As expected, low mortgage interest rates boosted August existing home sales and refinance originations. Freddie Mac indicated that rates fell from 3.77% in July 2019 to 3.62% in August 2019 and those percentage points make a difference. Think 4.54% throughout all of 2018 and go from there.
Let’s look at August existing home sales first. According to the National Association of REALTORS® (NAR), August existing home sales soared to a 17-month high. Prices also increased +4.7% in one year as persistent low supply concerns continued to push those prices ever upward. Again according to NAR, the median price of existing homes hit $278,800, an increase of +4.7% from last year. Condo prices also increased +5.2% over last year to a medina price of $257,600. August 2019 was the 90th consecutive month of y/y price gains.
The regional breakdown for existing home sales and prices in August looked like this:
- Sales up +7.6% from 7/19 and +1.4% from 8/18
- Median price of $303,500 or -0.3% from 8/18
- Sales up +3.1% from 7/19 and +2.3% from 8/18
- Median price of $220,000 or +6.6% from 8/18
- Sales up +0.9% from 7/19 and +3.6% from 8/18
- Median price of $240,300 or +5.4% from 8/18
- Sales down -3.4% from 7/19 and +1.8% from 8/18
- Median price of $415,900 or +5.7% from 8/18
Additionally, housing starts spiked to a 12-year high in August 2019.
Looking at refinancings, Ellie Mae’s Origination Insight Report in August indicated, “The drop in interest rates month/month continues to drive up the percentage of refinances, which accounted for 43% of all loans in August, up from 38% the month prior.”
In the eighth consecutive month of rate drops, the 30-year note rate in August 2019dropped to 4.07% from 4.17% in July 2019. Closing rates on refinances dropped to 72.5%; FHA refinances climbed from 24% to 27%; conventional refinances rose from 42% in July 2019 to 46% in August 2019; and VA refinances rose from 31% in July to 34% in August 2019.
Jonathan Carr, President and CEO of Ellie Mae, said, “Interest rates continue to decline and we’re seeing homeowners capitalize on the refinance opportunity throughout the month of August. As we enter the fall and the market expects further rate cuts from the Fed (which came to fruition in September 2019), we’ll watch to see if the share of refinances continues to climb further.”