The 30-year fixed-rate mortgage averaged 3.64% this week, the lowest level in thirteen weeks. Sam Khater, Freddie Mac’s chief economist, says rates dropped as investors sought the safety of the U.S. Treasury’s fixed-income markets in light of the U.S.’s escalating turmoil with Iran. That said, “the drop in mortgage rates, combined with the strong labor market, should propel a continued rise in home buyer demand,” Khater says.
Freddie Mac reports the following national averages with mortgage rates for the week ending Jan. 9:
30-year fixed-rate mortgages: averaged 3.64%, with an average 0.7 point, falling from last week’s 3.72% average. Last year at this time, 30-year rates averaged 4.45%.
15-year fixed-rate mortgages: averaged 3.07%, with an average 0.7 point, falling from last week’s 3.16% average. A year ago, 15-year rates averaged 3.89%.
5-year hybrid adjustable-rate mortgages: averaged 3.30%, with an average 0.3 point, falling from last week’s 3.46% average. A year ago, 5-year ARMs averaged 3.83%.
The first open houses of the year are drawing out the crowds, real estate pros report. Low mortgage rates—which dipped even further this week—may be driving some of that activity.
An open house in the Atlanta area last Sunday for a newly renovated, three-bedroom, two-bath house for $335,000 drew a crowd of about 34 people during a two-hour time span. Listing agent Melissa Fuentes says she’s conducting two second showings this week and expects an offer by the end of the week.
The home attracted homeowners and investors alike. “With the market value the way it is right now, there’s a lot of people jumping on the same kind of real estate that I’m looking to invest in,” Michael Tartly, who is looking for an income property in the Atlanta area, told CNBC.
Economists have already predicted thatJanuary could be a hot selling month this yearacross the country and lower mortgage rates are certainly helping to kick off a winter selling season, they say.
The average rate on the 30-year fixed-rate mortgage dropped to its lowest level since October this week, at 3.69%, Mortgage News Daily reports.
The continued strength in consumer sentiment about the housing market “attests to the intention among consumers to purchase homes,” says Doug Duncan, Fannie Mae’s chief economist. Fannie Mae’s housing sentiment index, a survey of consumers, remained near an all-time high in 2019, fueled by a 16 percentage point annual increase in the share of consumers who believe it is a good time to buy.
A decline in mortgage rates—down by more than 1 percentage point for fixed-rate loans compared to November 2018—is buoying higher sales activity, says Frank Nothaft, chief economist at CoreLogic. Nothaft adds that any slowdown in home prices in early 2019 likely ended in late summer. He predicts prices to rise well into 2020.
Couples can bicker when trying to decide on a home to purchase. A certain level of compromise is usually required in finding the right one. As a real estate pro, you may find yourself a mediator to these disputes.
Nearly one in four homeowners say their current home does not have all the features their partner considered important, according to a survey of more than 980 homeowners conducted by Porch.com, a home remodeling website.
So what features inspire the most spats during a house hunt? Wood-burning fireplaces, in-ground pools, and hardwood flooring, according to the survey. For example, with a pool, couples may not see eye-to-eye whether the maintenance costs and upkeep is worth the hassle of having one, the study notes.
“Not all features are bound to cause a struggle though,” Porch.com’s study notes. “Couples were often quick to agree on energy-efficient appliances, newly renovated bedrooms, and freshly upgraded bathrooms.”
The Federal Housing Finance Agency’s new loan limits for 2020 have gone into effect; Fannie Mae and Freddie Mac, which are operated by the FHFA, began backing larger loans last week when the new year started. The cap on Fannie and Freddie loans has increased to $510,400 from 2019’s $484,350 limit.
This is the fourth consecutive year that the FHFA has raised conforming loan limits, which can stretch even higher in areas with expensive median home values. High-cost areas will be capped at $765,600, or 150% of the $510,400 limit. The maximum conforming loan limit is higher in 2020 for all except 43 counties in the U.S.
The Federal Housing Administration also increased its loan limit to $331,760, which is a $17,000 increase from 2019. In about 70 designated high-cost counties, the FHA’s 2020 loan limit has climbed to $765,600, a $40,000 increase from 2019. Alaska, Hawaii, Guam, and the U.S. Virgin Islands have higher limit ceilings than the rest of the country because of higher construction costs, the FHA says. Those areas have a 2020 FHA loan limit of $1,148,400.
The busy home-shopping season will start early in January this year, according to forecasters. The month of January in recent years has tended to have the second-most listing views across the year (just 1% below February), according to realtor.com® data.
With sub-4% mortgage rates, low unemployment, and higher wages, industry insiders are expecting a bustling winter real estate season.
“The shift to January’s newfound popularity does not mean that the other prime spring months have become less competitive,” says Nicolas Bedo, an economic data analyst for realtor.com®. “Realtor.com® data shows that views per listing used to ramp up into spring, but now competition starts high in January and stays high … What used to be a lopsided bias for April is now a feverish search starting in January, staying consistently competitive across the first four months of the year as hopeful home buyers look for just the right home.”
Seattle may be the busiest in January. The metro area saw the biggest jump in January home shopping with a 32% increase over its next highest month in listing views, according to realtor.com®. McAllen, Texas, landed at number two with a 14.9% increase.
“Although it lagged February, January saw a surge, ranking as the top month in 20 of the 100 largest metro areas, including New York, Los Angeles, Chicago, Dallas, Houston, Seattle, San Francisco, Atlanta, San Jose, California, and Denver,” Bedo says. For comparison, “in 2018, that was true for just three of the top 100 metros.”
A back porch or deck, newly renovated kitchen, and hardwood flooring are among the top home features house hunters say they want most, according to a new survey by Porch.com, a home remodeling site. Further, buyers are willing to pay between $2,500 and $4,500 more for a home with these features, shows the survey of more than 980 recent home shoppers.
Consumers are embracing outdoor space, as a back porch or deck was the feature Americans most wanted in their home, according to the survey. Some buyers are willing to sacrifice square footage for greater access to outdoor space, Porch.com researchers note.
Starting Jan. 1, all newly constructed homes and low-rise apartment buildings in California are required to have rooftop solar panels. The state is the first in the nation to carry such a mandate.
The law also requires better insulation and air filtration for new homes. Some areas also are seeing mandates on the use of natural gas. For example, in the Bay Area, new homes in Berkeley, San Mateo, Menlo Park, San Jose, or Marin County will not be able to install gas appliances or will have to be more energy-efficient to do so.
The rules for energy use are intended to help alleviate the state’s greenhouse gas emissions. The new laws apply only to newly constructed homes.
To comply, some home builders are buying rooftop panels to install or leasing them from solar providers. Some developers of new-home communities are also hoping the state energy commission will approve fulfilling the solar requirement with community panels, a collection of panels that can provide energy to several homes.
The California Energy Commission estimates that the solar mandate and additional building code changes could add $9,500 per home in construction costs. However, they say the changes will save homeowners $19,000 in energy and maintenance costs over 30 years.
The California Building Industry Association estimates the new mandates will add between $8,000 to $13,500 to the price of a new-construction home. It says the costs will be passed on to home buyers.
The California Energy Commission says that 26% of the state’s greenhouse gas emissions come from buildings. “There’s no way to meet carbon or clean energy goals without electrifying the building sector,” Panama Bartholomy, director of the Building Decarbonization Coalition.
Home shoppers are being greeted with much lower mortgage rates to kick off 2020 than they were a year ago. The 30-year fixed-rate mortgage averaged 3.72% this week, compared to 4.51% at the beginning of 2019.
Improving economic data has led to a stability in mortgage rates over the last few weeks. Thirty-year rates have generally hovered around an average of 3.7% for the past two months.
What a difference a year makes: “The stability is welcome news after the interest rate turbulence of the last year, which caused a slowdown in the housing market and other interest rate-sensitive sectors,” says Sam Khater, Freddie Mac’s chief economist. “The low mortgage rate environment combined with the red-hot labor market is setting the stage for a continued rise in home sales and home prices.”
Freddie Mac reports the following national averages with mortgage rates for the week ending Jan. 2:
30-year fixed-rate mortgages: averaged 3.72%, with an average 0.7 point, falling slightly from a 3.74% average a week ago. Last year at this time, 30-year rates averaged 4.51%.
15-year fixed-rate mortgages: averaged 3.16%, with an average 0.7 point, dropping from last week’s 3.19% average. A year ago, 15-year rates averaged 3.99%.
5-year hybrid adjustable-rate mortgages: averaged 3.46%, with an average 0.3 point, rising slightly from a 3.45% average last week. A year ago, 5-year ARMs averaged 3.98%.
Security officials are warning consumers to not abbreviate “2020” in official documents because they say it can be an easy way for scammers to commit forgery. They say the abbreviation makes it easy for scammers to change out the numbers on paperwork. For example, if you write a date like “1/3/20,” scammers could change it to “1/3/2000” or 1/3/2021.”
Instead, write out the full year as “1/3/2020” or, better yet, write out the name of the month as well to read “January 3, 2020.” It “could possibly protect you and prevent legal issues on paperwork,” Dusty Rhodes, a Hamilton County, Ohio, auditor told the USA Today Network.
Why would scammers want to change a date? They could seek to establish an unpaid debt or to attempt to cash an old check.
Police departments across the country have urged the public to write out the year. “This is very sound advice and should be considered when signing any legal or professional document,” the East Millinocket Police Department in Maine wrote in a Facebook post. “It could potentially save you some trouble down the road.”
Pending home sales rose 1.2% in November after slipping the prior month, according to the National Association of REALTORS®’ latest housing report, which was released Monday. Year-over-year contract signings were up 7.4% nationally, according to the report.
November’s Pending Home Sales Index reached 108.5; an index of 100 is equal to the level of contract activity in 2001. The West region of the country reported the highest monthly growth in pending home sales at 5.5%, while the Midwest jumped 1%. The Northeast and South saw only minor adjustments in month-over-month contract activity.
“Despite the insufficient level of inventory, pending home contracts still increased in November,” said NAR Chief Economist Lawrence Yun, noting that housing inventory has been in decline for six straight months. “Favorable conditions are expected throughout 2020 as well, but supply is not yet meeting the healthy demand.”
At NAR’s first-ever Real Estate Forecast Summit earlier this month, housing economists predicted 2% GDP growth, a 3.7% unemployment rate, and a 3.8% average mortgage rate. “Sale prices continue to rise, but I am hopeful that we will see price appreciation slow in 2020,” Yun said at the event. “Builder confidence levels are high, so we just need housing supply to match and more home construction to take place in the coming year.”
Here’s the regional breakdown of November results:
West: Pending home sales grew 5.5% and were up 14.0% from a year ago.
Midwest: Pending home sales rose 1% and were 5% higher than a year ago.
Northeast: Pending home sales slid 0.1% but were 2.6% higher than a year ago.
South: Pending home sales decreased 0.2%, but were 7.7% higher than a year ago.
