After Brief Hike, Mortgage Rates Fall Below 4%

Following two weeks of rate increases, the 30-year fixed-rate mortgage settled back below a 4 percent average this week.

“Continued economic uncertainty and weak inflation data pushed rates lower this week,” says Sean Becketti, Freddie Mac’s chief economist.

Freddie Mac reported the following national averages for the week ending July 20:

  • 30-year fixed-rate mortgages: averaged 3.96 percent, with an average 0.6 point, dropping from last week’s 4.03 percent average. Last year at this time, 30-year rates averaged 3.45 percent.
  • 15-year fixed-rate mortgages: averaged 3.23 percent, with an average 0.5 point, falling from last week’s 3.29 percent average. A year ago, 15-year mortgage rates averaged 2.75 percent.

Source: Freddie Mac

Home Loan Interest Rates Push Above 4%

Average mortgage rates are moving up, posting increases for the second consecutive week.

“After fully absorbing the sharp increases in Treasury yields over the past couple of weeks, the 30-year mortgage rate has cleared the psychologically important 4 percent mark for the first time since May,” says Sean Becketti, Freddie Mac’s chief economist.

Freddie Mac reports the following national averages for the week ending July 13:

30-year fixed-rate mortgages averaged 4.03 percent, with an average 0.5 point, increasing from last week’s 3.96 percent average. Last year at this time, 30-year rates averaged 3.42 percent.

15-year fixed-rate mortgages averaged 3.29 percent, with an average 0.5 point, increasing from last week’s 3.22 percent average. A year ago, 15-year rates averaged 2.72 percent.

Source: Freddie Mac

The Real Costs of Tiny Homes

The tiny home movement—homes that often fall within the 100- to 400-square-foot range—is becoming more trendy as owners are drawn to the homes’ minimalism and sliced costs. But buyers may not want to count on cutting their savings by purchasing a tiny home.

A tiny home usually has more costs up front. If you build it yourself, the average cost is about $23,000, according to The Tiny Life. This usually doesn’t include the land price, so buyers will need to pay more to purchase a plot of land or lease land for the home. Additionally, about 68 percent of tiny home owners don’t have a mortgage at all, compared to just 29.3 percent of buyers of traditional homes.

Tiny-home living promotes less spending on utilities as an added perk, but buyers will need to watch those upfront payments as well. Tiny homes often use alternate forms of energy, such as propane, solar energy, or composting. Even for a tiny house, a solar-power system can cost about $8,000, according to The Financial Times.

Source: “Tiny House Living: How Much Money Can You Really Save?” CheatSheet.com (July 11, 2017)

Labor Shortage Causes Headaches for Builders

Buyers eyeing newly constructed homes may need to brace for building delays and higher prices due to an ongoing labor shortage. About two-thirds of homebuilding contractors say they’re struggling to finish projects on time because of the labor shortage, according to a new survey sponsored by USG Corp. and the U.S. Chamber of Commerce. More than one-third say they sometimes have to turn projects down.

“There is reason for concern in the lack of qualified talent,” says Tom Donohue, CEO of the Chamber of Commerce. Further, more construction projects are being started with an insufficient number of workers. Construction spending zoomed to $359.5 billion in the first four months of this year, which is 5.8 percent higher than the same period in 2016, according to Census data.

During the housing downturn, many workers left the industry for other employment and have not returned. Also, the construction workforce is aging ,says Steve Jones, senior director of Dodge Data & Analytics. “You have an aging workforce in an industry that doesn’t lend itself to long careers because it’s hard, physical work, and then you lose a whole bunch of people.”

Source: “Labor Shortage Squeezes Real-Estate Developers,” The Wall Street Journal (June 27, 2017) [Log-in required.]

Survey: More Buyers Make Offers Sight Unseen

The number of buyers making offers sight unseen—meaning they haven’t physically visited the property is on the rise, according to a survey of recent home buyers conducted by real estate brokerage Redfin. Thirty-three percent of respondents in 11 major markets say they made an offer on at least one house sight unseen. These types of offers are more common when working with foreign buyers and in markets where homes are selling quickly, real estate professionals say.

New uses of 3-D photos, video tours, and virtual reality are giving some buyers enough confidence to purchase a home without an in-person showing. The Wall Street Journal reports that some real estate pros are conducting property walkthroughs with long-distance buyers remotely via FaceTime, Skype, or WhatsApp. Some agents are working with technology companies to create 3-D photo and video tours within the virtual reality space to make long-distance buyers feel like they’re at the property in person.

Source: “Buying a Home Sight Unseen Is Easier Than Ever – and More Common,” The Wall Street Journal (June 22, 2017) [Log-in required.]

Retirees Look to Build Smaller, Custom Homes

Many people seek to downsize their home in retirement—but not their home buying wish list. Retirees reportedly are flocking to smaller newly built homes customized to their personal needs and tastes.

One advantage older home buyers find with these custom homes is that they can be built to accommodate medical conditions or physical restrictions, such as wider hallways to accommodate mobility devices. The home also can be outfitted with age-in-place features such as outdoor ramps and lower kitchen cabinets.

Retirees are looking to cut back on home maintenance and repairs, which is why their preferences are straying away from larger, older homes. However, building a custom home can be stressful because of the wide availability of options. Real estate experts recommend researching building plans and contractors carefully to make sure buyers get the type of craftsmanship they seek.

Source: “Retirees Turning to Custom Homes to Get the Right Space,” RISMedia (June 22, 2017)

‘Tear-Downs’ Account for More New Homes

More than 10 percent of new single-family homes that began construction in 2016 were part of a tear-down project, according to new data from the National Association of Home Builders. That’s up from 7.7 percent in 2015. NAHB defines a tear-down as a home that is built on a site where a previous structure existed. Nationwide, there were 79,300 single-family tear-downs started in 2016, up from 55,200 in 2015, NAHB estimates.

Builders continue to cite lot shortages as a major setback to new-home construction. Home shoppers and builders are now eyeing tear-downs because many of the properties are in prime locations. Take a look at the charts posted on below ‘source’ blog to see the breakdown of tear-down starts by region.

Source: “NAHB Estimates 79,000 Single-Family Tear-Down Starts in 2016,” National Association of Home Builder’s Eye on Housing blog (June 19, 2017)

After Steady Decline, ‘Mortgage Rates Rise’

Mortgage rates increased this week for the first time in more than a month, but they still remain near their yearly lows.

Freddie Mac reports the following national averages for the week ending June 15:

  • 30-year fixed-rate mortgages: averaged 3.91 percent, with an average 0.5 point, rising from last week’s 3.89 percent average. Last year at this time, 30-year rates averaged 3.54 percent.
  • 15-year fixed-rate mortgages: averaged 3.18 percent, with an average 0.5 point, increasing from last week’s 3.16 percent average. A year ago, 15-year rates averaged 2.81 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 3.15 percent, with an average 0.5 point, rising from last week’s 3.11 percent average. A year ago, 5-year ARMs averaged 2.74 percent.

Source: Freddie Mac

Home Loan Interest Rates Are Still Dropping!

Good news, home buyers may want to rush to lock in: The 30-year mortgage rate hit its lowest level in nearly seven months this week, Freddie Mac reports.

Freddie Mac reports the following national averages for the week ending June 8:

  • 30-year fixed-rate mortgages averaged 3.89 percent, with an average 0.5 point, down from last week’s 3.94 percent average. Last year at this time, 30-year rates averaged 3.60 percent.
  • 15-year fixed-rate mortgages averaged 3.16 percent, with an average 0.5 point, dropping from last week’s 3.19 percent average. A year ago, 15-year rates averaged 2.87 percent.
  • 5-year hybrid adjustable-rate mortgages averaged 3.11 percent, with an average 0.5 point, holding the same average as last week. A year ago, 5-year ARMs averaged 2.82 percent.

Source: Freddie Mac

A New ‘2017 Low’ Struck with Mortgage Rates

The 30-year fixed-rate mortgage moved lower for the third consecutive week and set a new low for the year, Freddie Mac reports. However, with this latest jobs report out of the way, the runway is now clear for the Federal Reserve to raise benchmark interest rates when it meets June 13 and 14. Even before the Labor Department’s release on Friday morning, the Fed had been sending firm signals that its members viewed the economy as strong enough to withstand another rate increase.

Freddie Mac reports the following national averages for the week ending June 1:

30-year fixed-rate mortgages averaged 3.94 percent, with an average 0.5 point, dropping from last week’s 3.95 percent average. Last year at this time, 30-year rates averaged 3.66 percent.

15-year fixed-rate mortgages averaged 3.19 percent, with an average 0.5 point, holding the same average as last week. A year ago, 15-year rates averaged 2.92 percent.

Source: Freddie Mac