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Published: Aug 14, 2020 6 min read

New home purchases increased in July as builders make up for lost time and buyers took advantage of near record low interest rates to invest in the real estate market.

According to the Mortgage Bankers Association's Builder Application Survey, new home sales in July were up a seasonally adjusted 15% over the month of June, and 39% year-over-year. The MBA estimates that the pace of new single-family homes sales in July was at a seasonally adjusted annual rate of 890,000 units. The adjusted annual pace of units sold in June was 774,000.

"Typically, new home purchases peak in April and then decline through the remainder of the year. With the disruption this spring, seasonal patterns are not holding, and hence the seasonal adjustment is likely overstating the increase for this month," says Joel Kan, head of forecasting for the MBA. "While this is a signal of still strong demand for housing, we remain concerned about supply. Housing starts have not kept up with demand and this could hold back the pace of sales in the coming months"

The buying season has been pushed back from spring to summer as a result of pandemic related lockdowns and stay at home orders. While homebuyers have come back in force, low housing inventory remains a concern for a continued recovery.

Week in Review

Mostly positive housing news dominated this week, as indications of a continued rebound in the real estate market were evident, although a new refinance fee imposed by Fannie Mae and Freddie Mac could put a damper on that part of the mortgage market.

Mortgage rates remained below 3% for the third week in a row, fueling a 2% increase in purchase loan applications and a 9% increase in refinance applications. Both were well above year-ago levels with increases of 22% and 47% respectively. Meanwhile, the number of loans in forbearance plans continued its downward trend. The Mortgage Bankers Associated estimated that 3.7 million homeowners were still taking advantage of the payment deferral plans, down from the previous week's 3.8 million and the mid-April peak of 4.3 million.

Bidding wars are still taking place, as more than half of offers made by real estate brokerage Redfin were competing against at least one other offer. Some hope for an easing of the housing shortage surfaced in Realtor.com's Weekly Recovery Index, indicating that new listings coming on the market had reached January 2020 levels, although still 6% lower than 2019 numbers.

On Wednesday Fannie Mae and Freddie Mac announced a fee that would be added to refinance loans. It is estimated that this new fee could increase the cost of refinancing a home by $1,400, and was met by opposition by several mortgage banking organizations.

What are people paying for mortgages right now?

Borrowers with 700 credit scores were charged an average of 3.549% to secure a 30-year fixed-rate purchase mortgage on Wednesday, according to Money's survey of over 8,000 mortgage lenders across the country. The average rate for a 30-year refinance was 4.435%.

Average Refinance Rates Today

A homeowner with excellent credit who qualifies for the lowest rates as reported by Freddie Mac can save a significant amount of money when refinancing. A year ago the average mortgage rate was 3.60%. A homeowner with a $250,000 mortgage balance paying 3.60% on a 30-year loan could cut their monthly payment from $1,137 to $1,049 by financing at today’s lower rates. (It is important to consider closing fees and that refinancing could reset the clock on your mortgage, meaning you will have to make payments longer.)

What are today’s advertised rates?

Of course, mortgage rates vary widely by location and personal factors like the size of your down payment and your credit score. Here are today’s advertised mortgage rates at some of the mortgage industry’s largest lenders. (All rates are APRs. The rates you see may be different.)

JP Morgan Chase

Based in New York, JP Morgan Chase has nearly 5,000 U.S. branches.

Mortgage rates advertised for August 14:

30-year fixed: 2.955%

15-year-fixed: 2.653%

(Rates based on New York City zip code 10006.)

Wells Fargo

Based in San Francisco, Wells Fargo has more than 7,000 locations.

Mortgage rates advertised for August 14:

30-year fixed: 3.122%

15-year-fixed: 2.828%

5-year ARM: 2.914%


Quicken, a non-bank lender based in Detroit, is the nation’s largest mortgage lender by dollar origination volume.

Mortgage rates advertised for August 14:

30-year fixed: 3.49%

15-year-fixed: 3.178%

Bottom Line:

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