Average mortgage rates lowest in 31 months and SF Bay Area home prices fall 1.7% year-over year

The benchmark 30-year fixed mortgage rate fell again this week to 3.94 percent from 3.99 percent a week ago, according to Bankrate’s latest survey of the nation’s largest mortgage lenders. The last time mortgage rates were this low was November 2016.

A year ago, it was 4.71 percent. Four weeks ago, the rate was 4.20 percent. The 30-year, fixed-rate average for this week is 1.16 percentage points below the 52-week high of 5.10 percent, and matches the 52-week low of 3.94 percent.

The 30-year fixed mortgages in this week’s survey had an average total of 0.32 discount and origination points.

Source: https://www.bankrate.com/mortgages/analysis/

Last month’s 1.7% drop “marked the largest decline since February 2012, when the median fell 3.6% year over year,” said CoreLogic analyst Andrew LePage. The next month, the median rose 0.6%, and in April 2012, it began an 83-month stretch of consecutive gains. CoreLogic’s report includes new and existing homes and condos in the nine-county Bay Area.

Today, “there is a sense of pause by buyers because they don’t know what’s next,” said Selma Hepp, chief economist with the Compass real estate brokerage. “We are definitely seeing a lot of activity out there; buyers are coming to open houses. But for homes in imperfect condition, or imperfectly priced, they’re not willing to pull the trigger.”

Home Price Appreciation Flat, New Home Sales Decline, Pending Home Sales Improve

Mortgage rates continue to swing lower, amidst the Federal Open Market Committee’s decision to leave rates unchanged. Home price appreciation was flat month-over-month but up marginally year-over-year. New home sales declined, but pending home sales are up.

The Case-Shiller home price index was unchanged from March to April. Year-over-year the index is up 2.5%. Gains were driven by “sand cities” with warmer climates including. Las Vegas, Tampa, and Phoenix, though no cities posted double-digit annual gains. MarketWatch contributor Andrea Riquier wrote, “a slower pace of price gains should help attract buyers, particularly those who have been frustrated by a competitive and pricey housing market.”

New home sales declined from April to May, down 7.8% month-over-month. Year-over-year, sales are down a less significant 3.7%. Despite lower mortgage rates, buyers are not rushing to buy newly built homes. Builders Are competing with an ample supply of existing homes, plus higher cost of building materials and shortages of land and labor. Buck Horne, home building analyst and senior vice-president at Raymond James, commented, “it’s harder for the builders to compete against resale inventory that is priced significantly below where their asking price is now.”

The pending home sales index increased in May, up 1.1% year-over-year. Annually, however, signed contracts are down 0.7%. Three of the four regions increased, led by the Midwest, up 3.6% and the Northeast, up 3.5%. Pending home sales were up a marginal 0.1% in the South and down 1.8%in the West.

Lower mortgage rates combined with slowed home price appreciation are contributing to a favorable market for home buyers. Prospective buyers who may have been priced out last year may be inclined to take advantage of this year’s improved affordability.

Here’s what Fannie Mae is forecasting for the housing market from CNBC.

May single family home sales drop 7.8%, missing expectations from CNBC.

How lower mortgage rates are strengthening the refinance market from CNBC.

Sources: CNBC, CNBC, Econoday, MarketWatch, MarketWatch, Mortgage News Daily, The Wall Street Journal