Home affordability at all-time high due to record-low mortgage rates and attractive home prices

Home affordability at all-time high due to record-low mortgage rates and attractive home prices

It was a busy week in real estate news with several

reports being issued, and actions by the Federal

Reserve to help stabilize the economy. With

affordability at all-time highs due to record-low

mortgage rates and attractive home prices, this is

encouraging news for homebuyers and sellers.

First, the Commerce Department reported that permits for new construction

increased 3.2 percent in August, offering a glimmer of light for the new-home

market. A rising number of permits can be a forward-looking indicator of housing

starts in coming months, and later in sales of new homes.

In addition, the National Association of Realtors said that existing-home sales

increased in all regions in August, even despite regional disruptions created by

Hurricane Irene. Overall, sales of existing homes increased 7.7 percent from July

and were 18.6 percent higher than in August 2010.

This week, the Federal Reserve also announced Operation Twist, a program

intended to spur lending, induce businesses to expand and tempt consumers into

spending more. According to the Fed, the intended result is downward pressure

on longer-term interest rates and broader financial conditions that are more

accommodative. Economics are unpredictable, and while mortgage rates reacted

to this news by moving lower, things can – and have – changed quickly.

For consumers looking to make a purchase or refinance, the opportunity to

capitalize on historically low interest rates is right now.

SOURCE: Weichert Insights