A holiday-shortened week left mortgage rates little changed, but still at very low levels. Most of the latest economic news was on the sour side, imposing a bit of gloom upon the holiday cheer.

With 2008 poised to come to a close, mortgage markets are alive with low rates and refinance opportunities for good-credit-quality applicants. The last few weeks have been perhaps the best of the year for everyone involved in the mortgage industry. Ringing phones and chances to make commissions and fee income wouldn’t normally be so welcome in the midst of the holiday season, but after a very difficult year this situation is perhaps the most desired Christmas gift of all.

Homebuying hasn’t yet picked up, but we’re confident that it will do so — provided mortgage rates remain at these temptingly and historically low levels for the foreseeable future. With the Fed’s unwavering influence in the market, the odds of that are quite good.
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It’s certain that home sales will rise, especially given that rates are now down to extraordinarily low levels. November was quite a difficult month, and the Fed’s expression of more than a half-trillion dollars of support came at the tail end, too late to foster much improvement.

Sales of existing homes fell a sharp 8.6% in November from October, stopping that fall at an annualized 4.49 million units. Prices continue to ease, and coupled with the new lower level for at least conforming 30-year fixed mortgage rates, affordability should improve smartly into 2009. Of late, though, sales are sliding; at the current rate of homebuying, we still have over 11 months of homes available for sale. Without a pickup in demand — and with foreclosed properties still coming onto the market — prices probably won’t stabilize for a while.

New Home Sales also slid by 3% in November, easing to just a 407,000 annualized pace. As with existing home sales, demand is also weakening more quickly than inventory is moving, so the “months of supply” number bounced back up to 11.5 months available. For all that slowing, however, there was a 28,000 drop in the number of units on the market, which now totals just 374,000 available. That decrease in stockpiles was the largest in the last 12 months and was double the previous 2008 high. Even with sales continuing to slow we’ll eventually hit an inflection point where at least some new homes will have to be built. That may not happen for a few months yet; perhaps we’ll reach that point in the spring.
Daily FRMI rates are available here. The weekly statistics are here.

Again, that’s provided mortgage rates continue to cooperate. This week, HSH’s indicator of the overall level of 30-year interest rates, expressed as our Fixed-Rate Mortgage Indicator (FRMI) moved up by a total of three basis points (.03%) to 5.88%, while the FRMI’s hybrid 5/1 ARM counterpart nudged five basis points higher, closing the survey week at 5.94%.

Conforming mortgage rates ticked a little higher, rising by eleven basis points for the week, continuing a modest step up which began after touching near 50-year lows a week ago Wednesday. Jumbo borrowers remain penalized for poor market liquidity for their needs, with rates still holding just below 7%.

If one of the components of an improvement in the economy is an upturn in consumer moods, we may be in the early stage of at least some form of stability. The final December reading on Consumer Sentiment from the University of Michigan notched a 4.8 points gain to land at 60.1, the best reading since September, if still quite dour. As well, the weekly ABC News/Washington Post poll of Consumer Comfort sported its highest mark since early November, landing at -48 for the week ending December 21. Falling gasoline prices are serving to lift moods, it seems, and steep holiday discounts are bad news for retailers but may also make for a happier holiday season for those charged with paying the after-holiday bills.

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