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Mortgage Rates Down to Lowest Level in Three Months

by posted by Desi Sowers

Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey (PMMS) in which the 30-year fixed-rate mortgage (FRM) averaged 5.12 percent with an average 0.7 point for the week ending August 20, 2009, down from last week when it averaged 5.29 percent. Last year at this time, the 30-year FRM averaged 6.47 percent.

The 15-year FRM this week averaged 4.56 percent with an average 0.7 point, down from last week when it averaged 4.68 percent. A year ago at this time, the 15-year FRM averaged 6.00 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 4.57 percent this week, with an average 0.6 point, down from last week when it averaged 4.75 percent. A year ago, the 5-year ARM averaged 5.99 percent.

One-year Treasury-indexed ARMs averaged 4.69 percent this week with an average 0.5 point, down from last week when it averaged 4.72 percent. At this time last year, the 1-year ARM averaged 5.29 percent.

“U.S. Treasury bond yields fell nearly a quarter of a percentage point over the week, and other long-term yields followed suit,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Interest rates on 30-year and 15-year fixed-rate mortgages fell to the lowest level since the end of May, while initial rates on 5/1 hybrid ARMs declined to levels not seen since January 2005."

“Low mortgage rates are helping to reinforce the housing market. New construction on one-family homes rose for the fifth consecutive month in July to an annualized pace of almost 500,000 homes, the most since October 2008. In addition, homebuilder views of housing market conditions for the remainder of the year rose for the second month in a row in August to the most positive reading since June 2008, according to the National Association of Home Builders.”

Good News on the Housing Front

by Desi Sowers

Good news on the housing front - after dropping for three years, home prices appear to be stabilizing. 

The median national home price today is about $169,000 which is down almost 14% from a year ago and an estimated 30% from its peak.

The First Time Home Buyer Tax Credit, which Congress recently improved by eliminating the the repayment requirement and increasing the benefit to $8,000 is working.

The credit, coupled with all-time-high housing affordability and continuing low interest rates, is leading to solid inventory improvement in most markets.

I've just posted additional information about the tax credit on my podcast and you can listen by clicking here.

In order to take advantage of the tax credit, you must purchase your home by December 1st - the clock is ticking down!  Please call or email me today if you would like to view homes or need help with getting your financing lined up - I'm happy to help!

OPEN HOUSE - Sunday the 23rd - COME SEE!!

 

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122 13th Nw St, Pulaski, Virginia

Price: $165,000.00

Beds: 3

Baths: 2

Sq Ft: 1710

Description: Dramatic Price Reduction!! Come home to peaceful surroundings. The sweeping lawn with mature trees and landscaping is the prize of the neighborhood! Lovingly maintained and updated home boasts be ....

View this property >>

Real Estate Outlook: Growth Mode

by posted by Desi Sowers

Steady jumps in pending home sales and low interest rates continue to lead housing out of the doldrums into growth mode -- and even toward price increases in some hard-hit markets as well.

Last week's 3.6 percent increase in pending sales marked the fifth consecutive month of positive news from this key leading indicator, the first time there's been a string that long since 2003.

Every region of the country saw increases in pending sales in June, according to the National Association of Realtors, which compiles the data based on signed contracts for home sales that haven't yet closed.

Lawrence Yun, chief economist for the National Association of Realtors, attributed the string of increases in part to first time buyers getting off the sidelines and looking to qualify for federal tax credits.

Another contributing factor is the dramatic improvements in affordability of houses in many markets, sharply lower prices combined with mortgage rates in the mid to lower five percent range.

The national housing affordability index is now 37 percent better than it was just a year ago. The typical family, with a monthly household income at the national median, can now devote just 16 percent of gross income to paying principal and interest on a median priced home financed with a 20 percent downpayment.

That sort of affordability hasn't been seen for decades!

Meanwhile, there are growing reports of multiple offers on low-priced houses for sale in some major markets, along with the first signs of possible price turnarounds.

For example, in the Portland-Vancouver market, resales in June were up 25 percent from May. But more significantly: the median price of homes sold there gained 2.1 percent, according to MDA DataQuick, a research firm.

On the mortgage front, new purchase applications to buy houses rose again last week, according to the Mortgage Bankers Association. Thirty-year average fixed rates fell to 5.2 percent from 5.4 percent. Fifteen year rates averaged 4.6 percent.

Not all the economic indicators are reading positive for real estate, of course. Unemployment rates in many parts of the country remain in the double digits, consumer confidence is brittle, and gross domestic product, GDP, was down last quarter by one percent, the fourth straight quarterly drop.

But economic forecasters like the Mortgage Bankers' Orawin Velz, see a bright side on the near horizon: The latest GDP negative number is much smaller than the 6 percent plus loss in the previous quarter.

That suggests "the end is near" for the recession, she says, and that's got to be good for housing.

Written by Kenneth R. Harney
August 11, 2009

Displaying blog entries 1-3 of 3

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