Mortgage rates fell this week below 3%, following the downward trend of the 10-year Treasury yield. Freddie Mac reported today that the average rate on the 30-year fixed rate home loan fell to 2.97% from 3.04% the previous week. Although the economy is gaining momentum, the 10-year Treasury yield is declining as the expectations for higher inflation had already drifted up the rates. However, expect mortgage rates to rise in the following months.
These low mortgage rates continue to fuel home buying activity. NAR published existing-home sales figures today that were above 6 million units at a seasonally-adjusted annual rate in March. Compared to the historical average, this translates to nearly 710,000 more home sales. Moreover, total mortgage application volume surged 9% compared to the previous week, according to the Mortgage Bankers Association.
Meanwhile, demand is expected to increase further as employment is gaining momentum. Although layoffs are still happening, 3 in 5 people who lost their job at the beginning of the pandemic have already found another job. At the local level, in Michigan (5.2%) and Arizona (1.5%), there are more payroll jobs than the pre-pandemic average during 2017-2019. As more people re-enter the work place, the demand for housing is expected to increase as Americans set their sights on homeownership and mortgage rates remain historically low.
While housing inventory is at record lows, it’s very promising that housing starts rose to 1.74 million homes in March. At the local level, building permits rose in 40% of the metro areas in 2020. Nevertheless, there is still a way to go. Housing supply adjusts slowly over time. Developing new homes takes time, up to several years for large projects or 10 to 12 months for single-family homes, so home builders cannot instantly ramp up production to meet increased demand. In the meantime, our country has been underbuilding for the last decade, by about 5 to 6 million housing units. Thus, expect this housing shortage to continue for at least the next 15 years, putting upward pressure on home prices and eroding affordability.
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210 Realty Group offers a wide range of Real Estate Services in metro San Antonio to help find your next forever home, sell your current home or expand your investment portfolio. Our agents have years of experience in and around San Antonio and are ready to tackle all your real estate needs. We know that buying & selling can be very stressful, which is why we cater our services to fit your specific needs. Give us a call today at 210.515.4885 and see how 210 Realty Group can streamline the buying and selling process for you. We can help you determine what you should sell your current home for and what is a fair market price for your new home.
Xavier Turpin, Realtor 808.866.8807