Falling mortgage rates and other housing news

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As suggested in last week’s blog, mortgage rates have fallen back with the national average for a 30 year fixed rate loan at 4.32%, a level last seen in July.

While the 30 year fixed rate mortgage is the benchmark normally quoted, note that the average 15 year rate is 3.37%, while the 5/1 ARM is just 3.07%. Freddie Mac weekly mortgage rates

For my comments on Adjustable Rate Mortgages (ARMs) read Is it time to consider an ARM?.

Existing home sales rise continued to climb in August, reaching 5.48 million, the highest level since the 5.79 million in February 2007.

I think there is a lot of confusion about the way the numbers for both home sale (sales that have closed) and pending home sales (signed but not yet closed) are reported. The housing market is seasonal! Sales will generally increase in the spring and summer and decrease in the autumn and winter.To try to smooth out these declines the NAR produces both actual (raw) numbers and seasonally adjusted ones. This chart helps to understand the seasonality of the housing market:

Source: National Association of Realtors (NAR)

Source: National Association of Realtors (NAR)

Pending home sales decline was the headline in this week’s press release from NAR, but this refers to a decline from July to August, while pending sales are still 6% higher than a year ago.

The NAR also released its 2014 forecast this week. Again I am reproducing a chart (with background images from my screenshot) to show their main conclusions:

Source: NAR

Source: NAR

If NAR is correct, then by the end of next year both prices and mortgage rates will be higher. These forecasts suggest buyers should be looking to move ahead now.

If you are considering buying or selling a home and have questions about the market and/or current home prices, feel free to contact me on 781.631.1223 or andrew@HarborsideRealty.com.

Andrew Oliver is a Realtor with Harborside Realty in Marblehead.