Dive Brief:
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Mortgage rates on newly constructed homes followed their 5-basis-point rise in November with a 19-point jump in December, putting the new rate at 3.78% at the close of 2016, according to the National Association of Home Builders, citing data from the Federal Housing Finance Agency.
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The NAHB noted that December’s increase comes as purchases of newly built homes tumbled 10.4% for the month, contributing to concerns that the hike in rates could be slowing sales.
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Mortgage rates trended lower in 2016 after starting the year at a high of 3.94%, falling consistently to a year-low of 3.54% in October. Rates turned back up to 3.59% in November and 3.78% in December.
Dive Insight:
These figures dovetail with other recent data showing mortgage rates increasing following the general election in November.
A move by the Federal Reserve to push up interest rates to a range of 0.50% to 0.75% from 0.25% to 0.50% last month is also adding to concerns that activity in the market could slow this year as higher rates and increasing home values widen the affordability gap, particularly for first-time buyers.
In December, a report from Black Knight Financial Services noted that the mortgage rate hike pushed the average home price up by $16,400 from before the election. As a result, a median-priced home now requires a 21.6% share of median household income, which is the most since June 2010.
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