Mortgage rates edged a little higher this week, according to weekly averages from Freddie Mac's Primary Mortgage Market Survey.
The 30-year average fixed-rate mortgage added 2 basis points, increasing to 3.34 percent. The 15-year average fixed-rate mortgage also increased, adding 3 basis points and averaging 2.67 percent for the week. Rates still remained near record lows reached during the November 21 week when the 30-year FRM averaged 3.31 percent and the 15-year FRM averaged 2.63 percent.
Asset purchases by the Federal Reserve following its Federal Open Market Committee meeting on December 11 - 12 are expected to continue, keeping mortgage rates at their current levels for an extended period of time.
The Mortgage Bankers Association's Weekly Mortgage Applications Survey showed improvements in mortgage and refinance applications for the week, after two consecutive weekly declines. The Market Composite Index, which measures mortgage applications, increased 4.5 percent. Meanwhile, the Refinance Index increased 6.0 percent. The Purchase Index also increased for a fourth consecutive week, adding 0.1 percent.
In other real estate news, the Commerce Department released its October report on construction spending. CoreLogic also released reports on housing prices and the impact of foreclosure inventory.
Construction spending continued to trend higher as the Commerce Department's monthly report stated an increase in the annual rate of 1.4 percent in October. The month's improvement also added to a year-over-year increase of 9.6 percent. Construction spending was also higher on a calendar year-to-date basis, ending October at $707.4 billion, a 9.3 percent increase from the year-to-date total in October 2011.
CoreLogic's HPI showed an increase of 6.3 percent in home prices from October 2011. A decrease in the number of foreclosed homes on the market appeared to contribute to the yearly increase. CoreLogic's Foreclosure Inventory report stated a foreclosure inventory of 1.3 million homes in October 2012, a 13.3 percent decrease from October 2011. Further declines in foreclosure activity should help continue the improvement in housing prices since foreclosed homes drag on average market prices due to their lower market values.
Overall, mortgage markets appeared to continue trending towards healthy recovery rates during the December 7 week. Average mortgage borrowing levels remained low, mortgage application activity increased and housing prices pushed higher as foreclosure inventory declined.