It has been an eventful week in the line of real estate news. Existing home sales, new home sales, and mortgage rate movement has all made headlines with implications for the housing market. Moving from one to the next…
Sales of existing homes rose to the best pace in three and a half years in April, according to the National Association of Realtors. The pace of 4.9 million represents a 9.7% rise from the previous year, and the median price of $192,800 was the highest in 5 years. On the national level, the tightness of supply is finally easing, as supply of inventory rose to 5.2 months (6 is considered healthy).
New home sales also increased, underscoring elevated demand on the market for property. The pace of 454,000 in April was up 29% from the previous year and the highest level since the summer of 2008.
Part of the reason for such high demand is the favorable affordability conditions. Home prices have been rising lately, but they are still at 2003 levels.
Mortgage rates have been near record lows, but over the past three weeks have jumped. As of today (May 29) the average 30-year fixed rate wars 3.90% according to the Mortgage Bankers Association, which is the highest level in a year.
Central Coast Lending’s rates are lower than the national average. We have published the 30-year fixed at 3.625% (3.701% APR). See the graph at the end of this post for movement over the past two weeks. You can see how much rates have spiked.
Higher rates have hurt mortgage application activity, especially refinances. Applications for purchases are also down slightly, although, as discussed, positive affordability conditions and the a stronger economy continue to influence elevated demand for real estate.
Mortgage rates have jumped as we continue to see encouraging news about the economy. Investors continue to move money out of the bond market and into the record-setting stock market. Still, even with the rises, the Federal Reserve’s stimulus program will keep downward pressure on rates for the time being. When they wind down their program, we will see further jumps in rate prices.