Mortgage Resources

Search with GoPrime Mortgage

Check out our guides, tools and research for expert help on all your home mortgage and marketing questions!

Good Times Rolling For Housing; How Long Will It Last?

November 22, 2019

Financial markets remain transfixed by seemingly insignificant updates relating to US/China trade negotiations. For those who follow markets closely, this can be exasperating at times, but it’s happening for a good reason.

If we only look at shorter-term market movements (like the chart below with this week’s stock prices and bond yields), we might conclude that neither side of the market knows where it wants to go and that they’re taking turns following each other and/or waiting for bigger inspiration.  But that’s actually not an unfair statement.

20191122 NL1

2019 has been a big year for both stocks and bonds.  Both have moved to very strong levels (high stock prices and low bond yields) and have covered a lot of ground to get there.  The uncertain fate of the trade deal was a major factor helping rates move lower and preventing stocks from breaking to all-time highs earlier this year.  But now that a “phase 1” deal is at least being discussed as a possibility, stocks have moved higher while rates have reconsidered the long-term lows seen in early September.  With this in mind, the divergent performance between stocks and bonds in the bigger picture makes more sense.

20191122 NL2

Notably though, rates aren’t panicking, and have actually managed a modest but noticeable winning streak over the past 2 weeks.  In terms of mortgage rates, this translates to average 30yr fixed rates improving by an eighth of a percentage point to the lowest levels since October 31st.

As far as rate rallies go, that qualifies as just a bit longer than average and just a bit better than average, but it’s good to keep in mind that it comes at the expense of a more significant move toward higher rates that lasted nearly the entire month of October.

In the bigger picture, however, rates are staggeringly lower than they were this time last year.  Despite having risen from multi-year lows in September, we’re still in a very solid ball park.

20191122 NL3

The impressive drop in mortgage rates seen in the chart above has done wonders to help the housing market get back on track.  There were multiple housing-related reports out this week and everywhere we look, there are reasons to be excited.

Existing Home Sales didn’t quite break their recent highs, but they’re back in line with the highest levels since before the housing crisis.

20191122 NL6

Unsurprisingly, low rates and strong sales have had a positive impact on builder confidence as seen in this week’s Housing Market Index from the National Association of Homebuilders.

20191122 NL5

In this week’s New Residential Construction report, building permits surged to their highest levels in more than 12 years.

20191122 NL44

And on a mortgage-specific note, application activity has remained undeterred by rising rates.  Granted, refinance demand has leveled-off, but it remains in territory that’s 150% better than the same time last year.  Purchase applications are winning in a different way.  While they’re only up about 14% year over year, that’s the highest growth rate since 2016.

20191122 NL7

The extent to which the good times will keep rolling depends heavily on global economic momentum.  And global economic momentum depends heavily on the outcome of the US/China trade negotiation.  It’s anyone’s guess as to how long that will take and how it will ultimately look, but no one is expecting a sweeping conclusion to happen in the next few weeks.  That’s precisely why we’ve seen rates level-off and push back, but NOT in a panicked way.

Be warned though, if progress materializes in trade negotiations and especially if economic data can manage to improve even before a trade deal is shored up, rates are ready and willing to move higher at a quicker pace.  Bottom line: take advantage of what we have today or at the very least, be ready to act if it looks like the rate landscape is shifting.

Related News & Articles

Neighborhood Highlight – Flanders Mill

The Gallatin Valley is growing quickly enough that it can be hard to keep up with the number of neighborhoods and developments in the area.  We’re here to help!  In this blog post, we’ll take a look at Flanders Mill in Bozeman.   Where Is It? Flanders Mill is...

Neighborhood Highlight – River Rock

The Gallatin Valley is growing quickly enough that it can be hard to keep up with the number of neighborhoods and developments in the area.  We’re here to help!  In this blog post, we’ll take a look at River Rock in Belgrade.   Where Is It? River Rock is located...

Have Some Doggone Fun!

Best Dog Friendly Digs in Bozeman   It’s not an unlikely occurrence that gatherings in Bozeman have equal numbers of pets to people – we really are a pet lover’s town. When someone thinks about bringing their dog with them on outdoor activities, Bozeman offers...