Housing Numbers Fall Along with Refinance Mortgage Rates

We had a few good months in the housing market with both previously occupied and new home sales. The mood on the street was lifting, while signs of a housing market stabilization were shining bright. Then the December numbers were reported.

Sales of previously occupied homes took the largest monthly drop in more than 40 years in December, marking a figure more dramatic than most had expected. December home sales were down nearly 17 percent and many are attributing this deep slide to the home purchase tax credit extension. Sales had been expected to fall by 10 percent, but December's sales fell 16.7 percent to a seasonally adjusted annual rate of 5.45 million, from an unchanged pace of 6.54 million in November, the National Association of Realtors said Monday.

2009 home sales closed out the year at 5.16 million, an increase of about 5 percent from the year earlier and the fist annual sales gain since 2005. This may sound good, but home prices fell by 12.4 percent, the largest decline since the Great Depression.

Regarding new home sales, it was reported today that sales fell 7.6 percent to a 342,000 unit annual rate from an upwardly revised 370,000 units in November. It was the second straight month that new home sales declined. For 2009, new home sales fell 22.9 percent to a record low 374,000 units.

There is great debate on the street as to whether home sales and prices will drop further form here. One camp cites the fact that inventories have fallen and that the tax rebate incentive has been continued through June. The other camp is stating that there is a huge inventory of foreclosures yet to hit the market while the jobs picture has not improved.

Most would agree that we have already experienced the worst of the housing downturn, but where we go from here will depend on a number of factors yet to be determined. Factors such as employment, loan modification programs, mortgage rates, and lenders opening their wallets a little wider.

So home value and lender programs are a key concern still, not only for those purchasing homes, but for those refinancing.

On the refinance mortgage rates front, we have experienced a drop once again. The lousy housing numbers are prompting investors to get a bit jittery and many are moving toward a flight to safety in US Treasury bonds. This is causing the treasury yield on the 10-Year bond to drop and mortgage rates have dropped along with it.

There is much concern that mortgage rates could rise significantly once the government’s mortgage-backed securities and Treasury buy-back programs come to an end, which is right around the corner.

We’ll have to wait and see if the government comes in to save the day once again in an effort to keep mortgage rates near the current all-time lows.

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May the Mortgage Refinance Rates be with You!

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