Mortgage rates in the U.S. dropped to a record for a second week, decreasing borrowing costs as housing demand strengthens.
The average rate for a 30-year fixed mortgage fell to an all-time low of 3.31 percent in the week ended today from 3.34 percent, McLean, Virginia-based Freddie Mac said in a statement. The average 15-year rate slipped to 2.63 percent, also a record, from 2.65 percent.
Low mortgage rates have helped fuel a recovery in housing. Sales of previously owned homes gained 2.1 percent to a 4.79 million annual rate in October as inventories dropped to the lowest level in almost a decade, the National Association of Realtors said two days ago. The median price of an existing home climbed to $178,600, up 11 percent from a year earlier.
“Sales in October were helped by record low mortgage rates,” Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts, said in a Nov. 19 note to clients. “We are expecting the housing market to continue to improve and outperform the rest of the economy over the next few quarters.”
Homebuilders will continue stepping up construction to fill demand as inventories tighten, Newport said. Permits for the construction of single-family homes advanced in October to the highest in four years, Commerce Department data showed yesterday.
The number of previously owned homes on the market fell 1.4 percent to 2.14 million, the fewest since December 2002, according to the Realtors group. At the current sales pace, it would take 5.4 months to sell those houses, the least since February 2006 and down from 5.6 months at the end of September.