Mortgage Rates Are Low, But This Factor Limits The Growth in Housing

Armen Hareyan's picture
Mortgage Rates

The average long-term mortgage rates in the US fell this week, marking the 13th consecutive week below 4 percent. These low interest rates offer incentives to potential home buyers, but what is limiting the housing sector's growth?

The giant mortgage provider Freddie Mac said yesterday that the average rate for 30-year fixed mortgages declined to 3.79% compared to 3.82% the previous week. The rate on 15-year fixed mortgage fell to 2.98% from 3.03%.

It's been 13 weeks that the rates are below four percent. But the rates are far below the levels of 2014.

Low mortgage rates and the constant improvement of the labor market have helped the real estate market in the United States to achieve what looks like a stable level in recent months. Data released Thursday by the National Association of Realtors showed that Americans bought more homes in September 2015, growing existing home sales and suggesting that the housing sector has interestingly remained isolated from the turmoil in the global economy. Sales of existing homes rose 4.7% last month to an adjusted annual rate of 5.55 million.

Yet, there are two another issues at stake.

One is that few people are still buying homes for the first time. Second, is that the number of homes listed for sale is relatively low, limiting potential growth in the sector.

What do you think the number of homes listed for sale is relatively low? Do you also think more homes will come into the market as prices go up?

Also See: Mortgage Rates Rising, Why It Doesn't Matter and How The Rise in Mortgage Rates Impact Average Buyer's Ability to Qualify for a Loan.

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