This morning the Mortgage Bankers Association reported mortgage application activity fell 13.5% (includes purchase and refinance activity) for the week ending September 6th with the refinancing index declining 20.2%. The rapid spike in mortgage interest rates has certainly played a significant part in the slowdown in mortgage activity. One follow on questions is whether the improvement seen in real estate prices is sustainable in the face of these higher mortgage rates and the anticipated tapering by the Fed. A recent report from Chart of the Day highlights the sharp increase in median home prices as noted below:
"The US real estate market continues to surge. For some perspective, today's top chart illustrates the US median price (adjusted for inflation) of a single-family home over the past 43 years while today's bottom chart presents the semi-annual percent change in home prices (also adjusted for inflation). Today's chart illustrates that the inflation-adjusted median home price has rarely increased more than 10% in six months (gray shading). When inflation-adjusted home prices did increase more than 10% in six months, it was often soon followed by a period of stagnant or declining prices. It is worth noting that over the past six months, the median price for a single-family home has shot up at the fastest pace on record."
|From The Blog of HORAN Capital Advisors|
Source: Chart of the Day