Mortgage rates reached a new all-time low this week, as rates continued to decline in reaction to the Federal Reserve's mortgage-backed securities purchases.
Freddie Mac's Primary Mortgage Market Survey showed a decrease of 9 basis points in the 30-year average fixed-rate mortgage for the week. The 30-year weekly FRM average fell to a new record low of 3.40 percent.
The PMMS also reported a new record low for 15-year fixed-rate mortgages. The weekly average for 15-year FRMs fell to 2.73 percent from 2.77 percent.
Mortgage applications continued to increase with the declining rates. The Mortgage Bankers Association reported an increase of 2.8 percent in its Market Composite Index which measures mortgage applications on a weekly basis.
The MBA's Refinance Index also gained for the week, increasing 3 percent. Refinancings continued to account for the majority of the weekly applications at 81.2 percent.
The weekly survey also showed an increase in home purchases of 1 percent.
In other real estate news, the Commerce Department released its August New Residential Sales report, the S&P/Case-Shiller and FHFA House Price Indices showed strong July housing price improvements and the National Association of Realtors released its index report on Pending Home Sales.
New residential sales, reported by the Commerce Department, slowed in August to a seasonally adjusted annual rate of 373,000. The August annual rate is 0.3 percent below July but 27.7 percent higher than August 2011.
Pending home sales also decreased in August, declining 2.6 percent. Regionally, the NAR's Pending Home Sales Index showed the greatest potential for closings in the Northeast where the Index improved 0.9 percent. Meanwhile, readings for the Midwest, South and West all decreased with the greatest decline in the West at 7.2 percent.
July housing price index data, however, continued to show strong gains. The S&P/Case-Shiller Index reported a 0.4 percent increase in housing prices in July based on seasonally adjusted data from its 20-City Composite Index. Phoenix and Detroit showed the greatest price increases by metropolitan area gaining 1.4 percent in July. Data from the Federal Housing Finance Agency was consistent with the S&P/Case-Shiller Index report, showing a seasonally adjusted monthly price increase of 0.2 percent for single-family homes.
The week's reports show continued downward trending in mortgage rates, consistent with the Federal Reserve's monetary policy guidance. However, prices appear to be favoring sellers and sales seem to be slowing which could indicate stalled housing market improvements through the end of the year.