Housing Starts for August rose better than expected and the highest level since last November - while Building Permits came in a bit shy of expected. All in all, a decent report, suggesting that while we are not out of the woods just yet, the worst in the housing market may have passed. Builders may be reluctant to further increase the supply of homes amid uncertainty over whether the Obama administration's $8,000 tax credit for first-time buyers will be extended beyond November, economists have said.
Homebuyers continue to have a good opportunity here. Historically low interest rates, the first-time homebuyer credit, and affordable home prices definitely make it an attractive time to buy a home. There's considerable uncertainty beyond the fall because the Federal Reserve at some point will stop buying mortgage-backed securities that have helped to keep rates low. Mortgage-Backed Securities (MBS) dictate long term home loan interest rates. When these bonds go up in value, home loan rates conversely go down.
Frank Nothaft, Freddie Mac vice president and chief economist was recently quoted saying "Interest rates for 30-year fixed-rate mortgages have averaged just above 5% through mid-September, which is roughly a percentage point below last year's average and suggests that 2009 may reach a record annual low since the survey began in 1971."
The clock is ticking for anyone looking to buy a home or refinance...
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