Mortgage rates have mostly drifted sideways this summer. This stability is much needed for home sales, which have crested because of the multi-year run up in prices, tight affordable inventory and this year’s higher rates. Going forward, the strong economy will support the housing market, but with affordability pressures mounting, further spikes in mortgage rates will lead to continued softening in home price growth.
For Week Ending July 28, 2018
The U.S. Labor Department reported that the economy added 157,000 jobs in July, marking 93 months in a row of job additions. Beginning in October 2010, that is the longest streak of monthly employment growth on record. The unemployment rate dropped to a historically low 3.9 percent, and wage growth remained at an annual rate of 2.7 percent. Meanwhile, escalating tariff conflicts with U.S. trade partners have not yet impacted the day-to-day housing market, but builders have indicated that lumber tariffs are increasing prices for new homes.
In the Twin Cities region, for the week ending July 28:
For the month of June:
All comparisons are to 2017
Click here for the full Weekly Market Activity Report. From The Skinny Blog.
The 30-year fixed-rate mortgage drifted up for the second consecutive week to 4.60 percent.
The higher rate environment, coupled with the ongoing lack of affordable inventory, has led to a drag on existing-home sales in the last few months. Yesterday, the Federal Reserve passed on raising short-term rates, but with the embers of a strong economy potentially stoking higher inflation, borrowing costs will likely modestly rise in coming months.
Even with home price growth easing slightly in some markets, mortgage rates hovering near a seven-year high will certainly create affordability challenges for some prospective buyers looking to close.
For Week Ending July 21, 2018
Although talk of another real estate pricing bubble poised to burst is premature, pundits are nevertheless beginning to point toward the common markers that caused the last housing market downturn. As prices continue to rise while wages don’t rise as quickly, a new situation could be an eventuality. Yet today’s market is quite different than the last recession. The economy is growing, lending practices are more in line with economic fundamentals and inventory appears to be improving in many markets, which would help alleviate price pressure.
In the Twin Cities region, for the week ending July 21:
For the month of June:
All comparisons are to 2017
Click here for the full Weekly Market Activity Report. From The Skinny Blog.
Mortgage rates moved up slightly over the past week to their highest level since late June.
The next few months will be key for gauging the health of the housing market. Existing sales appear to have peaked, sales of newly built homes are slowing and unsold inventory is rising for the first time in three years.
