Existing Home Sales in November higher, Mortgage Rates hit highs, Home Price gains remain strong
December 21, 2016
The National Association of REALTORS® reported on Wednesday that Existing Home Sales in November edged higher by 0.7% from October to an annual rate of 5.61 million units, a 9-year high. Potential borrowers locked in before the presidential election on November 8 to lock in low rates feeling that rates may edge higher after the results. Year-over-year, sales were up 15.4%, but that number could be distorted given the fact that TRID rules went into effect November 2015 and many mortgage applications were pushed into December.
Mortgage rates hit highs not seen since the spring of 2014 this week as the post-presidential election results touched off a six-week rally in the Stock markets, which pushed Bond prices lower and yields higher. The Mortgage Bankers Association reported today that the 30-year fixed-rate conventional mortgage ($417,000 or less) rose to 4.41% in the latest week, the highest since May 2014. However, it is still worth noting that from a historic perspective, mortgage rates are still very low – for example, mortgage rates were 10.13% in 1990 and 5.67% in 1996.
Fannie Mae released its December 2016 Economic and Housing Outlook revealing that mortgage rates continue to trend higher following the U.S. presidential election and after the Federal Reserve hinted at multiple interest hikes in 2017. Fannie Mae went on to say that home price gains remain strong, which has pushed equity in homes higher and is providing support to consumers. In addition, Fannie said, “The recent surge in interest rates amid continued strong home price appreciation are likely to present affordability challenges to home buyers, especially for young adults who are looking to enter the housing market for the first time.”