Low Mortgage Rates Help Spur Home Sales

Mortgage interest rates continued to drift downward last week for the fifth consecutive week, reaching new record lows.  This is good news for prospective home buyers.  So far this year, interest rates on 30-year and 15-year fixed rate mortgages have averaged one percentage point below their respective averages in 2008.

“Low mortgage rates and the cumulative decline in house prices have contributed to an extremely affordable housing market and helped spur home sales this year,” said Frank Nothaft, Freddie Mac’s chief economist.  “For instance,” he said, “total new and existing home sales in October were 36% higher than their January low on a seasonally adjusted, annualized rate, according to the U.S. Census Bureau and the National Association of Realtors (NAR).  The NAR also reported that pending existing home sales rose for the ninth straight month in October, representing the longest consecutive gain since the series began in 2001.”

Sales of new single-family homes in October were at a seasonally adjusted annual rate of 430,000, which was 6.2% above the revised September rate of 405,000.  Existing-home sales, including single-family, townhomes, condominiums and co-ops, surged 10.1% in October to a seasonally adjusted annual rate of 6.1 million, up from a downwardly revised pace of 5.54 million in September.

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