Fears of housing slowdown abate as rates ease

by Adam Smith25 Jul 2013

Mortgage rates have eased further, perhaps alleviating fears of a housing market slowdown.

Freddie Mac's Primary Mortgage Market Survey has shown average fixed mortgage rates falling for the second consecutive week. The average 30-year fixed-rate mortgage edged downward to 4.31% from 4.37% last week, while the average 15-year rate fell from 3.17% to 3.16%.

But rates remain well up on a year ago. Freddie Mac data indicated that the average 30-year fixed-rate at the same time last year was 3.49%, while the average 15-year fixed rate was 2.74%.

While rates may have trended upward, Freddie Mac vice president and chief economist Frank Nothaft said this week's decline should alleviate some fears over a housing market slowdown in the wake of rising rates.

"Thus far, existing home sales for June were the second highest since November 2009 and new home sales were the strongest since May 2008. In addition, the low inventories of homes for purchase are putting upward pressure on house prices. For instance, the FHFA purchase-only house price index increased for the 16th consecutive month in May and was 7.3% above the May 2012 figure; May's index level was the highest since September 2008," Nothaft said.

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