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Freddie Mac's Primary Mortgage Market Survey reported that the 30-year fixed-rate mortgage averaged 3% for the week ending May 20, 2021. Last week the 30-year averaged 2.94% and a year ago this time, it averaged 3.24%.
“After a run-up over the first few months of the year, rates have paused and hovered around three percent since March,” said Sam Khater, Freddie Mac’s chief economist. “Despite this favorable rate climate, there remains a shortage of homes for sale. The lack of housing supply has been compounded by labor disruptions and expensive building materials that are driving up the cost of new housing, making it difficult for homebuyers to find homes to purchase.”
Homebuyers have been disappointed by the inability to find their perfect home and while some are willing to settle on a home that isn't exactly ideal, it has been increasingly difficult to simply find a home to settle on. Homes are also being sold at a rapid rate, forcing buyers to have to make a nearly immediate decision. Additionally, bidding wars have driven up home sale prices to record highs.
“We may see some amount of fresh inventory come to market this spring in accordance with the usual seasonal trend, but today’s acute supply shortage will be hard to undo. It will take years of accelerated new home construction to close the gap from a decade of under-building, and an end to the pandemic by itself is unlikely to bring enough sellers to the market to bridge the gap between supply and demand. In short, the housing inventory shortage is here to stay,” said First American chief economist Mark Fleming in his industry and inventory analysis.
The PMMS also reported that the 15-year fixed-rate mortgage increased to 2.29% up from 2.26% last week, but overall, down from the same period in 2020 when it averaged 2.70%. Meanwhile, the 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 2.59%, unchanged from the previous week and down considerably from the 3.17% it averaged for the same period in 2020.
Click here to read Freddie Mac's full PMMS.