Interest rates may favor winter market

As interest rates rose in early fall, housing in some areas began to slow and applications for refinance loans became a trickle. Now, with interest rates at their lowest since June, we may see a boost in the lending market and in housing sales. Nearly everyone agrees that rates this low cannot last forever and at least for some, it's "get while the getting is good."

While a new Fed chair will soon take over, the economy seems to be driving the organization's activity, so no drastic changes to the bond buying that has kept rates low is anticipated in the short term. The rise in mortgage rates that did occur put pressure on rising home prices and brought some stability to them so buyers will not face the sticker shock they may have, had prices continued to escalate.

So far this year we have seen respectable increases in average prices throughout our market. Whether this trend continued through September and October pending sales we will know soon, when our latest data becomes available and we can report closed sales. Realtor members of the Coeur d'Alene Association appear to still be busy and most are satisfied with current activity levels, but some of our lender members have reported a slow down in mortgage applications and in applications for refinancing. Last week's drop in rates, the second in as many weeks, may revive their activity.

Nationally, the U.S. home value index rose just .3 percent in October. Our neighbors in Oregon and Washington were reported as some of the worst markets in the nation for appreciation. Even so, some Multiple Listing Services there reported price increases of 10 percent of more since last year.

According to a report last week from the National Association of Realtors (NAR), "Pending home sales declined for the fourth consecutive month in September, as higher mortgage interest rates and higher home prices curbed buying power. The Pending Home Sales index, a forward-looking indicator based on contract signings, fell 5.6 percent to 101.6 in September from a downwardly revised 107.6 in August, and is 1.2 percent below September 2012 when it was 102.8. The index is at the lowest level since December 2012 when it was 101.3; the data reflect contracts but not closings."

NAR chief economist, Lawrence Yun said concerns over the government shutdown also played a role. "Declining housing affordability conditions are likely responsible for the bulk of reduced contract activity," he said. "In addition, government and contract workers were on the sidelines with growing insecurity over lawmakers' inability to agree on a budget. A broader hit on consumer confidence from general uncertainty also curbs major expenditures such as home purchases."

Yun notes this is the first time in 29 months that pending home sales weren't above year-ago levels. "This tells us to expect lower home sales for the fourth quarter, with a flat trend going into 2014. Even so, ongoing inventory shortages will continue to lift home prices, though at a slower single-digit growth rate next year."

Many pundits of the housing market have reflected similar thoughts - that the double-digit appreciation enjoyed by sellers in many markets will settle to the single digits in 2014. If that holds true here, we should anticipate continued increases in sales as buyers who feared they would be priced out of the market - by rising rates and home prices - realize that the time is ripe to buy an affordable home. At 4.1 percent, interest money is cheap to borrow and is unlikely to remain that way for too much longer.

Trust an expert ... call a Realtor. Call your REALTOR or visit www.cdarealtors.com to search properties on the Multiple Listing Service or to find a REALTOR member who will represent your best interests.

Kim Cooper is a real estate Broker and the spokesman for the Coeur d'Alene Association of REALTORS. Kim and the Association invite your feedback and input for this column. You may contact them by writing to the Coeur d'Alene Association of REALTORS, 409 W. Neider, Coeur d'Alene, ID 83815 or by calling 208-667-0664