Rates have risen to the 3% mark, as the latest Primary Mortgage Market Survey (PMMS) from Freddie Mac finds the 30-year fixed-rate mortgage (FRM) up 0.6 point over last week when it stood at 2.94%. A year ago at this time, the 30-year FRM averaged 3.24%.
“After a run up over the first few months of the year, rates have paused and hovered around three percent since March,” said Sam Khater, Freddie Mac’s Chief Economist. “Despite this favorable rate climate, there remains a shortage of homes for sale. The lack of housing supply has been compounded by labor disruptions and expensive building materials that are driving up the cost of new housing, making it difficult for homebuyers to find homes to purchase.”
That void in the housing supply was reported by the U.S. Department of Housing and Urban Development (HUD) and the U.S. Census Bureau, which found that housing starts dropped in April 2021 by hitting 1.57 million units, down 9.5% from March, but 67.3% above the April 2020 rate of 938,000.
Supply shortages continue to impact new construction, as National Association of Home Builders (NAHB) recently found that the price of lumber has tripled over the past year, forcing the price of a new single-family home to rise $35,872 on average.
“Housing starts and permits posted a monthly decline in April, as escalating prices for lumber and other building materials price out some homebuyers from an otherwise hot housing market,” said NAHB Chairman Chuck Fowke. “Policymakers need to prioritize the U.S. supply chain for items like building materials to ensure builders can add the additional inventory the housing market desperately needs.”
Freddie Mac also reported that the 15-year FRM averaged 2.29% with an average 0.7 point, up from last week when it averaged 2.26%. A year ago at this time, the 15-year FRM averaged 2.70%. The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.59% with an average 0.3 point, unchanged from last week. A year ago at this time, the five-year ARM averaged 3.17%.
News of rates on the rise comes on the heels of yesterday’s announcement from the Mortgage Bankers Association (MBA) that applications rose 1.2% over last week’s total, with the refinance share of volume increasing to 63.3% of total applications, up from 61.3% the previous week.