Mortgage Rates Plummet



Mortgage Rates Plummet

The market value of U.S. housing increased $1.9 trillion last year according to a report released by Zillow This Week in Real Estate resulting in a total value of $33.3 trillion. Below are a few highlights from the first week of January that influence our business:

U.S. Housing Market Value Climbs to $33.3 Trillion in 2018

In 2018, the total value of the U.S. housing market increased $1.9 trillion, propelling its value to a whopping $33.3 trillion, according to new data from Zillow. This 6.2% increase is up $10.9 billion from 2012, when the housing market crashed. Zillow Senior Economist Aaron Terrazas said seen from the rearview mirror, 2018 was a year of unusually strong, stable home value growth across the country. “During the second half of the year, appreciation slowed sharply in the priciest corners of the country while it picked up in affordable hotspots,” Terrazas said. “Housing wealth may have touched new highs this year, but home value gains don’t translate into dollars in the bank account unless homeowners opt to sell or borrow against their home and, in contrast to previous housing booms, many Americans have been more reluctant in recent years to spend against their home’s worth,” Terrazas said.

Mortgage Rates Lowest in Nearly a Year

Mortgage rates have been plummeting, depending on your definition of the word. To be sure, the past 2 months have no competition in nearly 3 years. The past few days have been special in their own right. Whereas there was cause for concern about the new year bringing a bounce for stock prices and mortgage rates, stocks haven’t done much of anything in the context of their late-2018 volatility, and mortgage rates have dropped another eighth of a percentage point (or more, depending on the lender). There are now lenders quoting 30 year fixed rates as low as 4.375% on top tier scenarios with the average lender back to 4.5%. That’s quite a jump from the 5.125% average at the recent highs (just 2 months ago).

Job Growth Surged in December

At the end of 2018, job growth surged. Total employment increased by 312,000 in December and the unemployment rate rose to 3.9%; however, this increase was good news because it was generated by growth in the labor force. Residential construction employment increased by 1,700 in December. The total construction industry (residential and nonresidential) added 280,000 jobs in 2018, more than the gain of 250,000 jobs in 2017. According to the Employment Situation for December released by the Bureau of Labor Statistics (BLS), total non-farm payroll employment rose by 312,000, faster than the upwardly revised increase of 176,000 jobs in November. It was the biggest monthly gain since February 2018. In 2018, job gains have averaged 220,000 per month, about 20% higher than the average monthly growth of 182,000 over all of 2017. Over the past twelve months, total non-farm payroll employment rose by 2.6 million, compared with the increase of 2.2 million in 2017. Residential construction employment now stands at 2.85 million in December, broken down as 816,000 builders and 2.0 million residential specialty trade contractors. The 6-month moving average of job gains for residential construction is 6,567 a month. Over the last 12 months, home builders and remodelers added 99,800 jobs on a net basis. Since the low point following the Great Recession, residential construction has gained 871,400 positions.

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