Low Mortgage Rates and Home Prices Make Now a Good Time to Buy a Home
current mortgage rates and a slowing of home sales make now a good time to buy a home. Average 30 year mortgage rates today remain just above the record low at 4.23 percent. While the average rate is above 4.00 percent, there are plenty of lenders quoting 30 year rates below 4.00 percent if you're willing to pay points on a loan.
The past year 30 year mortgage rates have increased from the record low of 3.34% set in January 2013 but rates are still low, historically speaking. Over the past decade, average 30 year conforming rates have declined significantly and have remained low. The last time average 30 year rates were above 5.00 percent was back in January 2010. The last time 30 year rates were above 6.00 percent was back in May 2008 and the last time we saw rates above 7.00 percent was back in March 2002.
A report released by the National Association of Realtors shows existing home sales dropped in August, the first slip after four consecutive months of gains. Total existing home sales fell from 5.14 million in July to 5.05 million in August. The main reason home sales slowed is a decline in all cash purchase by investors.
The NAR report showed all-cash sales made up 23 percent of transactions in August, compared to 29 percent in July. Transactions completed by individual investors dropped from 16 percent in July to 12 percent in August. The average home buyer can't compete with investors offering all cash. Now that home price appreciation is slowing from the double digits to the single digits, investors/flippers are moving onto other investments.
As you can see, rates are still low right now so if you are thinking about buying a home and haven't yet, now is probably the best time to buy in your lifetime. If you're financing your home (like the vast majority of home buyers), low rates allow you to afford "more home." Low rates, however, are not the only reason to buy now.
Investors slowing purchases means less competition for buyers, especially for first-time home buyers who finance most of their home purchase. While, home prices are higher than the housing bust lows, prices in many areas of the country are still considerably lower than the prices were at the peak of the housing bubble.
For these reasons now is probably one of the best times to buy a home, or refinance a mortgage if you already own a home. Refinance rates and home prices will be moving higher in the coming years because of better economic growth, a lower unemployment rate and higher inflation. The recession and slow job growth the past 5 years has lowered demand for homes.
U.S. household formation was only at 434,000 for the month of June 2014, about one third of the long term average of 1,140,000 (Soure: Census Bureau). In fact, there is so much pent up demand for housing once the economic outlook is brighter all these buyers will rush into the market causing home prices to rise.
RatesORama.com Average Mortgage Rates