New Home Sales Surged in Sept, Total Purchase Originations will increase in 2018, Mortgage Rates higher
October 25, 2017
The Commerce Department reported on Wednesday that New Home Sales surged 18.9% in September from August to their highest level since October 2007. This was the largest monthly gain since January 1992! Sales came in at 667,000 units versus the 555,000 units expected and were up 17% year over year. Currently, there is a five-month inventory of houses on the market, down from six months in August. A six-month supply is seen as a healthy balance between supply and demand.
The Mortgage Bankers Association (MBA) reports that it expects that total purchase originations will increase to $1.2 trillion in 2018, a 7.3% increase from 2017. However, the MBA anticipates that refinance originations will decrease 28.3% in 2018 from 2017 to approximately $430 billion. The MBA went on to forecast that total mortgage origination will fall to $1.60 trillion in 2018 from $1.69 trillion in 2017. Looking ahead to 2019, total originations should rise to $1.64 trillion, purchase originations of $1.24 trillion and refinance originations of $395 billion.
Mortgage rates edged higher in the latest week though they still remain historically attractive as reported by the Mortgage Bankers Association (MBA). The average contract interest rate for 30-year fixed conforming loan balances rose four basis points in the latest week to 4.18% with points decreasing to 0.42 from 0.44. The MBA’s Market Composite Index, a measure of total mortgage loan application volume, fell 4.6% in the latest week. In addition, the refinance index fell 3%, while the purchase index declined 6.1%.
Handshake of buyer and vendor of real estate
