Freddie Mac’s latest Primary Mortgage Market Survey (PMMS) has found that the 30-year fixed-rate mortgage (FRM) averaged 2.86% for the week ending August 19, 2021, down slightly from last week’s average of 2.87%. A year ago at this time, the 30-year FRM averaged 2.99 percent.
“Mortgage rates stayed relatively flat this week,” said Sam Khater, Freddie Mac’s Chief Economist. “Housing is in a similar phase of the economic cycle as many other consumer goods. While there is strong latent demand, low supply has caused prices to rise as shortages restrict the amount of sales activity that otherwise would occur.”
Also this week, the 15-year FRM averaged 2.16% with an average 0.6 point, up slightly last week when it averaged 2.15%. A year ago at this time, the 15-year FRM averaged 2.54%.
“Mortgage rates remain favorable for buyers, many of whom are welcoming the markets’ noticeable shift toward more normal seasonal trends,” said Realtor.com Senior Economist George Ratiu. “Based on today’s Realtor.com inventory data, the number of homes for sale continues to grow, as sellers are ready to move forward with delayed plans and take advantage of market conditions. We have seen three consecutive weeks of single-digit price gains, a clear sign that the last 12 months’ overheated price growth is behind us. This shift in inventory and pricing offers more choices for buyers along with more approachable prices. The next few months offer a golden window of opportunity for both buyers and sellers to capitalize on the combination of historically-low mortgage rates and rising inventory.”
The economy may see a boost, as more Americans are returning to work as the U.S. Department of Labor has reported that for the week ending August 14, the advance figure for seasonally-adjusted initial claims was 348,000, a decline of 29,000 from the previous week's revised level, marking the lowest level for initial claims since March 14, 2020 when it was 256,000.
However, as rates remain below the 3% mark, home sales have begun to slow, as the Mortgage Bankers Association reported that mortgage applications decreased 3.9% week-over-week, for the week ending August 13, 2021. The MBA also found the refinance share of mortgage activity decreased slightly to 67.3% of total applications from 68.0% the previous week.
Home prices remain at all-time highs, forcing many to reconsider their purchase options despite the low rates. In a new study, Redfin has reported the median home price once again hit an all-time high in July, reaching $385,600, a 20% annual increase. This total does not top the largest annual growth-rate peak of 26% in May 2021, but is still higher than any point on record prior to April of this year.
The month of July 2021 marks 12 consecutive months of double-digit price gains, which is significant because a year ago the housing market was already in a strong growth phase, after pausing briefly at the onset of the pandemic.
One year later, Redfin says it is still seeing extremely strong growth, but the market is gradually becoming less competitive for buyers, as slightly less-brutal bidding battles among homebuying hopefuls. In July, 60.1% of home offers written by Redfin agents faced competition, down from a revised rate of 66.5% in June and a pandemic peak of 74.1% in April. While July's bidding-war rate was the lowest since January, it was still higher than July 2020's 57.9% bidding-war rate.
"Competition has started to slow in the last three weeks. We're now seeing five to eight offers on homes instead of 25, and they're coming in $5,000 to $10,000 above the listing price instead of $50,000 to $60,000," said Scott Mercer, a Redfin Real Estate Agent in Sacramento, California. "Buyers are pushing back. They've even started including appraisal contingencies again and making requests for repairs—things that were pretty much unheard of last year."