What’s Ahead For Mortgage Rates This Week – August 2, 2021

Last week’s economic reporting included readings on home prices, new and pending home sales, and the post-meeting statement of the Fed’s Federal Open Market Committee. Weekly readings on mortgage rates and jobless claims were also released.

S&P Case-Shiller Home Price Indices: Home Price Growth Breaks Records for Second Consecutive Month

According to the Case-Shiller Home Price Index, national home prices grew by 16.60 percent year-over-year in May. Similarly, April’s reading reported year-over-year home price growth of 14.80 percent. That said, home price growth broke records for the second month in a row in May. Overall, S&P Case-Shiller’s 20-City Home Price Index reported top home price growth in Phoenix, Arizona, Seattle, Washington, and San Diego, California, again held the top three positions for US home price growth.

As the data suggests, home price growth exceeded expectations in the months since the covid pandemic arose as homeowners and homebuyers sought to relocate to less populated areas. Demand for homes continued to exceed inventories of homes for sale; this trend has driven home prices beyond the reach of many first-time and moderate-income buyers.  While affordability issues won’t be resolved overnight, some slowing in growth with home prices suggested that the national housing boom was easing as demand for homes slowed.

Nevertheless, affordability became an obstacle for homebuyers who could not compete with rapidly escalating home prices, high demand for homes, and buyers prepared to make cash offers.

New and Pending Home Sales Fall

Rapidly rising home prices and few choices among available homes caused new home sales and pending home sales to fall in June. Homebuyers were frustrated with low inventories of homes and high home prices. Pending home sales fell by 1.90 percent in June; analysts expected an increase of 0.50 percent for pending home sales. In contrast, pending home sales in May rose by 8.30 percent.

Yet, June sales of new homes fell to a year-over-year pace of  676,000 sales as compared to May’s reading of 724,000 sales of new homes. Despite this, analysts still expected a year-over-year sales pace of 795,000 new homes sold.  This was the lowest pace for sales of new homes since the onset of the pandemic.

Current Mortgage Rates, Jobless Claims Mixed

In other news, Freddie Mac reported mixed changes in average mortgage rates last week. Rates for 30-year fixed-rate mortgages rose by two basis points to 2.80 percent, but the average rate for 15-year fixed-rate mortgages fell by two basis points to 2.10 percent. The average rate for 5/1 adjustable rate mortgages also fell by four basis points to 2.45 percent. And discount points averaged 0.70 percent for fixed-rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages.

Additionally, new jobless claims fell to 400,000 first-time claims filed. This is in comparison to the previous week’s reading of 424,000 claims filed. Moreover, continuing jobless claims rose to 3.27 million ongoing claims filed last week, compared to the 3.26 million ongoing jobless claims filed in the previous week.

Furthermore, the Federal Open Market Committee of the Federal Reserve announced that it did not raise the Federal Reserve’s key target interest rate range of 0.00 to 0.25 percent.

Lastly, the University of Michigan’s Consumer Sentiment Index for July was released with an index reading of 81.2; a reading of 80.5 was expected based on June’s index reading of 80.8.

The Latest Numbers for WA, OR, ID, and CO

Washington State mortgage rates hit 2.66% and 2.35% for conforming 30-year mortgages and 5/1 ARMs, and for jumbo loans, the numbers in the state are 2.86% and 2.58% for 30-year mortgages and 5/1 ARMs, respectively.

Mortgage rates In Oregon for conforming loan rates are 2.60% for 30-year mortgages and 2.32% for 5/1 ARMs. For jumbo loans, the numbers are 2.69% for 30-year mortgages and 2.49% for 5/1 ARMs.

Mortgage rates in Idaho for conforming loans for 30-year fixed-rate mortgages are 2.53% and 2.28% for 5/1 ARMs, while for jumbo loans, the numbers for each loan type are 3.04% and 2.59%, respectively.

Mortgage Rates for Colorado for conforming loans for 30-year fixed-rate mortgages are 2.66% and 2.23% for 5/1 ARMs. For jumbo loans, the numbers for each loan type are 2.98% and 2.59%.