Record Low Mortgage Rates Help Spur Home Sales
Adding to good news for prospective home buyers, mortgage interest rates last week continued to drift downward for the fifth consecutive week, reaching new record lows.
In Freddie Mac’s Primary Mortgage Market Survey for the week ending on Thursday, Dec. 3, the 30-year fixed-rate mortgage averaged 4.71%, down from 4.78% the previous week and 5.53% for the same time a year earlier. This was its lowest level since Freddie Mac began its weekly survey in 1971.
The 15-year fixed-rate mortgage dropped to 4.27% last week, down from an average of 4.29% the week before and 5.77% a year earlier. This was its lowest since Freddie Mac started tracking it in 1991.
So far this year, interest rates on 30-year and 15-year fixed mortgages have averaged one percentage point below their respective averages in 2008.
“Low mortgage rates and the cumulative decline in house prices have contributed to an extremely affordable housing market and helped spur home sales this year,” said Frank Nothaft, Freddie Mac’s chief economist.
“For instance,” he said, “total new and existing home sales in October were 36% higher than their January low on a seasonally adjusted, annualized rate, according to the U.S. Census Bureau and the National Association of Realtors® (NAR).
“The NAR also reported that pending existing home sales rose for the ninth straight month in October, representing the longest consecutive gain since the series began in 2001. Seven of those months were the most affordable on record dating back to 1971, based on the NAR’s Housing Affordability Index,” Nothaft said.
Sales of new single-family homes in October were at a seasonally adjusted annual rate of 430,000, which was 6.2% above the revised September rate of 405,000.
Existing-home sales — including single-family, townhomes, condominiums and co-ops — surged 10.1% in October to a seasonally adjusted annual rate of 6.1 million, up from a downwardly revised pace of 5.54 million in September.
Construction Unemployment Nears 20%
Meanwhile, employment data for November released by the Bureau of Labor Statistics on Dec. 4 showed that 19.4% of the nation’s construction workers are now unemployed, despite a slowing in the number who lost their jobs.
Figures showed that 27,000 construction workers lost their job in November, compared to 56,000 in October.
Among those losing jobs in November, 86% (23,900) worked in nonresidential construction while 3,800 worked in home building.
Since January 2007, residential and nonresidential construction employment has declined by more than 1.7 million jobs.