to CoreLogic researchers.

“Given the 17 million more jobs now compared to the turn of the century, home sales are clearly under performing today,” says Lawrence Yun, NAR’s chief economist. “That also means there is a steady longer-term growth potential.”

Mortgage Rates End Year Lower

Rates continued their two-month slide and are currently hovering around the same level as the early summer, which was before the deterioration in home sales. The negative headlines around the financial markets are concerning but the economy remains healthy, so the drop in mortgage rates should stem or even reverse the slide in home sales that occurred during the second half of 2018.

Past week:  30-Yr Fixed Rate Mortgage 4.55%   15-Yr Fixed Rate Mortgage  4.01%
Source: freddiemac.com