Mortgage Rates and Home Prices Expected to Move Higher This Year
Single family home prices are expected to move higher in 2013 as the housing market continues to make its recovery. Mortgage rates are also expected to move higher in 2013 as economic growth increases and bond yields move higher. Mortgage rates today on 30 year conventional loans are averaging 3.68 percent, just above all-time record lows. Mortgage rates are predicted to move higher but still remain low, historically speaking.
After many years of home prices moving lower, Fannie Mae is predicting single family home prices will move 4 percent higher in 2013. Single family home prices are also forecast to move 1.6 percent higher in 2014. Home prices also moved higher in 2012 - the National Association of Realtors (NAR) reported the national median existing single-family home price was $178,900 in the fourth quarter. This is up 10.0 percent from $162,600 in the fourth quarter of 2011.
The existing single family home price increase in 2012 was the biggest increase since the height of the housing bubble. The last double-digit home prices increase year over year was back in the fourth quarter of 2005 when the average price increased 13.6 percent.
Homes are still very affordable even though home prices moved higher last year and are expected to move higher over the next couple of years. The NAR's Home Affordability Index hit a record high in 2012 and is expected to be at the third highest annual point in 2013. The higher the NAR's Home Affordability Index, the more affordable homes are.
Low home prices combined with the lowest mortgage rates ever make now a very compelling time to buy a home. Fannie Mae expects 30 year conventional mortgage rates to increase in 2013 but to remain under 4.00 percent. Mortgage rates are also expected to increase in 2014 but will still be under 4.50 percent.
Many homebuyers who have been waiting on the sidelines for years now realize that home prices and mortgage rates are moving higher and are jumping back into the market. The available number of homes for sale is also at the lowest point since several years. These two factors are making the current market a "seller's market," the first time since 2006.
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