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Instant Reaction: Mortgage Rates, August 26, 2021

Thursday Aug 26th, 2021

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"Mortgage rates showed little movement this week despite positive news on the Delta variant. According to the mortgage finance provider Freddie Mac, the 30-year fixed mortgage rate inched up to 2.87% from 2.86% the previous week. Thus, mortgage rates stayed below 3% for the last 9 weeks. What comes next? Mortgage rates will likely rise in the following months as inflation may last longer than expected. NAR forecasts the 30-year fixed mortgage rate to average 3.2% from October through December.

Even though home prices continue reaching new record highs, would-be homebuyers are rushing to benefit from historically low mortgage rates. In July, existing home sales rose by 2% and new single-family home sales increased by 1%. These headline figures are seasonally adjusted estimates and are reported in the news. However, for everyday practitioners, the simple raw counts of home sales are often more meaningful compared to the seasonally adjusted figures. The raw count determines income and helps better assess how busy the market has been. Specifically, 584,000 existing homes were sold in July. Although this is a 5% decrease from the previous month, 12% more existing homes were actually sold last month compared to the number of homes that are typically purchased in July. In July, 63,000 new single-family homes were sold. Compared to the historical level of new homes that are sold in July, we are seeing that 9% more new single-family homes were sold last month."

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