John Raoux/AP The National Association of Realtors said its index of sales agreements fell 1.2 percent last month.Enlarge John Raoux/AP
The National Association of Realtors said its index of sales agreements fell 1.2 percent last month.
Fixed mortgage rates have fallen to historic new lows for a fourth straight week. The average on a 30-year fixed mortgage fell to 4.01 percent this week, Freddie Mac said Thursday. And contracts to buy homes fell in August, after a weaker-than-expected peak buying season.
The 30-year rate is the lowest since Freddie Mac began keeping records in 1971. The last time long-term rates were lower was in 1951, when most long-term home loans lasted just 20 or 25 years.
The average on a 15-year fixed mortgage, a popular refinancing option, ticked down to 3.28 percent. Economists say that's the lowest rate ever for the loan.
Mortgage rates tend to track the yield on the 10-year Treasury note. The 10-year yield has risen this week to around 2 percent. A week ago, it touched 1.74 percent the lowest level since the Federal Reserve Bank of St. Louis started keeping daily records in 1962. As recently as July, the 10-year yield exceeded 3 percent.
Weekly rates, in percent, for fixed 30-year mortgages
Rates on mortgages could fall further after the Federal Reserve announced last week that it would take further action to try to lower long-term rates.
Still, low rates have so far done little to boost home sales or refinancing. Many would-be buyers or homeowners don't have enough cash or home equity to get a new loan.
High unemployment, scant wage gains and debt loads represent a heavy burden for many people. Others can't qualify. Banks are insisting on higher credit scores and 20 percent down payments for first-time buyers.
This year is shaping up to be among the worst for sales of previously occupied homes in 14 years.
Pending Home Sales Fall
The National Association of Realtors said Thursday that its index of sales agreements fell 1.2 percent last month to a reading of 88.6
A reading of 100 is considered healthy. The last time the index reached that level was in April 2010, the final month that buyers could qualify for a federal tax credit that has since expired.
Contract signings are usually a reliable indicator of where the housing market is headed. There's typically a one- to two-month lag between a contract and a completed deal.
But the Realtors group said a growing number of buyers have canceled contracts after appraisals showed the homes were worth less than the buyers had bid. A sale isn't final until a mortgage is closed.
Economy
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