House prices fall, sales rise in 1st quarter while mortgage rate slide triggers rise in apps

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House price, sales and mortgage application data all show that the housing market continues to perform unevenly, with sure and steady recovery still off in the future.

On the downside, house values continued to decline overall according to the latest figures from the National Association of Realtors. NAR figures released yesterday pegged the median price for an existing single-family house at $158,700, a drop of nearly 7% from the fourth quarter of 2010 and of 4.6% from the same quarter one year ago. Median house prices also fell year to year in 118 of the 153 metropolitan areas tracked by NAR.

Sales of existing homes, on the other hand, continued to rise. The seasonally adjusted annual rate of 5.14 million reported by the NAR is 8.3% above the rate in the previous quarter and only 0.8% off the pace set in the first quarter of 2010, when Federal tax credits for new home buyers gave sales a temporary boost.

According to NAR Chief Economist Lawrence Yun, both trends are being driven by investors and others shopping for bargains at the low end of the market. "The biggest sales increase has been in the lower price ranges, which are popular with investors and cash buyers," he said. "The preponderance of sales activity at the lower end is bringing down the median price, so what we’re seeing is the result of a change in the composition of home sales." First-time buyers, by contrast, have retreated from the market relative to last year, when the tax credit was in place.

Meanwhile, repeat buyers and homeowners seeking to refinance are once again taking advantage of near-rock-bottom rates. The continued slide in mortgage rates sparked strong increases in mortgage applications across the board on the Mortgage Bankers Association's Weekly Mortgage Applications Survey for the week ending May 6. The overall Market Composite Index rose by a seasonally adjusted 8.2% from the previous week. The Refinance Index climbed 9.0% from a week ago, and the Purchase Index rose 6.7% on a seasonally adjusted basis from last week.

Meanwhile, mortgage interest rates on the MBA survey fell to their lowest levels since late last fall. The average contract rate for a 30-year fixed-rate mortgage fell 9 basis points to 4.67%, a rate last seen in December 2010, while the average rate for a 15-year fixed-rate mortgage fell 15 basis points to 3.81%, a level last seen in November of that same year. While discount and origination fee points rose for both categories - from 0.75 to 1.10 for 30-year mortgages and from 0.82 to 1.05 for 15-year loans - the effective rates for both also fell.

"Rates dropped again last week as the Federal Reserve continued its QE2 asset purchase program. The 30-year fixed mortgage rate is now 46 basis points below its 2011 peak, and has decreased for four straight weeks by a total of 31 basis points," said Michael Fratantoni, MBA’s Vice President of Research. "Over this four week span, the refinance index has increased by about 18 percent. Despite the recent increases, however, refinance application volumes remain more than 50 percent below levels seen last fall" - a statistic that suggests that most homeowners who could take advantage of sharply lower interest rates did so when they first plunged last year.

Today's mortgage rates hold steady on overnight surveys

The steady day-to-day downward drift of mortgage rates paused today in the most watched categories on the major overnight surveys.

Yesterday's afternoon mortgage rates on the Zillow.com National Mortgage Marketplace, with changes from Monday and last week, were: 30-year fixed, 4.45% (unchanged, -11 points); 15-year fixed, 3.71% (+1 point, -6 points); 5-year ARM, 2.94% (-5 points, -9 points). Today's real-time average rates as of 9:20 a.m. ET, with changes from yesterday morning and afternoon, are: 30-year fixed, 4.46% (-1 point, +1 point); 15-year fixed, 3.69% (-3 points, -2 points); 5-year ARM, 3.02% (+10 points, +8 points).

Today's average mortgage rates on the Bankrate.com overnight survey, with changes from yesterday and one week ago, are: 30-year fixed, 4.59% (unchanged, -8 points); 15-year fixed, 3.82% (-1 point, -8 points); 5-year ARM, 3.17% (unchanged, -3 points); 30-year fixed refinance loan, 4.59% (+1 point, -8 points).

One basis point equals one hundredth of a percentage point. Rates reported in this article assume good credit (FICO score of 650 or higher) and a 20% down payment.

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