Mortgage Rates Jump
“Where are Mortgage Rates going?”
The real estate industry took a tumble this April. Amid the peak home buying season, long-term U.S. mortgages rose this week continuing at their highest levels in seven years. Here are some of the trends we have seen:
- The Average Rate on 30-year, fixed-rate mortgages = 4.66 %
- UP from 4.61 % last week.
- Highest Average Rate since May 5th, 2011
- 2017 Average Rate: 3.95 %
- The Average Rate on 15-year, fixed-rate loans = 4.15 %
- UP from 4.08 % last week.
- The Average Rate on five-year adjustable-rate mortgages = 3.87 %
- UP from 3.82 % last week.
The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. The fees on five-year adjustable rate (0.3%), the 30-year (0.4%), and the 15-year fixed-rate mortgages (0.4%) all remained unchanged.
Home Sales Tumble
In addition to rising mortgage rates, U.S. home sales slipped this April. U.S. sales of existing homes fell 2.5 % due to rising costs of homes as well as a lack of properties available on the market. These sales reflect the Northeast, South, and West while the Midwest was unchanged.
The sale of new homes also took a hit, falling 1.5% in April. Despite the setback, new-home sales so far this year are 8.4 % higher than in 2017.
The healthy job market has caused an increase in demand for purchasing homes, new and old. However, the housing shortage, rising costs, and increased mortgage rates have become a large burden on the real estate market, which in turn has magnified the competition for buying a home. Here are some additional trends we have seen:
- Home Sales = DOWN 1.4 % over the past year.
- Number of Sales Listings = DOWN 6.3 % over the past year.
- Median Sales Price of New Home = UP 0.4 % from a year ago, to $312,400.
- Average Price of New Home (April) = UP 11.3 % from a year ago, to $407,300.
This April, homes were on the market for around 26 days, compared to 39 days a year ago. This decrease is due to buyers attempting to close sales before the affordability of their homes erodes due to higher borrowing costs. Although the increased mortgage rates and decreased sales have taken a toll on the real estate market, we look to the healthy job market as being a key factor for a more successful real estate market as we wait on more housing to come available.