After climbing to their highest level in more than seven years, mortgage rates eased a bit this week. It was the first time they declined in four weeks, says Sam Khater, Freddie Mac’s chief economist.
The 30-year fixed-rate mortgage fell 10 basis points to a 4.56 percent average this week.
“Meanwhile, confident American consumers shrugged off the market volatility, as purchase mortgage applications continue to trend higher from a year ago.”
But even with higher rates this year, Khater believes demand from home buyers will stay elevated as long as job growth and other economic fundamentals stay strong.
“Extremely low inventory conditions in most markets are preventing sales from breaking out while also keeping price growth elevated,” Khater says. “Even if rates climb closer to 5 percent, sales have room to grow more—but only if current supply levels start increasing more meaningfully.”
Total existing-home sales—which are completed transactions that include single-family homes, townhomes, condos, and
co-ops—decreased 2.5 percent to a seasonally adjusted annual rate of 5.46 million in April.
Sales are now 1.4 percent below a year ago. This also marks the second consecutive month sales have fallen on an annual basis.
However, inventory shortages are even worse than in recent years, and home prices keep climbing above what many home shoppers are able to afford.”
For the inventory that is out there, homes are selling fast. Strong buyer demand mixed with low inventory levels are prompting homes to sell at a record pace.
Freddie Mac reports the following national averages with mortgage rates for the week ending May 31:
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Source: Freddie Mac
The 30-year fixed-rate mortgage fell 10 basis points to a 4.56 percent average this week.
“Meanwhile, confident American consumers shrugged off the market volatility, as purchase mortgage applications continue to trend higher from a year ago.”
But even with higher rates this year, Khater believes demand from home buyers will stay elevated as long as job growth and other economic fundamentals stay strong.
“Extremely low inventory conditions in most markets are preventing sales from breaking out while also keeping price growth elevated,” Khater says. “Even if rates climb closer to 5 percent, sales have room to grow more—but only if current supply levels start increasing more meaningfully.”
Total existing-home sales—which are completed transactions that include single-family homes, townhomes, condos, and
co-ops—decreased 2.5 percent to a seasonally adjusted annual rate of 5.46 million in April.Sales are now 1.4 percent below a year ago. This also marks the second consecutive month sales have fallen on an annual basis.
However, inventory shortages are even worse than in recent years, and home prices keep climbing above what many home shoppers are able to afford.”
For the inventory that is out there, homes are selling fast. Strong buyer demand mixed with low inventory levels are prompting homes to sell at a record pace.
Freddie Mac reports the following national averages with mortgage rates for the week ending May 31:
- 30-year fixed-rate mortgages: averaged 4.56 percent, with an average 0.4 point, down from last week’s 4.66 percent average. Last year at this time, 30-year rates averaged 3.94 percent.
- 15-year fixed-rate mortgages: averaged 4.06 percent, with an average 0.4 point, ping from last week’s 4.15 percent average. A year ago, 15-year rates averaged 3.19 percent.
- 5-year hybrid adjustable-rate mortgages: averaged 3.80 percent, with an average 0.3 point, ping from last week’s 3.87 percent average. A year ago, 5-year ARMs averaged 3.11 percent.
In this video, Doerner gives a breakdown of how prices performed across regions.
Source: Freddie Mac
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