George L. Duarte - Mortgage Loans Fremont California Horizon Financial Associates

What's Ahead For Mortgage Rates 07-31-18 Last week’s economic readings included reports on sales of new and pre-owned homes, mortgage rates and first-time jobless claims.

New Home Sales Slide; Pre-owned Home Sales Meet Expectations

Commerce Department reported lower sales of new homes in June. Sales were expected to reach 666,000 sales on a seasonally adjusted annual basis, but the actual reading slipped by 5.30 percent to a pace of 631,000 new home sales. Analysts cited higher building costs, home prices and mortgage rates sidelined some buyers.

Concerns over inadequate inventories of available homes also impacted sales of newly-built homes. New homes sold at a rate 6.90 percent higher year-over-year, but analysts cautioned that home price appreciation and demand may be at or near their peak.

The National Association of Realtors® reported an annual pace of 5.38 million sales of previously-owned homes for June, which matched analysts’ expectations. May’s reading was 5.41 million sales of pre-owned homes.

Analysts caution that Commerce Department readings are subject to adjustment due to the relatively small number of home sales used to represent all sales of pre-owned homes.

Mortgage Rates and New Jobless Claims Rise

Freddie Mac reported higher mortgage rates last week with incremental increases in average mortgage rates. Rates for 30-year fixed rate mortgages were two basis points higher at 4.54 percent; rates for 15-year fixed rate mortgages averaged 4.02 percent and were two basis points higher.

Rates for 5/1 adjustable rate mortgages were one basis point higher and averaged 3.87 percent. Discount points averaged 0.50 percent for 30-year fixed rate mortgages and 0.40 percent for 15-year fixed rate and 5/1 adjustable rate mortgages.

First-time jobless claims rose to 217,000 claims filed; this reading fell short of the expected reading of 219,000 new claims but was higher than the 208,000 new claims reported for the prior week.

What‘s Ahead

Next week’s scheduled economic releases include readings from Case-Shiller Home Price Indices and readings on pending home sales and construction spending. Labor reports including public and private sector jobs growth and the national unemployment rate will also be released.

Weekly reports on mortgage rates and new jobless claims will also be published.

Top Real Estate Predictions You Should Know About Whether you are a homeowner looking to get the maximum return on investment, a buyer interested in fair market value or an industry insider grappling with the moving parts of the real estate industry, these are some trends and predictions you should know about.

Lower Home Supply Causing Significant Value Growth

Indicators point to a U.S. economy that has settled into a nice growth period. Unemployment rates have touched some record lows, wages appear to be on the rise and Millennials are entering high earning and home-buying years. Couple these factors with the fact that last year’s tax reform laws will likely put more money back in everyday Americans’ pockets and homes could be a hot commodity, so to speak.

Home supply — on the other hand — does not appear ready to meet the rising demand of buyers. Experts are predicting that rising demand will collide with the housing shortfall and prices will ramp up in 2019.

Home Values Could Rise Another 5 Percent By Year’s End

Some real estate insiders are pointing to National Association of REALTORS information that the number of available homes for sale has dropped for 35 consecutive months. The volume of sales is down because there simply are not enough homes being put on the market. Coupled with the uptick in the economy, sellers are in the driver’s seat right now and they are demanding top dollar for their homes.

That being said, it may be in the best interest of first-time homebuyers to get into the market sooner rather than later. The improved wages from the surging economy may not be able to keep pace with a potential 5-percent increase in property values by the end of 2019. It looks like a buy now or pay later real estate market.

It’s Not A Housing Bubble And Won’t Burst

The housing market has been on a tear over the last three years. Property values have appreciated fairly consistently for 35 straight months. Such data mirrors that of the housing market right before the crash. While some experts are calling for another housing bubble to burst due to an unforeseen flaw in the system, tough legislation and oversight are in place. It’s only human nature to be cautious when conditions appear similar to those leading up to a bad outcome.

This time around, rising home prices appear to be based on solid economic factors. Either contractors are going to start massive home-construction builds all over the country or the shortage will continue to drive prices up. While experts say we are not in a so-called housing bubble, the market may level off down the road to get in tune with consumer affordability.

If you are in the market for a new home, be sure to contact your trusted mortgage professional to get your financing pre-approval!