August 17th, 2020 6:33 PM by Richard Sardella MLO.100007700/NMLS 233568
Home prices continue to rise in Q2
Unlike economic downturns of the past, this one has home prices continually rising. In its recent quarterly report, the National Association of Realtors (NAR) revealed that median single-family home prices rose year over year in 96% of its measured markets in the second quarter. That translates into the national median existing single-family home price in the second quarter of 2020 was $291,300 — up 4.2% year over year.
Fifteen metro areas saw double-digit price growth, according to the NAR, ranging from 10.2% to 13.5%. Huntsville, Alabama, 13.5% led the rise, followed by Memphis, Tennessee, Boise, Idaho, 12.6%; Spokane, Washington, Indianapolis, and Phoenix.
Lawrence Yun, the NAR’s chief economist says. “Home prices have held up well, largely due to the combination of very strong demand for housing and a limited supply of homes for sale. Historically low inventory continues to reinforce and even increase prices in some areas.” He went on to say that he doesn’t see home prices decreasing anytime soon, with low mortgage rates attracting new buyers during a time when inventory is at record lows (nearly 20% lower than total inventory at the end of Q2 2019).
San Jose, California, remained the most expensive metro in the country in the second quarter, showing year-over-year price gains of 3.8% to a median of $1.38 million, with nearby San Francisco following at $1.05 million.
“This last quarter showed heavy buyer activity in less occupied areas when compared to highly populated cities such as San Francisco, New York, and Washington, D.C., related in part to the longer shutdowns in these cities,” said Yun. “In the midst of the pandemic, some buyers are looking for housing in less crowded and more affordable metros.”
Source: NAR | TBWS
How Rates Move:
Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage Backed Securities (MBS) which are traded in real time, all day in the bond market. This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates or pricing generally goes down. When they fall, mortgage pricing goes up. Tracking these securities real-time is critical. For more information about the rate market, contact me directly. I’m among few mortgage professionals who have access to live trading screens during market hours.
Rates Currently Trending: Neutral
Mortgage rates are trending sideways to slightly lower so far today. Last week the MBS market worsened by -70bps. This was enough to move rates higher last week. We saw elevated rate volatility last week.
This Week's Rate Forecast: Neutral
Three Things: These are the three things that have the greatest ability to move rates this week. 1) Stimulus, 2) Coronavirus, 3) The Fed
1) Stimulus: There is still no deal between the two sides on a stimulus package. The markets will be very reactive to any official agreement or date set for talks.
2) Coronavirus: As the pandemic continues to expand, the prolonged effect on the economy makes economists closely watch the headlines. Here are the most recent updates that are getting the attention of bond traders:
3) The Fed: We will get the Minutes from the last FOMC meeting on Wednesday.
This Week's Potential Volatility: High
Rate volatility is likely to be elevated again this week after months of very low volatility. Rate markets will be paying very close attention to the movement in additional stimulus from Congress. If markets see positive movement on a deal, look for rates to spike on elevated volatility.
If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.
Richard Sardella has been actively managing and providing services in the mortgage industry for over 27 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.
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