Mortgage rates fell again this week, reaching new all-time record lows.
Freddie Mac's weekly Primary Mortgage Market Survey reported average 30-year fixed-rate mortgages of 3.36 percent. The week's average rate marks a new weekly average record low for the 30-year fixed-rate.
According to the weekly report, the 15-year average fixed-rate mortgage also declined to 2.69 percent, setting a new weekly record low for the 15-year FRM as well.
The 30-year and 15-year weekly FRM averages have decreased 19 bps and 16 bps, respectively, since the Federal Reserve announced its new monetary policy actions which include the purchase of $40 billion in mortgage-backed securities per month.
The Mortgage Bankers Association's Weekly Mortgage Applications Survey gained again for the week and continues to trend upward as rates decline.
The MBA's weekly survey report stated an increase of 16.6 percent in mortgage applications. Refinancing activity also increased by 20 percent from the previous week as more homeowners refinanced at the market's lower rates. Refinancings' share of mortgage activity increased to 83 percent from 81 percent in the previous week.
The MBA's Purchase Index has also been steadily climbing following the Federal Reserve's new monetary policy actions. The Purchase Index increased 4 percent, according to the MBA's weekly report, and has gained 5 percent since the Federal Reserve began its new monthly MBS purchases.
Monday's construction spending report stated a 0.6 percent decline in total construction spending in August. Underlying data, however, showed positive improvements in residential construction spending which gained 0.9 percent during the month and increased 16.1 percent annually. The improved spending in residential construction is consistent with market gains occurring in housing starts and housing sales.
In August, single-family housing starts increased 5.5 percent while privately-owned housing starts gained 2.3 percent and 29.1 percent annually. New home sales maintained their current level and existing-home sales increased 7.8 percent in August.
Homebuilder stocks also reflected the market's August improvements. The S&P Homebuilders Select Industry Index was up 9.72 percent led by PulteGroup, Inc. (PHM) which returned 17.92 percent.
Increased housing prices also continue to fuel the housing market's recovery. On Tuesday, CoreLogic reported an annual gain in its Home Price Index of 4.6 percent. On a monthly basis the Index gained 0.3 percent in August. The month's gains mark six consecutive Index level improvements on a monthly and annual basis.
CoreLogic's report also included Pending Home Price Index data which shows prices continuing to rise on an annual basis in September. The Pending HPI estimates a 5 percent annual increase in selling prices in September. Pending home prices, however, show a slight decline of 0.3 percent occurring in month-over-month price levels as the market enters its off-peak season.
The week's reports show continued signs of sustainable improvement in the housing market fueled by decreasing mortgage rates, increasing home purchases and improved housing prices. The healthy housing market is good for the economic recovery and could provide the strength it needs to help overcome approaching headwinds through the end of the year.