Mortgage Rate Trends – Housing Inventory Data Remains Historically High

Fewer Americans moved in 2008 than in the past 16 years because they couldn’t sell their houses.  There is a great deal of pent up demand which could greatly help the housing industry if it is let loose.  It looks as if home sales are bottoming around 4.5 million, but this is deceiving as we continue to see rising foreclosures.  One half of all existing home sales are from distressed homes including short sales and foreclosures so the housing market really isn’t getting better.  The media will tell you differently but I will tell you the TRUTH!

Inventories are still very high so prices have room to go to the downside.  Home prices are DEFINITELY not bottoming.  As long as home prices are still declining we are not out of this financial crisis.  If you look at the New Home Supply graph you will notice that the uptrend in rising inventory has yet to be broken.  The United States is still SEVEN months above an average inventory supply for new homes.  We have seen a HUGE decline in new homes being built but it doesn’t matter if no one is buying the ones that have completed construction.

With this knowledge we can predict that mortgage rate trends are going to continue to fall.  If housing inventory is still climbing and home prices continue to fall, we still have a supply/demand imbalance.  The Obama administration will continue to lower mortgage rates, possibly to under 4%, if this imbalance continues into the future.  We do not know if lower mortgage rates will help us find a bottom in the housing market but one thing is for sure, it has definitely peaked the interest of the public.

Historical Mortgage Rates – Are We Really at an All Time Low?