Mortgage rates tick up, remain historically low

SILVER SPRING, Md. – U.S. long-term mortgage rates ticked up this week but remain at historic lows as the coronavirus pandemic continues to batter the economy even as more Americans get vaccinated.

Mortgage buyer Freddie Mac reported Thursday that the average rate on the benchmark 30-year fixed-rate home loan rose to 2.81% from last week’s 2.73%. One year ago, the rate was 3.49%.

The average rate on 15-year fixed-rate loans, popular among those seeking to refinance their mortgages, rose to 2.21% from to 2.19% last week. A year ago it was 2.99%.

The 5-year adjustable rate mortgage averaged 2.77%, down from last week’s 2.79%. It averaged 3.25% one year ago.

While economists expect modest increases in home-loan rates this year, they likely will remain low with the Federal Reserve keeping interest rates near zero until the economy recovers.

Record-low lending rates have helped push buyers into the housing market, but a lack of supply has left many prospective buyers empty handed. The lack of supply was pushing prices up even before the pandemic struck last March.

Although the housing market has been one of the stronger sectors of the U.S. economy since early summer, the overall economy remains at the mercy of the ongoing pandemic.

The number of Americans applying for unemployment aid rose last week to 861,000, evidence that layoffs remain elevated despite a steady drop in the number of confirmed viral infections. About 1.7 million Americans are getting vaccinated each day, although those efforts have been complicated by recent winter weather in many parts of the country.

Construction falls 6%while new applications spike

WASHINGTON – U.S. home construction fell 6% in January but applications for building permits, which typically signal activity ahead, rose sharply.

The decline pushed home and apartment construction down to a seasonally adjusted rate of 1.58 million units last month, compared with 1.68 million in December, the Commerce Department reported Thursday.

Single-family construction starts dropped 12.2% while construction of apartment units rose 16.2%.

Even with the January dip, ultra-low mortgage rates and rising demand from Americans ready for a bigger house after a year of living in a pandemic will in all likelihood mean a strong year for the housing market in 2021.

Hints of a sustained housing push could be found Thursday in the Commerce numbers.

Applications for building permits, considered a good sign of future activity, spiked 10.4% in January to an annual rate of 1.88 million units.

And strong sales this year would only extend a banner 2020 when home construction jumped 7% to 1.38 million units. That was the strongest showing since a housing boom in 2006.

“We still expect recovering demand, low mortgage rates and a shortage of supply to support a healthy rate of new home construction and the risk may be for further upsides surprises,” said Nancy Vanden Houten, lead economist at Oxford Economics.

Still, Vanden Houten expects the pace of housing construction will moderate somewhat this year as the desire to build collides with high lumber prices and well as a shortage of available land and workers.

Construction fell 12.3% in the Midwest and 11.4% in the West. It dropped 2.5% in the South. The only region of the country that saw an increase last month was the Northeast, where construction rose by 2.3%.

From wire reports