For the first time in months, the average 30-year fixed-rate went above 3.00%. Those who refinanced earlier this year or last year are set for the life of their mortgage. Those who have not refinanced may be kicking themselves. It seemed too good to be true for the rates to last that long at those low levels.
Good days are ahead still, according to Fannie Mae and the Mortgage Bankers Association.
Demand for homes will be bolstered by an improving job market, favorable demographic trends, and mortgage rates that, while rising, are still low from a historical perspective. The unemployment rate, which was at 6.2% in February, is expected to drop to 4.7% by the end of the year.
Another positive sign: more than 15% of the U.S. population has received at least one vaccine dose at this point.
With the improvement of our economic picture as a nation, comes upwards pressure on rates while inflation rises. Freddie Mac is forecasting that rates will be around 3.500% by the end of this year. As long as rates stay at or below these levels, buyers will not be dissuaded from getting into the housing market.
The good news for sellers: prospective homebuyers showed that 27% of millennial respondents planned to buy a home in the next 12 months, up from 19% in last year’s survey. Purchase applications have risen by double-digit percentage points so far this year. Existing home sales are at their highest level in 15 years.
The biggest challenge facing buyers is the lack of inventory. This is leading to bidding wars and raised prices. Homebuilders are increasing the pace of construction, but continue to struggle with supply chain issues. Lumber prices have increased more than 180% since last spring. According to the National Association of Home Builders (NAHB), these jumps in input costs have caused the price of building a new home to increase by more than $24,000 over the past year.
All in, the combination of robust demand for housing, constrained buy growing supply, and rapidly rising home prices will result in a strong spring market and a record level of purchase volume for the year.
We can set you up for success if you are looking to buy property this year. Give us a call to understand what you can afford and how you can buy your dream home.
Ken Thayer – firstname.lastname@example.org