This week's hot news: Mortgage rates have dropped once again. So why aren't more homebuyers taking advantage?

Hi everybody,  It’s Joe Hillner with Your Home Sold Guaranteed Realty, where we will list, market and sell your home for just a 1% commission, guaranteed! 

Ok, so every week, I share market data to keep you informed with the local real estate market.  
Here is this week’s Boca Market Watch.

First, Single Family Homes:

This past week, another  down week with only 46 new homes on the market, ranging from 95,000 to $5 Million.   14 homes back on the market, while 24 homes listed took a price decrease, and 8 sellers raised their asking price.  And  another so so week with 50 different properties under contract, and only 23 going pending.   And just 17 homes were unsuccessful in selling and were taken off the market or the listing expired outright.  And a really poor week with only 46 homes sold in the past week,  ranging from $332K to $7.8 Million. 

Next up, Condos and Townhomes:

5571ew listings, not too bad and ranging from $57 Grand to $5.4 Million.  
25 units came back on the market, 27 properties with a price decrease, and 7 sellers with an increase.  44 different properties went under contract, and another 33 went pending, a quiet week. And like the last few weeks only 19 condos or townhomes were unsuccessful in selling and were taken off the market or the listing expired.  80 closed sales this week, a decent week for condos, and ranging in price from $65 Grand to $3.3 M!

Here's what's making news right now.

Low mortgage rates are helping rekindle homeowners’ motivation to refinance their loans, but a builder backlog, ongoing listings shortages and rising home prices are likely to prevent a similar stampede by homebuyers hoping to take advantage of the drop in rates.


That’s according to the latest forecast from Fannie Mae economists, who now project homes sales will grow by just 3.1 percent this year, down from the 3.8 percent annual growth predicted last month.

Mortgage rates have dropped yet again - the 30 year fixed rate is now in the 2.7 - 2.8% range.  Why is that?  Slower than expected economic growth in the 2nd Quarter, plus a surge in COVID cases due to the Delta variant has led the Federal Reserve to continue to buy mortgage backed securities, and that tends to push rates down.

Fannie Mae is now predicting that rates will stay around 3% well into 2022, much longer than originally expected.  And the Fannie Mae economists have downgraded their forecast for home sales in the second half of this year.

That drop could be a result of homebuilders turning down orders to give themselves time to catch up on construction backlogs. In their second quarter earnings calls, many builders spoke of throttling back their order books in the face of supply disruptions, high cost of materials , and scarcity of labor .

While the recent surge of COVID-19 cases appears to be affecting consumer behavior, the economic response so far has been modest compared to last year’s outbreak, and its impact is slightly to the downside.

Fannie Mae says, “For the housing market, at current case levels, the lack of inventories of homes for sale and continued supply chain bottlenecks experienced by homebuilders remain the primary constraints on home purchase activity. Moreover, while mortgage rates have drifted downward and in theory provide greater purchasing power to potential borrowers, in practice, given current supply-side and affordability challenges, we expect that benefit to be limited.”

What does all this mean?  The past two months of declining mortgage rates would normally lead us to expect a greater increase in home sales over the latter half of the year, as rate drops typically induce more homebuying. But the historically low level of inventory for sale suggests that any rate-related increase in sales will be muted due to the inadequacy of listings needed to fulfill higher buyer demand. This  means more upward pressure on prices, pure and simple.

Stay tuned as we watch to see what's next...