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May 31st, 2012 (Modified on May 30th, 2017)

With sales, prices up and down, mortgage rates remain stable

by Peter Miller


Housing Market Trending DownIt seemed as though the real estate market might actually be showing signs of stability last week. Stability is a pretty big deal when you consider where we’ve been and what we’ve been dealing with since the market reached its peak in 2007.

Home sales

On May 22, the National Association of Realtors reported that sales and prices for existing homes were 10 percent higher than a year ago. A day later, the Census Bureau said that new home sales had increased 3.3 percent between March and April and 9.9 percent when compared with the same period in 2011.

The NAR numbers are significant because they show how the market has changed over a 12-month period. The figures for new homes–despite the extensive publicity they received–are far less certain.

Construction activity

The different levels of construction activity between March and April could have been caused by any number of reasons, the biggest issue being changing weather patterns. Too much rain in one month and not the other could easily impact final totals.

No less important, the margin of error for the new home totals is huge. According to the Census Bureau, “Sales of new single-family houses in April 2012 were at a seasonally adjusted annual rate of 343,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 3.3 percent (±12.3%)* above the revised March rate of 332,000 and is 9.9 percent (±14.7%) above the April 2011 estimate of 312,000.”

In other words, the margin of error for both the short-term and the long-term reports was actually greater than the reported changes. It’s entirely possible within the margin of error that there was no change at all and even that new construction declined.

Case-Shiller numbers

Now we have the latest S&P Case-Shiller reports. Case-Shiller tracks national housing trends as well as pricing in 10-city and 20-city composites. As of March, all three measures have declined around 2 percent and are now at post-crisis lows.

Which numbers can you believe?

The real estate indicators we have at our disposal are in conflict with one another. Part of the reason is that different time frames and methodologies are used. So, which numbers can you believe?

For most people, the answer is not going to be found in a news release or online report. Instead, homeowners and homebuyers should look up and down their streets and see what’s going on in their neighborhood.

While various sales and pricing figures may be hard to interpret, there’s little doubt when it comes to mortgage rates which keep bumping along at historically low levels. For April 2012, HSH.com reported that 30-year fixed-rate (conforming, non-conforming and jumbos) financing was available at an average of 4.21 percent. A year ago, HSH.com reported that the average rate for 30-year fixed-rate mortgages was 5.13 percent.

So while home prices and home sales continue to ratchet up and down, mortgage rates continue to be the most stable force in the real estate marketplace.

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About the HSH Blog

HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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