Mortgage rates hit record low, existing home sales fall
By Ariana Eunjung Cha
Mortgage rates fell percent to a record low on Thursday, but the declining rates haven't been enough to spark sales in a housing market struggling with high unemployment, tightened lending and rising foreclosures.
This is the fourth time in five weeks that mortgage rates have fallen. The average for 30-year fixed loans was 4.56 percent, down from 4.57 percent last week., the lowest since Freddie Mac began tracking the numbers in 1971. For 15-year fixed loans, the average was 4.03 percent, down 4.06 percent from last week.
"The decline in mortgages rates over the past few weeks echoes the recent signs of weakening confidence in the strength of the economy, particularly the housing and consumer sectors," Frank Nothaft, vice president and chief economist for Freddie Mac, said in a statement.
Sales of previously occupied homes fell again in June, by 5.1 percent, to a seasonally adjusted rate of 5.37 million, the National Association of Realtors reported on Thursday.
The West experienced a 9 percent decline from a month earlier, while the Midwest saw a 7.5 percent decline, and the South a 6.5 percent fall. The Northeast was the exception, with home sales rising nearly 8 percent.
Nationwide the median sales price was up 1 percent from a year earlier at $183,700.
Economists expect the numbers to get worse as the year continues and the federal tax credits of up to $8,000 for homebuyers are phased out. To be eligible for the credit, purchasers have to close their transactions by the end of September. Congress had initially set the deadline for June 30, but recently extended it.
While sales are up 19 percent from a lowpoint of 4.5 million in January 2009, they are still off 26 percent from the peak of 7.25 million sales in September 2005.
Ariana Eunjung Cha
July 22, 2010; 11:52 AM ET
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