The more things change, the more they stay the same. That at least seems to be the truth with rising mortgage rates and the sizzling housing market. Each upward adjustment with rates has caused concerns within the housing community that changes are on the horizon. There has been minimum impact on the overall interest among home buyers, even though rates have increased substantially over the last two months.
Existing home sales fell 1.2% in June, in a report that mostly reflected deals that were made before rates began to rise in late May. Nationwide, there was a 1% increase in applications for mortgages tied to home sales the week of July 12. During mid-June, when rates were surging, purchase related applications rose by 5% from week to week.
Buyer confidence is not waning, even as fixed 30 year mortgage rates have dipped to 4.37%, after rising more than a percentage point between mid-May and late June. Home builders are feeling exuberant about the present and future as confidence rose 6 points this month, to 57 on a 100 point scale. The confidence index dipped below 10 during the housing bust. July’s climb reflected both higher traffic at traditional open houses and new home developments.
From a historical perspective, rates are still relatively low compared to most of the last 4 decades. The other factor contributing to the upsurge in housing are the shortage of available homes to purchase. Recent surveys show the percentage of sellers who think it’s a great time to sell is still, hence the increase in inventory over the last couple of weeks. Seller shortages are actually a much bigger obstacle for most buyers than rates.
Most properly priced homes are being scooped up with multiple offers. A significant number of these homes are being purchased with all cash buyers, there in lies the other barrier facing buyers with loans. Everything else being equal, sellers are naturally attracted to these cash buyers. With every segment of buyers now back in tow and pursuing homes, this makes for some fierce competition that should continue for the forseeable future.
Will continuous increases in rates stall the market? Could a back log of pent-up inventory coming on the market at the same time, slow the housing locomotive? These are questions with no sure-fire answers. Please visit my website www.JohnnyBrooksHomes.com for helpful tips on buying or selling a home, scan my informative blogs and easy access to view local area homes for sale in Davis, California and the surrounding communities.