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Mortgage rates hit new lows – real estate market update

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If you work in the home or real estate business, this year has probably felt like an incredible sprint. If this were the 100 meter run, we would be at the last point in the race where it is time to prepare for the final lean over the finish line. Mortgage volumes and home sales have set a rapid pace.

Get the slender line going as it’s time for the last 5 meters. I know you have customers wanting a home over the holidays. Here are the insights you can use to help them!

The big story

It seems like we’ve said that many times, but after Freddie Mac, mortgage rates have held lows in recent weeks that have never been seen in the history of the survey. It’s hard not to pique your interests when your main interests right now are buying a home. It’s a great time to find prospects.

Low mortgage rates certainly helped create a glowing housing market. Selling new homes are on the right track with nearly 1 million units sold for the year so the market is scorching and even late October temperatures failed to cool it.

On the existing home sales front, home sales rose to a seasonally adjusted annual rate of 6.85 million, an increase of 4.3% compared to September, but also an increase of 26.6% compared to the same period last year.

The only downside to what is currently such a high level of sales is that supply is definitely an issue. At the current sales speed, there is only a 3.3 month offer on the sales page for new homes. If you look at existing houses, the offer is only 2.5 months. The buyer and seller balance is generally considered to have been reached when the delivery is 6 months.

In this incredibly tight market, being patient with your buyers is important. It may take them longer to find a home that suits their needs and price range. The good news is that they will rely more than ever on your insights when negotiating.

After all, as anyone who depends on customers will know, relationships are everything and it doesn’t stop at the end of the house. When you have a client who you think could benefit from refinancing in this market, offer value by being their expert and encourage them to take advantage of the environment we are in. The opportunity is great!

More news you can use

This report was produced with the support of Analysis of Econoday.1 Let’s go over what has happened since our last report!

Housing market index

Builders’ confidence in the markets is at an all-time high as that index hit 90 in November. Broken down into its components, the current sales situation was a whopping 96. This was followed by 89 for sales in the next 6 months. Finally, if you look at the traffic of potential buyers walking through new homes, it is 77.

Needless to say, there is a lot of optimism going on right now.

New building

The annual rate of housing starts rose 4.9% to 1.53 million in October. This is very positive considering the supply continues to be the number one boogie man and threatens the momentum in the property market. New single-family homes rose 6.4% to 1.108 million. The downside is the multi-family starts, which are 334,000, 34% below pre-COVID levels.

Looking at the permits, the annual rate for new builds is 1.545 million, which is unchanged for the month but increased by 2.8% for the year. In the case of single-family homes, there was an increase of 0.6% to 1.113 million. On the multi-family side, there were 365,000 in October.

After all, completions are in some ways the most important as they are currently affecting the supply of housing. These rose by 4.5% to 1.406 million. The completions of multi-family houses were 444,000 and the completions of single-family houses decreased by 3.4% to 883,000.

Existing home sales

Existing home sales rose 4.3% to 6.85 million in October, an increase of 26.6% for the year. Additionally, the average price of an existing home was $ 313,000, up 15.5% year over year.

In terms of supply, it was down 2.7% from September, down from 1.77 million last year, down 19.8% from the same time a year ago. As mentioned above, there are only 2.5 months of supplies available.

Sales in the Northeast were up 4.7% and 30.4% year over year as prices rose 20.2%. Meanwhile, the Midwest saw sales jump 28.1% year over year to 1.64 million, with prices up 16.7% year over year. In the south, home prices rose 15.7%, while the annual sales rate rose 3.2% to 2.91 million. Finally, in the West, monthly sales rose 1.4% to 1.4 million, 22.8% more than last year.

Case-Shiller House Price Index

House prices in this index rose by a seasonally adjusted 1.3% and by a total of 1.2% in September. In a year-on-year comparison, prices rose by a total of 6.6%.

This index spans 20 major cities and is a 3 month moving average as opposed to the competing FHFA index below. In addition, it covers all transactions unlike traditional loans alone.

FHFA house price index

Conventional loan home prices rose 9.1% year over year after rising 1.7% in September. This is based on conventional loans secured by Fannie Mae or Freddie Mac.

Gross domestic product (GDP)

The economy grew at a rate of 33.1% in the latest preliminary estimate for the third quarter, a rebound after the impact of COVID-19-related closures. Private consumer spending accounted for 40.6% of the growth.

Of particular interest to this group, housing investment helped increase 2.17% of GDP. Housing is still an important economic factor.

Selling new homes

As mentioned earlier, the pace of new home sales in October is 999,000, which is only slightly below the previous estimate. The median price for a new home was $ 330,600, up 2.5%.

If you take a closer look at the regional data, 41,000 apartments were sold in the northeast, seasonally adjusted. In the meantime 109,000 apartments have been sold in the Midwest, 580,000 apartments in the South and 269,000 in the West.

Home Sales Index

Pending home sales fell 1.1% to 128.9 in October. This is a sign that existing home sales could potentially be lower in November as this is a leading indicator.

MBA mortgage applications

On an unadjusted basis, purchase requests rose by 22% compared to the same week last year. On the refinancing side, the number of applications increased by 89% compared to the previous year.

The prices are extremely low and that is the driver. With 20% less and 0.35 points paid, the industry average rate on a 30 mortgage mortgage is 2.9% according to the MBA.

Consumer price index (CPI)

From the consumer’s point of view, inflation rose by a total of 0.2% compared to a month and by 1.2% compared to the previous year. As part of this, the cost of accommodation increased 0.1%. This appears to be under-indexing the real estate gains we’ve seen in other metrics.

Mortgage rates

Freddie Mac says mortgage rates have been at record lows for most of the year, making new lows time and time again. When you have a customer on the fence about buying or refinancing, a better time can be hard to imagine.

The average interest rate on a 30-year fixed-rate mortgage with 20% lower and 0.7 points paid was a record low of 2.71%, compared to 3.73% last year.

Meanwhile, the average interest rate on a 15-year fixed-rate mortgage with the same down payment and 0.6 points paid was 2.26%, down from 3.19% a year ago.

Ordinarily we would quote a rate on floating rate mortgages, but in the current market environment with fixed rate mortgages as they are, they don’t make a lot of money for anyone.

Now that you have these insights, go ahead and share them with your customers! For more tips and tricks, see our real estate agent page.

1 Important Legal Notice: Econoday has attempted to verify the information contained on this calendar. However, every aspect of this information is subject to change without notice. Econoday does not provide investment advice and does not guarantee or warrant that the information is correct or complete at all times. Copyright 2020 Econoday, Inc. All rights reserved.

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