Increase in Interest Rates Had Minimal Impact on Housing Activity

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Issue  / November 2013
Increase in Interest Rates Had Minimal Impact on Housing Activity
Three months after interest rates on mortgages started to increase, the housing market showed few signs of weakness due to the higher rates, according to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. Sales-to-list price ratios on non-distressed properties remained at elevated levels and the average time on market continued to decrease, indicating continued demand. The average interest rate for a 30-year fixed-rate mortgage increased from 3.54% in May to 4.49% in September, according to Freddie Mac. During that time, sales-to-list price ratios for non-distressed properties declined from 97.6% to 97.5%, based on the three-month moving average. And time on market for non-distressed properties declined from 9.4 weeks in May, based on the three-month moving average, to 8.6 weeks in September.
FHA Share of First-Time Homebuyer Financing Decreasing Significantly
FHA mortgages are no longer the default financing option for first-time homebuyers, according to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. The FHA share of first-time homebuyer financing has trended down for the past three years and started to decrease significantly in March. FHA mortgages financed 50.8% of home purchases by first-time buyers in February, based on the three-month moving average. In September, FHA mortgages had a 40.5% share of financing for first-time homebuyers. The recent decline in market share has coincided with increased costs for FHA mortgages as the federal government works to reduce losses from the program. Mortgages sold to Freddie Mac and other industry partners have seen their share of financing for first-time homebuyers increase as private mortgage insurers work to compete with the FHA.
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Thousands of real estate agents across the country gained practical social media skills, as well as lead-generating tactics, from New York Times bestselling author and former Yahoo Executive Tim Sanders during last month’s Real Estate Connections Webinar. If you missed this informative Webinar, it’s available for replay. We look forward to providing more ways to grow your business with additional Webinars in 2014. 
Existing Home Sales Index Continues to Rise
The National Association of REALTORS® (NAR) existing home sales index rose another 1.7% in August to a seasonally adjusted annual rate of 5.48 million—up from 5.39 million in July—according to J.P. Morgan Fixed Income research. This is the highest rate since February 2007 (when the index hit 5.79 million) and is 13.2% higher than last year. Total inventory increased 0.4% to 2.25 million, representing a 4.9-month supply at the current sales pace, which is 6.3% lower than a year ago, when there was a six-month supply. As a result, net demand climbed to 4MM in August— its highest level since 2006 and up 10% over last year.

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