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Record Low Mortgage Rates Hard for Would-Be Buyers Not to Notice
The housing market heard encouraging news last week on both mortgage interest rates and housing prices, suggesting that now is a good time for prospective buyers who have been sitting on the fence to make their move.
For the week ending on Thursday, March. 26, the average interest rate on 30-year, fixed-rate mortgages fell to another record low in Freddie Mac's Primary Mortgage Market Survey, hitting 4.85%. That was down from 4.98% the previous week and 5.85% the same time a year ago.
Freddie Mac’s weekly survey dates pack to 1971 for interest rates on 30-year mortgages.
One-year Treasury-indexed ARMs averaged 4.85% last week, down from 4.91% the week before and 5.24% a year earlier.
Frank Nothaft, Freddie Mac’s chief economist, attributed the latest downswing in mortgage rates to the recent announcement by the Federal Reserve that it intends to purchase Treasury securities over the next six months and a subsequent decline in bond yields.
Nothaft said that there is about a two percentage point difference in today’s fixed rate on a 30-year mortgage and its recent peak of 6.63% last July. This amounts to a monthly savings of $225 in mortgage payments on a $200,000 loan, he said.
Statistics for February on both new and existing home sales, he said, which both climbed about 5%, indicate that “potential home buyers are taking notice of these historically low mortgage rates.”
While no one can tell for certain just how low mortgage rates will fall, prospective buyers who are holding out for even further declines may be disappointed.
John Koskinen, the interim chief executive of Freddie Mac, said that home loan rates are near their bottom and any further decreases are liable to be small, according to a Reuters report on March 27.
Earlier in the week, on March 24, the Federal Housing Finance Agency's monthly House Price Index showed U.S. home prices rising 1.7% on a seasonally-adjusted annual basis from December to January.
December’s previously reported 0.1% increase was revised downward to a 0.2% decrease.
For the 12 months ending in January, prices for the country on the whole fell 6.3%, according to the latest index, leaving prices 9.6% below their peak of April 2007.
For the nine Census divisions, seasonally-adjusted monthly price changes from December to January ranged from a negative 0.9% in the Pacific division (Hawaii, Alaska, Washington, Oregon and California) to a positive 3.9% in the East North Central division (Michigan, Wisconsin, Illinois, Indiana and Ohio).
The government report noted that the January home sales reflected in the FHFA data disproportionately occurred in areas with the strongest markets. It also observed that home sales volumes for the month were relatively low.
 Tax Credit Web Site Looks at Opportunity of a Lifetime
Builders and other industry professionals can help spur home sales by referring prospective first-time home buyers to www.federalhousingtaxcredit.com. The NAHB Web site provides detailed information on the $8,000 federal tax credit for first-time home buyers included in the economic stimulus legislation signed into law by President Obama.
Consumers can use the Web site to find information on the tax credit – including a detailed question and answer section. It also includes information about other housing-related and small business measures in the legislation and a number of home-buying resources for consumers.
Spanish Version Also Available Online
A Spanish version of this increasingly popular Web site is also available to provide detailed information on the tax credit to Spanish-speaking first-time home buyers.
Industry professionals are encouraged to highlight either tax credit Web site when marketing to their potential first-time home buyer market.
 Plan to Attend Construction Forecast Conference
Plan to attend or watch the 2009 Spring NAHB Construction Forecast Conference & Webcast on Thursday, April 23 in Washington, D.C. to get the latest facts, insights and analysis of the housing industry.
Panels of nationally recognized experts at the day-long conference will discuss economic trends, government policies, developments in the housing industry and the results from NAHB's recent surveys.
For more information and to register, visit www.nahb.org/cfc.
 Want to Know the Housing Starts Through 2017?
Find out in HousingEconomics.com's Long-Term Forecast.
Subscribe and get downloadable Excel tables that feature the housing starts forecast, gross domestic product (GDP), demographics and more.
To learn more, visit www.housingeconomics.com.
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