Mortgage rates idle in the past week as the U.S. housing market saw sales slow marginally in many areas. The rate on a conventional 30 year fixed rate mortgage averaged 4.59 percent, down from 4.60 percent a week ago, according to the Freddie Mac survey.
“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,” said Freddie Mac chief economist Sam Khater. “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.”
The 15-year fixed rate mortgage averaged 4.05 percent for the week, also slightly down from last week when it averaged 4.08%. More consumers are opting for the shorter 15 year loan, especially to refinance houses as a result of fallout from the financial crisis a decade ago when millions of Americans lost their homes due to foreclosure.
“There continues to be a steady rate of job creation, but as we’ve seen throughout most of this economic expansion, wage growth is not meaningfully increasing above inflation,” said Khater.” With home prices still climbing and mortgage rates up from 3.90 percent a year ago, some prospective buyers are definitely feeling an affordability crunch.”
Home prices have increased an average of 6.8 percent in the past year nationally, according to real estate analytics firm Core Logic, which tracks repeat sales in more than 100 markets across the U.S. “The rise in home prices and interest rates over the past year has eroded affordability and is beginning to slow existing home sales in some markets,“ said Core Logic chief economist Frank Nothaft.
Home sales in the San Francisco Bay area were down 9 percent in June from a year ago and down 12 percent in the Los Angeles Metro area, according to Core Logic data.
Homes price increases have slowed the most in San Diego for any major metropolitan area in the west, easing to just 6.7 percent on an annual basis as sales slow. The Miami metropolitan region, which was once bolstered by the highest number of cash sales as a result of illicit drug money coming into the market has slowed the most in the southern region of the U.S. to an annual clip of just 5.0 percent.