Mortgage rate expected to end 2016 at 40-year low
The average mortgage rate for 2016 is expected to be 3.6 per cent, the lowest annual average in more than 40 years.
Freddie Mac’s latest outlook for the market says that mortgage originations are expected to surge in this quarter and are on course to hit $2 trillion for the whole of 2016, the highest total since 2012.
Home price appreciation has been upwardly revised from last month’s outlook, to 5.6 per cent for 2016 and 4.7 per cent in 2017; compared to the previous reading of 5.3 and 4.0 repectively.
Real estate firms remain positive despite sales slip
Growth and profitability in the real estate industry are still viewed with optimism despite some short-term challenges.
A survey by the National Association of Realtors highlights a decline in optimism in 2016 compared to last year mainly due to tight inventory affecting sales volume. However, the longer-term profitability of the industry is considered good.
“For a second year in a row, a majority of real estate firms have a positive outlook on profitability, with 91 percent of all firms expecting their net income to increase or remain the same over the next year,” said NAR President Tom Salomone, broker-owner of Real Estate II, Inc. in Coral Springs, Florida. “Although there is an overwhelmingly positive outlook, low inventory and high prices have led to an overall decrease in real estate firm’s sales volume since last year’s report.”
He added that high home prices are putting off first-time buyers.
The value of brokerage sales shown by the report was $6.3 million for residential and $4.5 million for commercial agents.
Forty-three percent of agents expect increased competition with 46 per cent expecting competition from virtual agencies.
Most of the firms surveyed (78 per cent) were single-office operations with an average of 3 licensees, up from an average of 2 last year.
Housing starts down almost 6 per cent
With home sales under pressure from tight inventory a decrease in new starts is not good news; in August there was a 5.8 per cent drop to a seasonally-adjusted annual rate of 1.14 million.
Figures from the HUD and Commerce Dept. also reveal that overall permit issuance was down 0.4 per cent.
“The August reading represents a one-month blip in what has been a long-term, gradual recovery,” said NAHB Chief Economist Robert Dietz. “On a year-over-year basis, single-family starts are up 9 percent while multifamily construction continues to level off at a solid level as that sector seeks to find a balance between supply and demand.”
The Northeast, Midwest and West posted respective gains of 7.6 percent, 5.6 percent and 1.8 percent, respectively. The South registered a 14.8 percent decline. The South was also the only region to show a decline in permits issued.