Rates hit new lows for the 13th time this year

Rates are beginning to hunker down and settle in as we enter the holiday season. The 30-year fixed rate mortgage fell 5 basis points to 2.85% while the 15-year fixed rate mortgage stayed in place at 2.40%.

current outlook:

The federal government will have to approve new spending legislation by December 11th or risk another government shutdown. Many CARES Act provisions are set to expire on December 26th, most of them offering supplemental unemployment benefits. All told, December is slated to be a busy month for policymakers and market data watchers alike.

Rates hit new lows for the 13th time this year

As Unemployment Improves, Real Estate Moves

The seasonally-adjusted ratio of unemployed persons to job openings is at 2.0, down from April’s peak of 4.6. In addition, the national unemployment rate fell 1.0% from last month to 6.9% in October. 

What does this mean for mortgages?

  • Improvements in unemployment numbers typically leads to improvements in home purchase activity
  • Mortgage purchase applications increased 22.5% on a four-week moving average basis from last year
  • According to Freddie Mac’s Primary Mortgage Market Survey, interest rates hit new lows for the 13th time this year


While the predominant housing trend we’ve seen this year is a desire for more space and privacy, there are also smaller trends to take note of. For instance, fewer custom homes are being built. There was a 7% drop in custom building starts in Q3 2020, and custom homes now represent only 19% of single-family homes. In comparison, at their peak in 2009, custom homes represented 31.5% of the single-family home market.

Home Prices Go Up, Up, and Away

Existing home sales increased 4.3% from September and 26.6% from last October, making this the fifth consecutive month of positive sales growth. In total, 6.85 million homes were sold. The last time so many units were sold was in November 2005.

A snapshot of where we are:

  • We are now down to 2.5 months of inventory (the time until supply is depleted if purchasing continues at current rates)
  • The median price of a home is now up to $313K, which is 16% higher than this time last year
  • This bodes well for new homes but may make it harder for first-time and low-income buyers to penetrate the market

“Weaker consumer spending data, which accounts for the majority of economic growth, drove mortgage rates to a new record low. While economic growth remains unstable, strong housing demand continues to have a domino effect on many other segments of the economy.”

SAM KHATER, Freddie Mac’s Chief Economist
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