Home sales continue rise in January while today’s mortgage rates continue fall

Submitted by Sandy Smith on 2011-02-25

For the first time in seven months, the pace of existing-home sales in January outstripped the level of one year ago, according to the latest figures from the National Association of Realtors. Continued low mortgage rates are helping spur sales – and those rates continued to fall this week.

According to the NAR, existing-home sales in January rose to a seasonally adjusted annual rate of 5.36 million units, 2.7% above December’s downwardly revised level of 5.22 million and 5.3% above the 5.09 million annual rate of January 2009.

Sounding a familiar theme, NAR Chief Economist Lawrence Yun said, “The uptrend in home sales is consistent with improvements in the economy and jobs, which are helping boost consumer confidence. The extremely favorable housing affordability conditions are a big factor, but buyers have been constrained by unnecessarily tight credit. As a result, there are abnormally high levels of all-cash purchases, along with rising investor activity.”

For those buyers who can obtain credit, though, mortgage interest rates are attractively low and getting lower. With the release of this week’s Freddie Mac Primary Mortgage Market Survey, rates for 30-year fixed-rate mortgages have pulled back solidly below the 5% threshold they crossed at the beginning of the month. The average contract rate for a 30-year fixed-rate mortgage fell 5 basis points to 4.95% on this week’s survey, with discount and origination fee points averaging 0.6. The average contract rate for a 15-year ARM fell 7 points, to 3.8%.

Moreover, the houses on the market are also more affordable. The latest figures from the S&P/Case-Shiller Home Price Indices showed national home prices falling 3.9% in the fourth quarter of 2010, moving to within a percentage point of the low set in the first quarter of 2009.

Today’s mortgage rates move weakly downward

The downward drift in mortgage rates also continues on the overnight surveys for today.

Yesterday’s afternoon mortgage rates rates on the Zillow.com National Mortgage Marketplace, with changes from Wednesday and last week, were: 30-year fixed, 4.75% (-1 point, -7 points); 15-year fixed, 4.06% (-1 point, -7 points); 5-year ARM, 3.24% (+2 points, -17 points). Today’s real-time average rates as of 9:30 a.m. ET, with changes from yesterday morning and afternoon, are: 30-year fixed, 4.74% (-2 points, -1 point); 15-year fixed, 4.01% (-6 points, -5 points); 5-year ARM, 3.25% (-6 points, +1 point).

This morning’s home loan rates on the Bankrate.com overnight survey, with changes from yesterday and last week, are: 30-year fixed, 4.87% (-3 points, -6 points); 15-year fixed, 4.16% (-3 points, -7 points); 5-year ARM, 3.56% (-1 point, -6 points); 30-year fixed refinance loan, 4.88% (-2 points, -6 points).

One basis point equals one hundredth of a percentage point. Rates reported in this article assume good credit (FICO score of 650 or higher) and a 20% down payment.

Original article posted at http://www.huliq.com/8738/home-sales-continue-rise-january-while-todays-mortgage-rates-continue-fall

U.S. Mortgage Demand Rose From Two-Year Low on Falling Rates

By Bob Willis - Feb 23, 2011 4:00 AM PT

The number of applications for U.S. mortgages rose last week, led by more refinancing as mortgage rates fell to the lowest level since the end of January.

The Mortgage Bankers Association’s index of loan applications increased 13 percent in the week ended Feb. 18 after dropping the prior week to the lowest point since November 2008. The group’s refinancing measure jumped 18 percent and the purchase gauge rose 5.1 percent.

“Refinancing is more sensitive to fluctuations in rates” than are purchases, Paul Dales, a senior economist at Capital Economics Ltd. in Toronto, said before the report. Still, he said he expected refinancing to “remain soft” with sales at “historically depressed levels for perhaps two or three years.”

The average rate on 30-year fixed mortgages dropped to 5 percent as turmoil in the Middle East and North Africa led investors to seek the safety of U.S. Treasury securities, which are benchmarks for some consumer loans, pulling down their yield. Still, mounting foreclosures, falling prices and 9 percent unemployment mean it will take time for demand to pick up.

The 30-year rate fell from 5.12 percent the prior week. It reached 4.21 percent in October, the lowest since the group’s records began in 1990.

At the current 30-year rate, monthly payments for each $100,000 of a loan would be $536.82, in line with the same week the prior year, when the rate was 5.04 percent.

Rates Fall

The average rate on a 15-year fixed mortgage fell to 4.28 percent from 4.34 percent.

The share of applicants seeking to refinance a loan rose to 65.7 percent from 64 percent the prior week.

The housing market is struggling to gain traction after a homebuyers’ tax credit expired last year and as more properties fall into the foreclosure pipeline. Combined sales of existing and new homes in December were at a 5.61 million annual unit pace, down from a July 2005 record of 8.53 million.

A report from the National Association of Realtors today may show existing home sales fell 1.1 percent to a 5.22 million annualized rate in January, according to economists’ estimates. Sales of previously owned homes last year totaled 4.91 million, the lowest level since 1997.

Builder Losses

Homebuilders are still posting losses. D.R. Horton Inc., the second-largest U.S. homebuilder by stock-market value, on Jan. 27 reported a fiscal first-quarter loss that was wider than analysts projected.

“I think 2011 will be a marginal, weak year in the homebuilding industry,” D.R. Horton Chief Executive Officer Donald Tomnitz said during a conference call the same day. “Given the weak macroeconomic conditions, high levels of existing homes for sale and tight mortgage availability, we remain cautious and realistic in our expectations.”

The Washington-based Mortgage Bankers Association’s loan survey, compiled every week, covers about half of all U.S. retail residential mortgage originations.

To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

Original article published at http://www.bloomberg.com/news/2011-02-23/u-s-mortgage-demand-rose-from-two-year-low-on-falling-rates.html