While new housing starts are still well below the level of a healthy housing market, they rose slightly for the first time since spring in September, another sign of nascent recovery in the housing market. Meanwhile, the continuing fall in mortgage rates, which set another new low on a major weekly survey, has produced a perverse incentive: Borrowers are now sitting on the sidelines waiting to see how much farther they will fall.
The Commerce Department reported yesterday that housing starts rose 0.3% to a seasonally adjusted annual rate of 610,000 units in September. That brings the annualized pace of housing starts back to its level in April, when the new homebuyer tax credit expired. Still, the increase is well below where it was this time last year, when housing starts rose 4.1%. Annual production of new housing is also well below the 1 million to 1.5 million units a healthy housing market would generate.
Lawrence Yun, chief economist for the National Association of Realtors, told Fox News that the figures indicate the housing market is recovering at "a very, very sluggish rate."
Further evidence of this comes in the form of declining mortgage applications in the midst of mortgage rates that continue to fall to new record lows each week. In its explainer of this week's national mortgage rate survey, Bankrate.com said that loan officers note that homeowners seeking to refinance their mortgages keep putting off applying because rates keep falling. Combined with time-consuming paperwork to meet new regulations, the slide leads people to conclude they need not hurry to refinance.
Mortgage rates lower on weekly and overnight surveys
Mortgage rates set new record lows in all major categories on the Bankrate.com weekly national mortgage survey today. The benchmark rate for 30-year fixed mortgages fell 5 basis points to 4.42%, the 15-year fixed benchmark rate dropped 3 points to 3.82%, and the 5-year ARM rate dropped 2 points to 3.6%. Mortgage rates for the standard 30-year fixed loan dropped below 5% in mid-May and crossed the 4.5% line in late September.
Today's mortgage rates also fell in most categories on the major overnight surveys. Wednesday's day-end figures on the Zillow.com National Mortgage Marketplace were: 30-year fixed, 4.10%, 3 points below yesterday's and last week's figure; 15-year fixed, 3.60%, unchanged from yesterday and down 1 point from last week; 5-year ARM, 3.00%, up 1 point from yesterday and from last week. This morning's real-time rates, with changes from yesterday morning and day end, are: 30-year fixed, 4.05% (-6 points, -5 points); 15-year fixed, 3.50% (+3 points, unchanged); 5-year ARM, 2.93% (-8 points, -7 points).
Today's mortgage rates on the Bankrate.com national overnight survey, with changes from yesterday and one week ago, are: 30-year fixed loan, 4.24% (-3 points, -4 points); 15-year fixed, 3.63% (-4 points, -5 points); 5-year ARM, 3.17% (-1 point, unchanged); 30-year fixed refi, 4.25% (-3 points, -4 points). One basis point equals one one-hundredth of a percent.
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