According to The Mortgage Bankers Association’s Weekly Applications Survey, the average contract interest rate for 30-year fixed-rate mortgages fell to 4.67 percent from 4.75 a week earlier. Rates for 15-year fixed-rate mortgages dropped to 4.06 percent, the lowest rate ever recorded in the survey. With rates hovering near record lows, the Refinance Index jumped 12.6 percent to its highest level since May 2009. But despite the gains, purchase demand sank toward a 13-year low. More here and here.
According to Standard & Poor’s Case-Shiller Home Price Index, housing prices rose 3.8 percent in April from a year earlier. Of the 20 major metropolitan areas surveyed, 18 posted month-to-month gains but the increases were largely due to demand created by the tax credit. David M. Blitzer, chairman of the index committee at Standard & Poor’s, said the federal program had a large impact but feels, because recently released housing data shows sharp declines since its expiration, it may be a year before there are signs of sustained recovery. More here, here, and here.
As the Federal Reserve wrapped up their purchases of mortgage-backed securities in March, analysts suggested that interest rates would begin to climb once the program ended. Instead, rates have continued to fall. Last week, Freddie Mac said rates for 30-year fixed-rate mortgages had dropped to the lowest level since it began tracking them in 1971. But despite the record lows, demand remains weak. Sales numbers have suffered after the expiration of the popular homebuyer tax credit. And, with tougher lending standards in place, many borrowers that could benefit from refinancing can’t qualify. Credit Suisse estimates that 61 percent of borrowers would be able to lower their rate but only 38 percent of them would qualify. Leif Thomsen, CEO of Mortgage Master, says he’s seen a noticeable drop in demand and expects a slow summer despite the record-low rates. More here and here.
Spencer Rascoff, chief operating officer of Zillow Real Estate, says record low interest rates are undoubtedly good for the market but, until the unemployment and foreclosure numbers improve, housing will remain fragile.
Following the tax-credit backed sales surge, new home sales dropped 32.7 percent in May, according to estimates from the U.S. Census Bureau and the Department of Housing and Urban Development. Year-over-year sales fell 18.3 percent. It was the largest monthly drop and the slowest sales pace since the Commerce Department began keeping records in 1963. The median sales price of new homes sold in May was $200,900. More here and here.
According to The Mortgage Bankers Association’s Weekly Applications Survey, the average contract interest rate for a 30-year fixed-rate mortgage fell to 4.75 percent last week from 4.82 percent the week before. But despite the lowest rates since May 2009, refinancing activity dropped 7.3 percent and purchase applications decreased 1.2 percent. Cameron Findlay, chief economist at Lending Tree, said low purchase demand indicates home sales will continue to weaken. Findlay believes there will not be sustained improvement in the housing market until unemployment falls below nine percent. More here and here.
Sales of existing homes, including single-family, townhomes, condos, and co-ops, fell unexpectedly in May, according to The National Association of Realtors. Month-over-month, sales fell 2.2 percent from April but were up 19.2 percent from last year. Lawrence Yun, NAR’s chief economist, said he expects one more month of elevated home sales before the effects of the tax credit fade. Total housing inventory also fell in May, dropping 3.4 percent to 3.89 million available homes. More here and here.
According to Altos Research’s 10-City Composite Price Index, May saw a 0.2 percent increase in the median sales price of single-family existing homes. It was the first increase since July 2009 and 6.1 percent below last year’s peak. The index is based on prices in Denver, Washington D.C., Boston, Chicago, Los Angeles, San Francisco, San Diego, New York, Miami, and Las Vegas. Altos also reports that national inventory is 10 percent lower year-over-year but has been growing throughout the spring. More here and here.
Billy Procida, president of real-estate firm William Procida Inc., believes the excess housing inventory will be absorbed over the next few years but doesn’t foresee significant gains in pricing.
The Senate passed an amendment that will extend the closing deadline of the homebuyer tax credit an extra three months. Under the tax credit’s original deadline, purchases had to be under contract by April 30 and closed by June 30. But, because of the program’s popularity and the time it takes to process these sales, as many as a third of eligible buyers were at risk of missing out on the tax break. With this extension, buyers that had a contract in hand by April 30 will have until September 30 to close the deal. More here, here, and here.