October 30th, 2013 10:36 AM by Preston Ware
October 30, 2013: The National Association of Realtors reported pending homes sales dropped 5.6 percent to the lowest level since December. The decline was the largest since May 2010. The index is based off of contracts signed last month. This index has now dropped four months in a row.
Some experts believe that the run up in interest rates over the last 6 months is holding back the economy. Freddie Mac the government agency reported median interest rates in May 2013 at 3.54% where they are now at 4.49% in September. Please keep in mind when quoting statistical averages and interest rates that the average usually includes .6% of a point origination fee charged.
I on the other hand typically quote a loan with no points charged.
Interest rates have actually shown a move in the downward direction recently as other poor economic numbers push the Federal Reserve’s policy of continuing to purchase American Mortgage Backed securities in an effort to keep rates low.
My opinion is that the reason for fewer contracts is simply a lack of inventory. Look across the state as home prices go up and volume is way down.
Manufacturing production edged up only .1% down from a .5% increase the month before.
These numbers are prior to the self-destructive month of October when our government chose to shut itself down. Look for worse numbers from the economy next month but a possible improvement in rates to continue.
For a day to day assessment of what is happening with regards to interest rates sit my Daily Rate Lock Advisory page.