Highest sales pace since February 2007
November 2016 U.S. home sales rose as buyers looked to lock in low mortgage rates. The National Association of Realtors reported that existing home sales increased 7/10 of 1%. Sales were strong in the Northeast and South but fell in the Midwest and West with overall sales up 15+% year-over-year.
The Federal Reserve increased the Fed Funds rate 25 basis points in December. The forecast for next year is at least three more moves helping to push 30-year mortgage rates towards the 4.5% to 5% levels. Clearly, the more hawkish tone by the Fed will be influenced by the overall market. If the president-elect Trump stimulus doesn’t take place and the market slows or stalls monetary easing will begin again. Given the current state of play, we believe that’s an unlikely scenario in 2017.
Although mortgage applications have been down this year, activity has picked up in November. A 30-year fixed-rate mortgage with conforming loan balances increased from 4.28% to 4.41%, or 13 basis points. More affluent buyers are a higher percentage of the activity using gains from their sale to trade up. The buyer on the margin find these interest rate moves more daunting as their purchasing power quickly fades with each additional 10 basis point move in mortgage rates. If interest rates continue to move higher, the buyer on the margin will have to seriously consider adjustable-rate mortgages as a possible solution for their funding.
The Meier Team has been closely tracking the NYC real estate market (12 signed contracts in the last 6 weeks), interest rates, stock market and market sentiment. If you are thinking about buying or selling property in New York, you should speak to us first. We would be happy to share our expertise.