Economic Report: Mortgage rates hit a 2-month low, offering house-hunters the only reprieve from market turmoil

A sign advertising a lower price sits next to a real estate sign in Westerville, Ohio

Rates for home loans tumbled for a third week, making real estate one of the only places to hide — at least for now.

The 30-year fixed-rate mortgage averaged 4.75% in the Dec. 6 week, down six basis points, mortgage liquidity provider Freddie Mac said Thursday. The 15-year fixed-rate mortgage averaged 4.21%, down from 4.25%. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 4.07%, down three basis points.

Those rates don’t include fees associated with obtaining mortgage loans.

Mortgage rates track the benchmark 10-year U.S. Treasury TMUBMUSD10Y, -2.15%  note. Bond yields have plunged over the past few weeks as investor fears about geopolitics have slammed stocks. As investors snatch up the perceived safety of bonds, their prices rise and yields fall.

See: 4 reasons why the 10-year Treasury yield has tumbled below 3%—again

That’s a “welcome relief” to prospective homebuyers, Freddie Mac Chief Economist Sam Khater said.

Khater’s team on Wednesday published a fresh analysis of the housing supply shortfall. Over the past five decades, they showed, there has only been one year in which the supply of new housing was lower than in 2017. That was 1982, a year in which the Federal Reserve intentionally caused a recession to bring inflation to its knees. Throughout that year, the 30-year fixed-rate mortgage averaged 16.04 – and that was a sign of progress, because it had averaged 16.64% in 1981.

Also read: The new housing play: helping priced-out renters become long-distance landlords

The U.S. needs to be building about 370,000 more units per year than it currently is, the Freddie Mac team said. Put another way, they said, “we estimate that the U.S. economy is about 2.5 million housing units below what is needed to match long-term demand.”

That may be a tough order. Home builders face stiff headwinds, tight margins, and even a skittish customer base. “A troubling sign for 2019 is that the primary concern among prospective buyers is that prices may fall in 2019 which would reduce their equity if they purchase now,” said BTIG Research’s Carl Reichardt, Jr. in a recent client note. “Buyers are aware that builders are motivated sellers,” Reichardt said, yet it’s hard for builders to slash prices.

Read: Toll Brothers orders tumble, but housing market comeback may be in the cards

Filed in: Top News Tags: 

You might like:

The tech whiz behind Vine and HQ Trivia made millions in his 20s — and died at 34 The tech whiz behind Vine and HQ Trivia made millions in his 20s — and died at 34
Market Extra: The Nasdaq escapes longest bear market — by one measure — in 28 years Market Extra: The Nasdaq escapes longest bear market — by one measure — in 28 years
Market Extra: Presidents Day: Everything you need to know about market closures on Washington’s Birthday Market Extra: Presidents Day: Everything you need to know about market closures on Washington’s Birthday
Capitol Report: Commerce Department report backing 25% tariffs on auto imports could hit Sunday Capitol Report: Commerce Department report backing 25% tariffs on auto imports could hit Sunday
Cannabis Watch: Cannabis company Aphria finds some board members had conflicts in Latam deal Cannabis Watch: Cannabis company Aphria finds some board members had conflicts in Latam deal
XPO Logistics stock plunges, as cut back by largest customer, weak Europe trump big buybacks XPO Logistics stock plunges, as cut back by largest customer, weak Europe trump big buybacks
Beset by recalls and falling meat prices, America’s biggest meat producer wants to take a bite out of the vegetarian market Beset by recalls and falling meat prices, America’s biggest meat producer wants to take a bite out of the vegetarian market
BookWatch: Here’s why the craft cannabis industry can thrive in the face of Big Marijuana BookWatch: Here’s why the craft cannabis industry can thrive in the face of Big Marijuana

Leave a Reply

Submit Comment
© 2019 Stock Investors News. All rights reserved. XHTML / CSS Valid.