E Economics

US House Prices Skyrocketed As The 30-Year Mortgage Rate Hit A 5-Month Low

24 July, 2021
30-Year Mortgage Rate

Latest real estate indexes confirmed that US housing prices growth remained strong in June. The trend is unlikely to weaken sharpy in July in a context where the 30-year mortgage rate kept falling and recently hit a 5-month low.

Housing Prices Rose Most In Decades

First data for June confirmed that housing prices growth remained robust in June. Earlier this week, the National Association of Realtors highlighted the median existing-home price rose to $363,300, in June, up 23.4% from a year earlier, reaching a record high amid limited inventory.

Meanwhile, “Home value appreciation broke annual records for the second month in a row, growing 15% year-over-year in June – the highest in Zillow data reaching back through 1996.

Finally, Rick Palacios Jr. (Director of Research at John Burns Real Estate Consulting) also posted a chart on Twitter showing that Home Value Index accelerated on a YoY basis in June (but the pace of growth appears to be moderating compared to prior months).

30-Year Mortgage Rate Declined To A 5-Month Low

According to Freddie Mac, the 30-year fixed-rate mortgage (FRM) averaged 2.78 percent for the week ending July 22, 2021 (the lowest since early February). It was down from the previous week when it averaged 2.88 percent (the largest weekly drop since November 2020). This week’s drop in the 30-year mortgage rate marks a second-consecutive 5-month low following four straight weeks of declines. A year ago at this time, the 30-year FRM averaged 3.01 percent.

Over the same period, Freddie Mac report also showed the 15-year fixed-rate mortgage declined significantly. It averaged 2.12 percent (lowest on record), down from 2.22 percent last week (the largest weekly fall since April 2020). A year ago at this time, the 30-year FRM averaged 2.54 percent.