Mortgage rates rise modestly
By Holden Lewis • Bankrate.com

Mortgage rates went up this week, but not by much.

The benchmark 30-year fixed-rate mortgage rose 8 basis points, to 6.11 percent, according to the Bankrate.com national survey of large lenders. A basis point is one-hundredth of 1 percentage point. The mortgages in this week's survey had an average total of 0.43 discount and origination points. One year ago, the mortgage index was 6.27 percent; four weeks ago, it was 5.95 percent.

The benchmark 15-year fixed-rate mortgage rose 5 basis points, to 5.7 percent. The benchmark 5/1 adjustable-rate mortgage rose 7 basis points, to 5.92 percent. The 30-year fixed jumbo, for bigger loans, rose 2 basis points, to 7.34 percent.

Weekly national mortgage survey

Results of Bankrate.com's April 24, 2008, weekly national survey of large lenders and the effect on monthly payments for a $165,000 loan:

In a week devoid of earthshaking economic news, the most noteworthy report was the one on existing home sales.

According to the National Association of Realtors, home resales tumbled in March compared with the same month a year before. Seasonally adjusted annual sales fell 19.8 percent, to an annual pace of 4.93 million units. Actual sales -- not seasonally adjusted -- fell 22.7 percent. Some 374,000 homes were resold in March, compared with the 484,000 sold in March 2007.

At the end of March, there were 9.9 months' worth of used homes for sale at that month's sales pace. That's a hefty supply for the beginning of the traditional sales season. With more than 4 million homes for resale (and at least another half-million new houses for sale), it's a buyer's market in many areas.

The Realtors' sales price data seem to confirm that it's a buyer's market. In March, half of home resales fetched a price below $200,700. That's 7.7 percent below the median price of $217,400 in March 2007.

Prices may be firming
Sounds like a buyer's dream scenario, right? But there are a couple of indications that prices are firming.

First, the Realtors report that the median home price was $195,600 in February. March's median price was 2.6 percent higher. Almost 20 percent more homes were resold in March than in February, but that probably has more to do with the longer month and the warmer weather than with a sudden surge in demand.

Then there's the price information from the Office of Federal Housing Enterprise Oversight, or OFHEO, which regulates Fannie Mae and Freddie Mac. OFHEO says home resale prices rose from January to February, after having fallen for seven months in a row. The 0.6 percent gain was anchored by a 2.2 percent price advance in the New England states.

In the year-over-year comparison, home prices were down 2.4 percent in February, compared with February 2007. OFHEO doesn't express home prices in dollar figures, but rather in a price index. The index was set at 100 in the first quarter of 1991. It topped out at 226.1 in April 2007, and was 219 in February.

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OFHEO's data seem to lag. For example, according to OFHEO, home prices peaked in April 2007, while the Realtors have prices peaking in July 2006. For most homeowners and homebuyers, the Realtors' timeline would seem more accurate.

Lawrence Yun, the Realtors' chief economist, blames a couple of factors for the continued slowdown in sales. Even though mortgage rates are relatively low, lending standards are stricter, with higher down payment requirements and new fees.

"At the same time, many buyers continue to bide their time with a large number of homes to choose from, while other potential buyers remain on the sidelines," Yun says.

Those potential buyers will run onto the field after they become convinced that prices are rising and home inventories are falling. But prices won't rise, and inventories won't fall, until more people buy.