WASHINGTON (7/31/13)--Interest rates on mortgages continued climbing, existing-home prices rose, and home ownership dove to an 18-year-low, according to three separate reports released Tuesday.
Mortgage prices in June increased 0.15% from May, according to the Federal Housing Finance Agency (FHFA). The national average contract rate for pre-existing homes was 3.55% for loans closed in late June. The contract rate on the composite of all mortgage loans was 3.55%, up 15 basis points (bp) from 3.40% in May.
Interest rates typically are locked in 30 to 45 days before a loan is closed, which means the June data reflect market rates from mid-to-late May. The effective interest rate was 3.67%, up 10 bp from 3.57% in May. Effective interest rate accounts for adding in initial fees and charges over the term of the mortgage.
The average interest rate for a 30-year, fixed-rate mortgage of $417,000 or less was 3.76% in June, up 18 bp. The average loan amount for all loans was $282,400 in June, an increase of $1,800 from $280,600 in May, said FHFA.
On the home price front, home prices in 10 major U.S. cities increased 11.8% in the year ended in May, said Standard & Poor's/Case-Shiller home price index (The Wall Street Journal and Moody's Economy.com July 30). Home prices in 20 cities had risen 12.2% on the year. Economists surveyed had projected a gain of 12.4%. Seasonally adjusted, the 10-city index rose 2.5% in May from April and the 20-city index rose 2.4% for that period.
House prices grew robustly, said Moody's, which pointed out that the growth is concentrated mostly in the West, while prices dipped in Georgia and Florida.
Meanwhile, homeownership in the U.S. for the second quarter was unchanged from first quarter, according to Census Bureau data released Tuesday (Bloomberg.com July 30). Ownership is currently at an 18-year-low, expected to hit about 64% in the next year when families in foreclosure have ended that process and enter rental homes, said London-based Capital Economics Inc. in an analysis of May figures.
First-time buyers and minorities have seen the sharpest declines in home ownership since the financial crisis. About 81% of senior citizens own homes and that is little changed, said Bloomberg. However, only about 37% of those younger than 35 owned homes, compared with 42% five years earlier.