Low Rates, Low Sales

While mortgage rates are staying low, and showing little signs of change, buyers have still been slow to buy due to the low number of homes for sale or being built. According to Freddie Mac, the 30-year fixed-rate mortgage (FRM) averaged 3.89 percent with an average 0.4 point for the week ending August 17, 2017, down from the previous week when it averaged 3.90 percent. A year before, the 30-year FRM averaged 3.43 percent. The 15-year FRM for that week averaged 3.16 percent with an average 0.5 point, down from the previous week when it averaged 3.18 percent. A year previously, the 15-year FRM averaged 2.74 percent.

According to Bankrate, as of Friday, consumers with a 30-year FRM will pay $480.30 each month for every $100,000 they borrow, up from $479.72 the previous week.Bankrate reports that this lower mortgage rate is good news for homeowners, as they can refinance for a lower rate, however, inventory issues have still kept many consumers out of the market. The U.S Census Bureau reports that starts on new homes fell 4.8 percent from June to July, while mortgage applications made a very small improvement of just 0.1 percent.

Meanwhile, the Federal Reserve noted that inflation has not yet reached its 2 percent predicted target, despite strong job growth. This has kept interest rates low, in part.

"It stands in the way of their long-term hope to boost interest rates and get on with the business of shrinking the $4 trillion balance sheet," of bonds, says Mark Hamrick, Bankrate Senior Economic Analyst.

In September, The Fed's meeting is expected to bring details of how the central bank will reduce its bond holdings, which is likely to push up long-term interest rates, like mortgage rates.