Mortgage rates ease back

The average 30-year, fixed-rate mortgage fell to 4.31 percent from 4.37 percent last week, according to Freddie Mac’s weekly survey. A year ago, the average rate was 3.49 percent.

The 15-year, fixed rate mortgage also decreased to 3.39 percent, down from last week when it averaged 3.17 percent. A year ago, the average was 2.8 percent.

"Mortgage rates eased for the second consecutive week which should help to alleviate market concerns of a slowdown in the housing market,” Frank Nothaft, Freddie Mac’s chief economist and vice president said in a statement. “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.”

In Virginia, residential sales volume (measured by the dollar value of real estate sold) passed an important milestone in the second quarter of 2013. Sales volume surpassed the volume sold in 2010 when sales were boosted by tax credit incentives. The 2010 comparison is important because the 2013 Virginia housing market has advanced beyond the peak of the 2010 market, despite significant economic stressors (government sequester) and without economic incentives (tax credits). All in all, the second quarter was strong and continues to exhibit signs of recovery.

Comparing the 2013 housing market to the 2010 housing market performance, inspired us to look back at sales volumes in the two years (2005 and 2006) prior to the peak “bubble” market in 2007 as possible benchmarks to recovery. A comparison of 2005-2006 sales volume to 2012-2013 shows that the Virginia housing market is well on its way back to normal. With unemployment rates continuing to fall and mortgage interest rates remaining low, we are looking forward to a strong market in July and August. The next two months may indicate whether we will continue to see encouraging numbers through the end of the year.

Analysis and commentary by Ted Koebel, Senior Research Associate, and Mel Jones, Research Associate, of the Virginia Center for Housing Research at Virginia Tech.

Click here for full Q2 2013 Home Sales Report