The low rates are turning into a boon for the housing market. The National Association of REALTORS® reported last week that housing contract signings in August jumped 24% year over year. Pending home sales are exceeding pre-pandemic levels, with all four major regions of the U.S. posting higher sales activity.
“As a result of low mortgage rates that have stayed under 3% since July, the housing market has seen a strong, upward trajectory during a very uncertain time,” says Sam Khater, Freddie Mac’s chief economist. “We’re seeing potential home buyers who now have more purchasing power and many current homeowners who have the option to refinance their loan for a better rate. However, several factors could disrupt this activity including high home prices, low inventory, and lender capacity.”
Home prices have climbed as housing inventories remain low. NAR recently reported that the median existing-home sales price was $310,600 in August, up 11.4% compared to a year ago ($278,800).
Freddie Mac reported the national averages with mortgage rates for the week ending Oct. 1:
30-year fixed-rate mortgages: averaged 2.88%, with an average 0.8 point, falling from last week’s 2.9% average. A year ago, 30-year rates averaged 3.65%.
15-year fixed-rate mortgages: averaged 2.36%, with an average 0.7 point, falling from last week’s 2.4% average. A year ago, 15-year rates averaged 3.14%.
5-year hybrid adjustable-rate mortgages: averaged 2.9%, with an average 0.2 point, unchanged from last week. A year ago, 5-year ARMs averaged 3.38%.
Freddie Mac reports average points with rates to reflect the total upfront cost of obtaining a mortgage.
Source: REALTOR® Magazine