Following the Federal Reserve’s first reduction of its benchmark interest rate and the largest in more than sixteen (16) years, the 30-year fixed-rate mortgage decreased to its lowest level This Week in Real Estate in two years, averaging 6.08%, according to Freddie Mac. Recent reports from the Mortgage Bankers Association (MBA) and ATTOM indicate that housing affordability has improved for the fourth consecutive month, driven by lower mortgage rates, rising incomes, and slower home-price growth. The National Association of Realtors reported a modest rebound in pending home sales, which increased by 0.6% in August. Conversely, the Commerce Department noted a sharp decline in new home sales in August, following a surge in July. Below are key events from the fourth week of September impacting our business: PENDING HOME SALES EDGED UP 0.6% IN AUGUST. Pending home sales in August rose 0.6%, according to the National Association of REALTORS. The Pending Home Sales Index (PHSI) increased to 70.6 in August. Year over year, pending transactions were down 3.0%. “A slight upward turn reflects a modest improvement in housing affordability, primarily because mortgage rates descended to 6.5% in August,” said NAR Chief Economist Lawrence Yun. “However, contract signings remain near cyclical lows even as home prices keep marching to new record highs.” Read the full story here.IS HOUSING AFFORDABILITY IMPROVING? TWO NEW REPORTS SAY YES. With rates now falling – and more downward movement expected after the Federal Reserve‘s recent interest rate cut – two new reports suggest that affordability is getting better too. The third-quarter 2024 housing affordability report from ATTOM says that falling mortgage rates, rising wages and slower home-price growth has made the expenses of buying and owning a home slightly more affordable. Meanwhile, the newest Purchase Application Payment Index data from the Mortgage Bankers Association (MBA) shows that the national median mortgage payment by applicants fell by 5.2% between July and August. Median payments for both Federal Housing Administration (FHA) loans and conventional loans declined. “Homebuyer affordability conditions improved for the fourth consecutive month, with lower mortgage rates, rising incomes, and slower home-price growth giving prospective buyers’ budgets a much-needed boost,” MBA associate vice president Edward Seiler said in a statement. “MBA expects that lower mortgage rates, coupled with increasing housing inventory, will entice additional homebuyers to enter the housing market.” Read the full story here.AVERAGE RATE ON A 30-YEAR MORTGAGE SLIPS TO 6.08%, LOWEST LEVEL IN 2 YEARS. The average rate on a 30-year mortgage in the U.S. slipped to its lowest level in two years this week. The rate dipped to 6.08% from to 6.09% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 7.31%. The last time the average rate was lower was on Sept. 15, 2022, when it was 6.02%. The average rate on a 30-year mortgage is down from 7.22% in May, its peak so far this year. Rates have been mostly declining since July in anticipation of last week’s move by the Fed to cut its main interest rate for the first time in more than four years. Fed officials also signaled they expect further cuts this year and in 2025 and 2026. The rate cuts should, over time, lead to lower borrowing costs on mortgages. Mortgage applications jumped 11% last week, according to the Mortgage Bankers Association. The strong gain was due partly to a 20% increase in applications by homeowners seeking to refinance their existing loan to a lower rate. Read the full story here.
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