The Fall Real Estate Market Update
Let’s take a break from speaking about the Federal Reserve for a week and talk about a more pleasant topic. Thus far this year, the real estate market has been strong. This year continues the sector’s recovery from the recession we suffered almost a decade ago. It has been a long, hard road for the recovery and real estate in particular, but we have seen a slow and steady recovery in the sector for some time. Last month we saw existing real estate sales dip by almost five percent from the previous month, but sales are still up over six percent year-over-year.
We are now in the fall real estate season and it seems that the most important factor holding back sales is lack of inventory in some areas of the country. This lack of inventory makes the ability of builders to gear up to increase production very important. And their major concerns are lack of affordable land and lack of skilled labor. Though lack of inventory, affordable land and skilled workers are real problems, they demonstrate that we have come very far in our recovery.
Instead of complaining about lack of confidence, jobs and available credit, as we were just a few years ago, the problems we face are very different today. They are problems that a stronger economy face. Today, if an attractive home goes on the market at a reasonable price, it more than likely will sell. Thus, if you are thinking about listing your home, conditions are favorable. And if you are thinking about purchasing, today’s low rates still make ownership a bargain. Next week we are sure to be talking about the Federal Reserve again, as the jobs report is released on Friday.
The Market Update
Rates on home loans were lower in the wake of the Federal Reserve Board’s decision not to raise short-term rates. Freddie Mac announced that for the week ending September 24, 30-year fixed rates fell to 3.86% from 3.90% the week before. The average for 15-year loans decreased to 3.08%. Adjustables were also down, with the average for one-year adjustables falling to 2.53% and five-year adjustables down to 2.91%.
A year ago, 30-year fixed rates were at 4.20%, over one-third of one percent higher than today’s levels. Attributed to Sean Becketti, chief economist, Freddie Mac — “Global growth concerns and lackluster inflation convinced the Fed to defer a hike in the Federal funds rate. In response, Treasury yields fell about 9 basis points over the week, with some larger day-to-day swings along the way.
In response, the interest rate on 30-year fixed rate loans dropped by 5 basis points to 3.86 percent. Rates on home loans have remained below 4 percent for 9 consecutive weeks and have remained range-bound between 3.8 and 4.1 percent since May. These low rates have supported strong home sales, and 2015 is on pace to have the highest home sales total since 2007.”
*Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.