Current Higher Mortgage Rates Haven’t Dampened Existing Home Sales
Higher mortgage rates the past three months hasn't put a damper on the housing market as existing home sales soar to the highest level since 2009. Fixed conforming mortgage rates increased over 100 basis points since early May and will likely continue to move higher in the coming months.
The increase in rates has killed the demand for homeowners looking to refinance but not for home purchases. Not yet anyway. The National Association of Realtors® reported existing home sales increased 6.5 percent in July. Existing home sales includes single-family homes, townhomes, condominiums and co-ops, increased 6.5 percent to a seasonally adjusted annual rate of 5.39 million in July.
The pace of home sales this July is also 17.2 percent above the 4.60 million unit pace in July 2012. You can view the NAR's chief economist Lawrence Yun, discuss the report in this video:
If current mortgage rates continue to rise, eventually the pace of home sales will slow. 30 year mortgage rates today are averaging 4.59 percent, up 20 basis points from last week's average 30 year mortgage rate of 4.39 percent.
Earlier in the year analysts were predicting the high point in 2013 for 30 year rates would be 4.50 percent. The same analysts also predicted 30 year rates wouldn't move above 5.00 percent until late 2014. Currently, 30 year rates are on pace to break above 5.00 percent sometime in 2013.
Today's mortgage rates on 15 year conforming loans are averaging 3.60 percent, up from last week's average 15 year rate of 3.41 percent. Average 15 year rates were below 3.00 percent in June 2013 and moved above 3.00 percent in early July. 15 year rates will probably move above 4.00 percent this year.
Jumbo mortgage rates today on 30 year loans are averaging 4.75 percent, an increase from last week's average 30 year jumbo mortgage rate of 4.64 percent. 30 year jumbo rates are also on pace to move above 5.00 percent this year. In fact, we probably will see rates above that point sometime by late October.
Average 15 year jumbo mortgage rates are at 4.08 percent, up from last week's average 15 year jumbo rate of 4.02 percent. The lowest point for 15 year jumbo rate in 2012 was just below 3.50 percent. You still can find lenders quoting 15 year jumbo refinance rates at 3.50 percent with points.
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