WASHINGTON
– July 23, 2013 – Two months after Federal Reserve Chairman Ben Bernanke roiled
the housing market in congressional testimony that included the first clues of
rising interest rates, the impact seems to be real – but still small.
Existing-home sales fell 1.2 percent in June, the National Association of Realtors said Monday, in a report that mostly reflected deals that were made before rates began to rise in late May. Most other statistics indicate rising rates have had only a small effect on prospects for home buying.
Indeed, from economic-forecasting firms such as Moody’s Analytics to big real-estate brokers such as Coldwell Banker and Century 21 parent company Realogy, the housing market’s condition is steady to rising.
Realogy, the nation’s largest broker, said last week that its transaction volume rose 21 percent in the second quarter from 2012 levels and will be up 15 percent to 20 percent in the second half of the year.
“My company had the best June for purchase-money mortgages that it has had in its 151/2 years we’ve been open,” said David Vugheri, executive vice president of Houston-based Envoy Mortgage, which does business in 48 states. “Phoenix feels like the heyday. There is no hesitation and no shortage of buyers.”
Nationwide, there was a 1 percent increase in applications for mortgages tied to home sales the week of July 12, according to the Mortgage Bankers Association. During mid-June, when rates were surging, the association’s index for purchase-related applications rose 5 percent from week to week.
But confidence is holding firm, as fixed 30-year mortgage rates have dipped to 4.37 percent, according to Freddie Mac, after rising more than a percentage point between mid-May and late June, said David Crowe, chief economist of the National Association of Home Builders.
Builders’ confidence rose 6 points this month, to 57 on a 100-point scale, in an association survey, Crowe said. The confidence index dipped below 10 during the housing bust. July’s climb reflected both higher traffic at new home developments and better expectations about future sales, he said. “The comments on the survey all say there are more buyers and the buyers who are there are more serious,” Crowe said.
One reason is that interest rates are still 2 percentage points below their post-World War II average of 6.5 percent, Fannie Mae chief economist Doug Duncan said. Surveys show the percentage of sellers who think it’s a good time to sell is still rising, he added.
Seller shortages are bigger problems for some buyers than rates. Low inventories have slowed down Keith and Elizabeth Leavitt, who want to trade up from a 2,400-square-foot townhouse in Manchester-by-the-Sea, Mass. They have a buyer for their current home and are ready to move but can’t find the house they need, Elizabeth Leavitt said.
“People realize the value is there,” since rates are still low and prices have dropped, she said. “I thought there would be more for sale.”
Existing-home sales fell 1.2 percent in June, the National Association of Realtors said Monday, in a report that mostly reflected deals that were made before rates began to rise in late May. Most other statistics indicate rising rates have had only a small effect on prospects for home buying.
Indeed, from economic-forecasting firms such as Moody’s Analytics to big real-estate brokers such as Coldwell Banker and Century 21 parent company Realogy, the housing market’s condition is steady to rising.
Realogy, the nation’s largest broker, said last week that its transaction volume rose 21 percent in the second quarter from 2012 levels and will be up 15 percent to 20 percent in the second half of the year.
“My company had the best June for purchase-money mortgages that it has had in its 151/2 years we’ve been open,” said David Vugheri, executive vice president of Houston-based Envoy Mortgage, which does business in 48 states. “Phoenix feels like the heyday. There is no hesitation and no shortage of buyers.”
Nationwide, there was a 1 percent increase in applications for mortgages tied to home sales the week of July 12, according to the Mortgage Bankers Association. During mid-June, when rates were surging, the association’s index for purchase-related applications rose 5 percent from week to week.
But confidence is holding firm, as fixed 30-year mortgage rates have dipped to 4.37 percent, according to Freddie Mac, after rising more than a percentage point between mid-May and late June, said David Crowe, chief economist of the National Association of Home Builders.
Builders’ confidence rose 6 points this month, to 57 on a 100-point scale, in an association survey, Crowe said. The confidence index dipped below 10 during the housing bust. July’s climb reflected both higher traffic at new home developments and better expectations about future sales, he said. “The comments on the survey all say there are more buyers and the buyers who are there are more serious,” Crowe said.
One reason is that interest rates are still 2 percentage points below their post-World War II average of 6.5 percent, Fannie Mae chief economist Doug Duncan said. Surveys show the percentage of sellers who think it’s a good time to sell is still rising, he added.
Seller shortages are bigger problems for some buyers than rates. Low inventories have slowed down Keith and Elizabeth Leavitt, who want to trade up from a 2,400-square-foot townhouse in Manchester-by-the-Sea, Mass. They have a buyer for their current home and are ready to move but can’t find the house they need, Elizabeth Leavitt said.
“People realize the value is there,” since rates are still low and prices have dropped, she said. “I thought there would be more for sale.”
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