Housing starts reached the highest level since the start of the pandemic in October. Single-family homes accounted for most of the starts and reached their highest annual rate since 2007. Sellers and buyers came back into the market after taking a short electoral break.
Today's Mortgage Rates
The average rate for a 30-year fixed-rate purchase mortgage was 3.249% on Wednesday. The average rate for a 30-year refinance was 4.213%.
Money's mortgage rates include data from over 8,000 lenders across the United States and are updated daily. These rates include discount points and represent what a borrower with a 20% down payment and 700 credit scores — roughly the national average FICO score — would have been quoted.
|Mortgage Rates for November 19, 2020|
|Loan type||Average Rate|
|30-Year Fixed Loan||3.249%|
|15-Year Fixed Loan||2.425%|
|30-Year FHA Loan||3.149%|
|30-Year VA Loan||3.271%|
|30-Year Jumbo Loan||3.626%|
Source: Money | Date: Nov. 18, 2020 | Rates Assume a Credit Score of 700
Mortgage rates vary from state to state. On Wednesday, borrowers in Illinois were quoted the lowest mortgage rates — at 3.05%. People looking for mortgages in Nevada saw the highest average rate at 3.492%. Nationwide, borrowers with the highest credit scores, 740 and above, were quoted rates averaging 2.877%, while those with credit of 640 or below were shown rates of 4.649% — a 1.772 percentage-point spread.
You may be able to negotiate a lower rate if you shop around or if you have other accounts with the lender. (Money's picks for the best mortgage lenders are here.) Currently, some lenders are hiking up advertised rates to keep demand in check, so you may be offered a lower rate if you reach out directly.
Freddie Mac's widely quoted Primary Mortgage Market Survey put rates at 2.72% with 0.7 points paid for the week ending November 19, a 0.12 percentage point drop from last week's 2.84% and the 13th record low set this year. The mortgage purchaser's weekly survey reflects borrowers who put 20% down on conforming loans and have excellent credit.
Today's Refinance Rates
Money's survey also shows that the offered rate for a 30-year refinance for someone with a 740 credit score was 3.45% on Wednesday. Last November, the average mortgage rate (including fees) was 3.874%.
|Refinance Rates for November 19, 2020|
|Loan type||Average Rate|
|30-Year Fixed Loan||3.45%|
|15-Year Fixed Loan||2.762%|
|30-Year FHA Loan||3.624%|
|30-Year VA Loan||3.7%|
|30-Year Jumbo Loan||3.604%|
Source: Money | Date: Nov. 18, 2020 | Rates Assume a Credit Score of 740
A homeowner with a $200,000 mortgage balance currently paying 3.874% on a 30-year could potentially cut their monthly payment from $940 to $893 by financing at the current lower rates. To determine if it's worth it to refinance your mortgage, also consider the closing fees you paid on your current mortgage, how much your new lender is charging and how long you have left on your loan term. (Our picks for the best lenders for refinancing are here).
What else is happening in the housing market today?
New housing starts reached a seasonally adjusted annual rate of 1.53 million units during the month of October, the highest rate since February, according to the U.S. Census Bureaus' monthly new residential construction report. It's the second consecutive month of increases in the number of starts and represents a 14% increase from a year earlier.
Most of the starts were for single-family homes, with an annual pace of 1.179 million units, the highest level since 2007. By contrast, the starts for buildings with five units or more were at an annual rate of 334,000. The increase in single-family home construction is very welcome news to an industry that has been suffering from extremely low inventory for years, a problem that has been worsened by the pandemic. A surge in the housing market demand has been fueled by low interest rates and homebuyers looking for more space away from densely-populated cities.
"The rise in construction is in line with other data on homebuilder confidence, and should help to alleviate the supply and demand imbalances seen in most parts of the country," commented Joel Kan, the Mortgage Bankers Association's associate vice president of economic and industry forecasting.
Kan went on to note that the MBA is forecasting a continued high pace of single-family starts for next year, which would help bring the housing supply more in line with strong homebuyer demand and solid home price growth. "Combined, these trends will lead to a record year of purchase originations in 2021," added Kan.
The number of building permits issued stayed steady last month at an annual rate of 1.545 million, the same as in September and nearly 3% higher than last year. Single-family homes made up about three-quarters of the permits issued. Housing completions hit an annual rate of 1.343 million, down by 4.5% from September but 5.4% higher than last October's rate.
More immediate relief for the inventory shortage came in the form of home sellers coming back into the market. According to Realtor.com's Weekly Housing Report/Market Recovery Index for the week ending November 14, the number of new listings were down 7% from a year ago, an improvement over the 12% deficit from the previous week.
However, the trend over the past few weeks has been for a worsening in the housing inventory. Earlier in the year, the lack of new listings was tied to the high number of COVID cases. With the more recent surge in the number of infections, it remains to be seen whether last week's bump is a sign of improving supply or a temporary blip. Overall housing inventory has been 38% below 2019 levels for the past five weeks.
Meanwhile, median listing prices were up 12.6% year-over-year compared to 12.9% during the week ending November 7. It's the 14th consecutive week of double-digit gains. The pace of sales has also remained fairly steady, with homes selling about two weeks faster than last year.
Mortgage Tip of the Week
Buying a home can be daunting. Follow these expert tips to make the process easier.
Ralph DiBugnara, president of Home Qualified, on getting the most out of a virtual home tour:
For more information read: How to Buy a Home When You Can't See It in Person.