Mortgage rates have climbed by more than a percentage point since late April.
If history is any indication, the recent spike in mortgage rates is going to have little to no impact on home prices, according to a new report from Fannie Mae.
After looking at mortgage rates going back to 1990, Fannie Mae’s researchers came to the surprising conclusion that while rising rates were likely to hurt the number of home sales, they had virtually no impact on home prices.
Inventory shortages that constrained home sales this spring are beginning to ease, with the number of homes listed for sale trending upwards in June, according to realtor.com data, The Wall Street Journal reports.
The total number of listings rose by 4.3 percent from May to June, to 1.9 million homes. While that’s down by 7.3 percent from the same time a year ago, inventory was off 18.6 percent year over year in February, the newspaper said.
Real estate industry observers have speculated that home price gains might spur more homeowners to put their properties up for sale — and for builders to break ground on more new homes.
With the latest CoreLogic Home Price index showing a 12.2 percent year-over-year gain in home prices in May, the recent uptick in listings — though bolstered by a normal seasonal increase — suggests that these market reactions may be starting to play out.
Earlier this month, the NWMLS reported: Current market conditions — including rising mortgage rates, tight inventory and declining unemployment — are driving even more buyers into what is already an “extremely competitive housing market,” reported OB Jacobi, a member of the board of directors for Northwest Multiple Listing Service.
New figures from the MLS show pending sales during June jumped 10.6 percent from twelve months ago as buyers scrambled to lock in loan rates and bid on a limited supply of homes. Members in the 21 counties served by Northwest MLS reported 9,484 mutually accepted offers last month, outgaining the year-ago number of pending sales by 907 transactions.
“In June, our brokers reported anywhere from 2-to-7 offers on homes in the lower to mid-price ranges,” said Jacobi, president of Windermere Real Estate Company in Seattle. He noted interest rates for 2013 reached a new high in mid-June — “a result of improved confidence in the U.S. economy. And now, with Seattle’s jobless rate below 5 percent we expect even further pressure on housing as new workers move to the area,” he added.
“Multiple offers situations are almost old news,” remarked Frank Wilson, an officer on the Northwest MLS board. He recommends sellers prepare to deal with multiple offers by discussing a strategy with their broker when they list their home. Buyers should consider writing offers that may be above list price and contain an escalation clause, Wilson suggests.
While would-be purchasers jostled for acceptance of their offers during June, 7,318 newly-minted homeowners took possession of their home. That volume of closed sales compares to 6,214 completed transactions for the same month a year ago for a 17.8 percent increase.
Home prices and mortgage interest rates are rising, and people looking to buy a home for the first time are feeling the pressure.
In this installment of MSN’s Buying Advice, agents, a housing analyst and an economist share what to expect this year, and the latest housing statistics are also included.
Low inventory and interest rates are why Realtors call Seattle one of the most competitive housing markets in the country.
“Good houses are disappearing instantly, you look at it one day online and say honey maybe we should look at this Sunday. By then, it’s already pending,” said Charles Harper, a home buyer.
According to the Northwest Listing Service, the median price of homes in Snohomish County is up 14 percent, and up 10 percent in both King and Pierce Counties.
Surging mortgage rates may have little effect on the housing market, at least in the near term, housing experts say. Mortgage rates rose sharply last week following comments from Federal Reserve Chairman Ben Bernanke that the Fed will begin tapering off its asset purchases later this year if incoming data continues to show the economy is on the mend.
Home prices have been soaring by double digits compared to last year’s numbers and the National Association of REALTORS® are calling the rises “unsustainable.”
The price for existing home sales surged 15.4 percent higher in May compared to last year.
“Some of the increases can be explained by the fact that it is recovering from an over-corrected situation,” says Lawrence Yun, NAR chief economist. “But with people’s income rising at only 1 or 2 percent and prices rising in double digits, it cannot continue.”
Like anything else, real estate has its urban legends, its stories that get told so often they seem like they must be true. But unlike urban legends about exploding Pop Rocks, housing market myths have the potential to cause panic, poor decisions, and substantial financial losses. The recent market upturn, coming on the heels of 6 years of near-depression, has given rise to a long list of real estate myths. Don’t get lost in the legends — find out what’s fact and what’s fiction.
Mortgage rates have risen sharply over the last month and Freddie Mac, in its monthly Economic and Housing Market Outlook for June, focuses on what happens to the housing market recovery if those increases continue. Recent movements have raised rates from the 3.5 percent range where they have been for most of 2013 to just over 4.0 percent.
While many market participants are concerned about the impact of higher rates on the economy and the chance that Fed tapering could take them higher, Freddie’s research suggests moderately higher rates are livable, even if they have some downside risks.
Home prices are rising rapidly in many markets, but Pacific Coast Builders Confidence attendees name two main factors that should quell fears of a new bubble.
Managing The Real Estate Details 