Home affordability at all-time high due to record-low mortgage rates and attractive home prices
It was a busy week in real estate news with several
reports being issued, and actions by the Federal
Reserve to help stabilize the economy. With
affordability at all-time highs due to record-low
mortgage rates and attractive home prices, this is
encouraging news for homebuyers and sellers.
First, the Commerce Department reported that permits for new construction
increased 3.2 percent in August, offering a glimmer of light for the new-home
market. A rising number of permits can be a forward-looking indicator of housing
starts in coming months, and later in sales of new homes.
In addition, the National Association of Realtors said that existing-home sales
increased in all regions in August, even despite regional disruptions created by
Hurricane Irene. Overall, sales of existing homes increased 7.7 percent from July
and were 18.6 percent higher than in August 2010.
This week, the Federal Reserve also announced Operation Twist, a program
intended to spur lending, induce businesses to expand and tempt consumers into
spending more. According to the Fed, the intended result is downward pressure
on longer-term interest rates and broader financial conditions that are more
accommodative. Economics are unpredictable, and while mortgage rates reacted
to this news by moving lower, things can – and have – changed quickly.
For consumers looking to make a purchase or refinance, the opportunity to
capitalize on historically low interest rates is right now.
SOURCE: Weichert Insights
