Thursday, April 2
Posted 8 a.m. EDT
Senior editor Chris Kissell contributed this entry. Holden Lewis is on vacation.
WAITING IN VAIN: Sometimes, it seems like all of house-hunting America is holding its collective breath, waiting for mortgage rates to fall to 4 percent.
But could rates rise instead?
Last week, acting-Freddie Mac CEO John Koskinen says mortgage rates "are probably close to bottoming out."
Sue Woodard, a home loan originator for Lakeland Mortgage in Minneapolis, agrees: "Many people still seem to believe rates will move lower. That is highly unlikely," she says.
Chris Sipe also doubts rates will fall much further.
"There is more risk than there is reward at these levels," says Sipe, senior mortgage consultant at Mason Dixon Funding in Frederick, Md.
Of course, nobody knows for sure where rates are headed. And mortgage lenders have their own reasons for hoping people will leap off the fence and into a new loan today.
Still, it's hard to deny the wisdom of getting a mortgage at a historically low rate now rather than possibly waiting in vain for what Woodard characterizes as the "unicorn rate" of 4 percent.
"People always wait too long to see that the trend has changed, and then, they attempt to get in as things are already on the upswing," she says.
"Why give up the leverage you hold as a buyer in today's market? Don't wait."
HALF-EMPTY ... OR ALREADY BONE DRY? Last week, a slew of good news offered hopeful signs of a turnaround in the nation's housing market. New- and existing-home sales were up in February, and prices rose between December and January, the first increase in 10 months.
The optimism came to a thudding halt Tuesday, when it was announced that January home prices fell by a record 19 percent year over year, according to the Case-Shiller National Home Price Index.
It is the 30th consecutive month that prices have fallen year over year in the 22-year-old index, which surveys 20 major metropolitan areas across the United States
The biggest decliners included the usual suspects, with the seven worst-performing cities located in four states: Arizona, Nevada, California and Florida. Phoenix led the way with a 35-percent drop.
Detroit -- ground zero in the automaker meltdown -- came in eighth. After that, the names got a little more interesting. Double-digit declines occurred in several cities where big price drops are unusual, including Minneapolis (-20.4); Washington, D.C., (-19.3); Chicago (-16.4); Atlanta (-14.3); Seattle (-15); and Portland, Ore. (-14).
Overall, 13 of the 20 metros surveyed experienced record declines in January. As David Blitzer, index chairman, says, "There are very few bright spots that one can see in the data."
Still, a separate report released Wednesday offered yet another tantalizing hint that the worst may be over for long-suffering home sellers. Pending home sales for February rose 2.1 percent, according the National Association of Realtors.
The index, which is based on contracts signed in February, is considered a forward-looking indicator.
Lawrence Yun, NAR chief economist, says sales "have a way to go for there to be a meaningful increase."
Nonetheless, the latest numbers indicate that sales activity could be on the upswing in coming months, especially given that housing affordability hit a record high in February, according to the NAR.
So, is the glass half-empty, or half-full? Stay tuned.