Are rising rates constraining home sales?
SocketSite reports that mortgage rates, which have been inching up recently, may be behind a minimal increase in pending home sales last month. However, the site counsels perspective.
“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,” the site says, “keep in 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.”
In its Pending Home Index for November, the National Association of Realtors found that there were home-sales increases in the South and West, while there were declines in the Northeast and Midwest. NAR chief economist Lawrence Yun said in a statement that the market was flattening: “We may have reached a cyclical low because the positive fundamentals of job creation and household formation are likely to foster a fairly stable level of contract activity in 2014.”
The index, which is a forward-looking indicator based on contract signings, went up 0.2 percent in November from a downwardly revised 101.5 in October.
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