Doctors: Mortgage Rates Fall Slightly, Giving the Housing Market More Room to Grow


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October 7, 2019


Doctors: Mortgage Rates Fall Slightly, Giving the Housing Market More Room to Grow

Mortgage rates moved lower after two straight weeks of increases, which should allow the housing market to remain strong as we shift into the typically slower fall months.

In 2019, mortgage rates have increased only 11 times on a weekly basis.

Over the past week, multiple reports have come out showing that the decline in mortgage rates during August gave a major boost to the nation’s housing market.

“With both the unemployment rate and mortgage rate below 4% and near historic lows, it is no surprise that the housing market regained momentum with home sales and construction at or near decade highs,” Freddie Mac chief economist Sam Khater said in the latest report. “The fall housing market is poised to continue with steady gains in prices and solid sales activity.”

Real-estate agents and home-builders are likely breathing a sigh of relief that mortgage rates didn’t continue on the upward trajectory they’ve been on for much of September. The Mortgage Bankers Association reported Wednesday that mortgage applications dropped more than 10% for the week ending Sept. 20 from the previous week as a result of rising interest rates.

While much of that decline stemmed from a slump in refinances, mortgage applications for home purchases also fell on a weekly basis, indicating how rate-sensitive today’s home buyers are.

Source: Mortgage® | Jacob Passy

Looking Ahead: Upcoming Key Market Dates

Monday, October 7, 2019 Consumer Credit
Wednesday, October 9, 2019 Wholesale Inventories
Wednesday, October 9, 2019 FOMC Minutes
Thursday, October 10, 2019 Consumer Price Index

Construction spending inches forward 0.1% in August

Spending on U.S. construction during August was estimated at a seasonally adjusted annual rate of $1.287 trillion, rising 0.1% from the revised July estimate of $1.286 trillion, the U.S. Census Bureau said. August’s spending was 1.9% below a year earlier.

Spending on private construction was at a seasonally adjusted annual rate of $955 billion, nearly the same as the revised July estimate of $954.8 billion, and 4% below a year ago.

Of that, residential construction spending was at a seasonally adjusted annual rate of $507.2 billion in August, which is 0.9% above the revised July estimate of $502.5 billion but 5% down from a year ago.

A measure of homebuilder confidence in September revealed that although low-interest rates were fueling solid demand, concerns regarding economic uncertainty and affordability were dampening builder sentiment.

Nonetheless, according to the National Association of Home Builders and Wells Fargo, the Housing Market Index, which measures current sales conditions, inched forward to 73 points from 71 points, while buyer traffic rose to 50 from 48.

That being said, homebuilder expectations for the next six months fell from 71 to 70.

“Solid household formations and attractive mortgage rates are contributing to a positive builder outlook,” NAHB Chief Economist Robert Dietz said. “However, builders are expressing growing concerns regarding uncertainty stemming from the trade dispute with China. NAHB’s Home Building Geography Index indicates that the slowdown in the manufacturing sector is holding back home construction in some parts of the nation, although there is growth in rural and exurban areas.”