December 30, 2013
While Still Cheap, Higher Mortgage Rates Are Slowing Home Sales
The National Association of Realtors Pending Home Sales Index inched up a nominal 0.2 percent in November, the second lowest level for the seasonally adjusted index in 2013 and down 1.6 percent on a year-over-year basis, the third year-over-year decline in as many months.
As we wrote in August: Rising Rates Start Reeling In Pending Home Sales.
While higher borrowing costs are bearing the brunt of the blame for the slowdown in home sales, and mortgage rates have increased 35 percent from an all-time low of 3.31 percent in November of 2012 to around 4.5 percent today, keep in mind mind that mortgage rates remain over 30 percent lower than their average of 6.7 percent since 1990 and are nearly 50 percent lower than average over the past 40 years.
First Published: December 30, 2013 8:30 AM
Comments from "Plugged In" Readers
It hardly matters that rates are historically low when prices are historically high. Talking about rates in a vacuum is beyond pointless.
Posted by: rabbits at December 30, 2013 9:05 AM
So rates increase 35% in a year and sales react by falling 1.6%. Doesn't look like the bubble is bursting yet.
Posted by: Rillion at December 30, 2013 9:27 AM
Rillion and ed.,
Rates going from 3.31% to 4.5% increase the mortgage payment by 16%, not 35%
I think that's the way we want to look at it.
Posted by: asiago at December 30, 2013 10:07 AM
I don't see a slowdown in SF. Market, unforch, is still too hot around here.
Posted by: poor.ass.millionaire at December 30, 2013 5:41 PM