Mortgage rates are close to record lows, and April home mortgage applications were at their highest since 2010, however lack of inventory continues to give sellers the upper hand, according to Capital Economics report, titled US Housing Market Monthly.
Annual growth rate for home sales rose to 5.4% in March, despite volatility caused by the Consumer Financial Protection Bureau's know before you owe regulations, aka TRID, according to the report.
After the slight growth of 1.4% in GDP in the fourth quarter of 2015, strong opposition such as falling oil prices and the strengthening of the dollar caused GDP growth to slow down in 2016’s first quarter, according to the report. This year started off even slower with a 0.5% GDP growth.
Although the labor market likely slowed in April, it still continues to rise. April’s gain of 160,000 dropped from the February and March gains of more than 200,000.
The current mortgage rate of 3.87% for a 30-year fixed rate puts mortgage rates close to record lows. Because of this, affordability continues to increase even while home prices rise.
That being said, mortgage credit remains tight, and prevents many from being able to qualify, according to the report.
"The improving economy will persuade banks to accept more applications, although the much tougher regulatory environment rules out any return to the ultra-loose conditions seen in the mid-2000s," the report stated.
In fact, the current weakness in the market reflects a lack of inventory rather than problems with lending.
Realtors also report stronger buyer than seller traffic every year since the beginning of 2012, the report added.
