New Evidence of a Housing Bubble?

The National Association of REALTORS®' home price affordability index dropped below a long-term trend line, once again igniting fears of a housing bubble. But some experts say the worries are being blown out of proportion. 

The latest reading of the index, which reflects July data, marked the lowest level of home affordability since July 2009 and the fourth month that the index has come in below trend. The index measures the household income needed to qualify for a traditional mortgage for a median-priced single-family home.

Higher mortgage rates and home prices are causing affordability to drop. Home prices have surged 13.4 percent compared to a year ago, and mortgage rates are at their highest averages since February 2012. Wages are rising — but not as fast as home prices.

The West has posted some of the biggest drops in affordability, as home prices have climbed 18.4 percent in the region in the last year.

NAR’s affordability index peaked in January at 210.7, and it has been falling ever since. It now stands at 157.8. An index reading above 100 indicates that median income is higher than needed to qualify for a mortgage. "A score of 157.8 officially indicates that a household earning the median income has 57.8 percent more income than needed to get a mortgage on a median-priced home,” CNBC reports.

But a recent paper by three economists from Robert Morris University in Pennsylvania suggests that when the index falls below trend for at least three months, it may be an indication of the beginning of a housing bubble. The economists point to the beginning of 2004, when home affordability fell below its long-term trend. Some say that marked the beginning of the last housing bubble. Housing affordability stayed below the long-term trend until December 2008, the economists note.

Housing affordability this year dropped below the long-term trend in April and has stayed there through July, CNBC reports. But even signs of a housing bubble don’t mean home prices are doomed to crash, analysts say.

NAR experts write at the Economists’ Outlook blog that housing affordability likely could strengthen in the coming months “as prices have decreased from a month ago and most likely reached their seasonal peak for the year. Even with rates increasing, certain metro areas have healthy inventory levels, and consumers can still look to purchase before those historically low rates are a thing of the past.”

Source: “Latest Housing Affordability Data,” NAR’s Economists’ Outlook Blog (Sept. 6, 2013) and “Yep, it's another housing bubble,” CNBC (Sept. 10, 2013)

Good News in the Housing Sector Bodes Well for Future Economic Growth

Four years into the recovery, and lackluster economic growth persists. Housing continues to be one bright spot, providing a positive boost to the GDP in the second half of 2013, according to Freddie Mac’s August 2013 U.S. Economic and Housing Market Outlook report.

"The economic recovery has completed its fourth year, but it has not been without growing pains,” says Frank Nothaft, Freddie Mac’s chief economist. “The U.S. has experienced the weakest economic recovery coming out of a recession in the Post-War era. Despite the eye-popping monthly house price appreciation taking place in some parts of the country, the recovery that has lingered for years is just now starting for many Americans. Fortunately, we should see this positive housing trend continue to improve in the second half of the year. A housing recovery is a broad-based recovery, benefiting all Americans, and therefore the overall economy."

Economists point out in the report that the positives in the housing market can help lift the economy in three main ways:

• Increasing construction - Rising demand for housing will help increase new single-family and multifamily construction, and in turn boost home sales. Economists project that starts will hover just below 1 million over the second half of the year, which will mark the best six-month building pace since the first half of 2008.
• Wealth effect - "Through the housing wealth effect, rising home prices should help to spur consumption spending," economists note. Home equity lending is already showing signs of rising. In the second quarter, $9.5 billion in home-equity was cashed-out as part of a refinance. 
• Rising home prices - The uptick in home prices will aid the economic recovery by helping to spur small business formation — “as a business owner’s home often serves as collateral for a start-up,” economists note in the report. 

Source: Freddie Mac

Short Sales Less Appealing to Buyers

Once seen as big bargains, the appeal of short sales has dwindled recently, so much so that some real estate professionals are advertising listings as "not a short sale" to attract more buyers.

The term 'short sale' appears to have a stigma now, getting bank approval for a short sale can be difficult, and the process of buying a short sale can take four to six months in Florida.

A recent study found that short sales in Boca Raton tended to stay on the market much longer than other homes. And when homes were advertised as "not a short sale," they tended to sell for 2 percent to 5 percent more than comparable non-distressed homes that were not advertised the same way, according to the study. Homes advertised as "not a short sale" also sold faster, according to the study.

In housing markets where short sales are less prevalent, agents say they aren’t noticing the stigma. Buyers aren't as aware of the lengthy process so they don’t dread it as much. Therefore, singling out a property as “not a short sale” would be pointless.

Source: “Is There a Stigma with Home ‘Short Sales?’” CBSNews.com (Aug. 14, 2013)

Homes For Sale in Longboat Key, Florida

Longboat Key is a town in Manatee and Sarasota counties along the central west coast of the U.S. state of Florida, located on and coterminous with the barrier island of the same name. Longboat Key is south of Anna Maria Island, between Sarasota Bay and the Gulf of Mexico. It is almost equally divided between Manatee and Sarasota counties. The town of Longboat Key was incorporated in 1955 and is part of the Bradenton–Sarasota–Venice Metropolitan Statistical Area.

Known for tasteful luxury and manicured surroundings, Longboat Key is rich in gorgeous beaches, wildlife and upscale amenities. High-end boutiques and five-star restaurants make it an ideal destination for vacationers who like their beaches on the swankier side. Ignored by spring breakers and devoid of the garish attractions that characterize many Florida beach towns, Longboat Key is one of quietest barrier islands on the Gulf Coast—and all the more beloved for it.

Its history includes tales of explorers and Native Americans, pirates and pioneers. There are grand mansions and even grander yachts, plus some of the world’s most beautiful sunsets lining the tranquil Gulf of Mexico.

Scores of retirees, young families and romantic couples relocate or visit each year to take advantage of the superb angling, shelling, biking, shopping, dining and the luxury homes that dot its 12-mile stretch of shoreline. Just minutes away from the cultural attractions of Sarasota and world-famous St. Armand’s Circle, Longboat Key is the ideal base from which to explore the area.

Although Longboat Key is a locale that prizes its tranquil nights and lazy beach days, it also offers plenty of opportunities. Let us take the guess work out of our island by providing our local services.

ARMs Are Back as Rates Climb Higher

ARMs aren’t quite back with a vengeance; they’re more creeping in from the shadows.

Vilified for causing defaults once “teaser” rates spiked higher after 2006, ARMs fell into disuse while fixed mortgage rates plunged.

But since May the share of ARMs among all mortgages has climbed by half, thanks to a little-watched gap in how rates are rising.

As the Federal Reserve mulls slowing its monthly bond purchases, rates for 10-year U.S. Treasuries have climbed more than a percentage point between early May and July. Fixed-rate mortgages, which follow 10-year Treasuries, rose to 4.51 percent last month from 3.34 percent in January.

But ARMs follow short-term rates such as one-year Treasuries. Because the Fed will keep short-term rates very low until unemployment is 6.5 percent or lower, one-year Treasuries traded at a 0.1 percent yield recently, down 0.04 percent in the last month.

The upshot: Fixed mortgage rates have risen twice as fast as five-year ARMs since speculation about the Fed’s exit began, according to Freddie Mac data. So last week, 6 percent of mortgage applications were for ARMs, up from 4 percent in early May, according to the Mortgage Bankers Association of America.

The availability of ARMs keeps homes affordable, argues Barb Jandric, president of Edina Realty, outside Minneapolis. It’s one reason Edina didn’t see buyer interest fall as rates began rising, she said.

The more expensive the house, the likelier it will have an ARM: 14 percent of the dollar value of new mortgage requests last week were for ARMs, said Matt Robinson, spokesman for the Mortgage Bankers Association of America.

“It can mean a difference of 1.75 (percentage points) in the interest rate,” said Brian Koss, executive vice president of Mortgage Network. He estimates that 5 percent to 10 percent of his most recent customers have switched to ARMs.

ARMs aren’t for everyone. Their interest rates can rise after one, five, seven or 10 years, and the first jump can be a budget-busting 2 to 5 percentage points. They’re best suited for buyers who will move on or refinance before the rate changes, Koss said.

Even so, some lenders still advise against ARMs, arguing that fixed rates are still near multi-decade lows.

“You can’t lose sight of how amazing rates are,” said Matt Weaver, senior lender at WCS Lending in Boca Raton, Fla.

He said borrowers who keep their homes longer than expected may regret it. Depending on the product, the first jump can be either 2 or 5 percentage points. “It doesn’t warrant the risk.”

Copyright © USA TODAY 2013.

Turnkey Purchase of Tampa Bay Mansion Includes Mercedes, Bentley and the Towels!

While it's generally unusual for the bulk of a home's furnishings to convey as a condition of sale, ultra-luxury property agents say this kind of demand is popular among affluent overseas buyers who desire a fast and convenient transition to their U.S. digs.

One recent example involves the sale of the Tampa Bay, FL, mansion of K-9 Detectives founder Christine Barsema. The spread -- which boasts seven full bathrooms, a gym, a dog run, marble floors, and more -- originally listed for $14.9 million in 2010 but was lowered by $2 million this spring. A buyer has since emerged and is slated to close on the property in September.

The deal includes not only the 15,000-square-foot estate but also Barsema's Mercedes convertible and Bentley, $2 million worth of handcrafted furniture, towels, dishes, rugs, and just about everything else inside the home.

Source: Tampa Bay Times (08/05/13)

Inventory Levels Rise as More Homes Get Listed For Sale

Inventory levels are on the rise nationwide, which could soon mean the severe inventory shortages plaguing many markets the last few months may soon be nearing an end, according to the latest report from realtor.com®. As home prices rise, more sellers may be testing the market, helping to increase the options for home buyers.

Realtor.com® reported that 1.96 million homes were listed for sale in June -- the highest number since last September.

The markets that posted the largest rises in the number of homes for sale compared to one year earlier were:

• Atlanta: inventories rose 17.9% year-over-year
• Sacramento, Calif.: +16.7%
• Los Angeles: +6.8%
• Orlando: +2.8%

All four markets have also posted strong gains in home prices the past year, realtor.com® reports.

“At the current pace of sales, the supply of homes for sale is still very low, suggesting price gains are likely to continue,” The Wall Street Journal reports. “But the months supply is up slightly in a growing number of markets. This could actually boost sales — a major complaint of home shoppers and their real estate agents is that there’s a shortage of attractive homes being offered for sale.”

Meanwhile, inventories of homes for-sale has fallen year-over-year levels in 26 of the markets realtor.com® monitors. Inventory levels fell the most in Detroit (by –30.2%); Boston (–28.9%), Denver (–25.1%), and San Francisco (–19.4%).

Source: “Housing Inventory Rose in July,” The Wall Street Journal (Aug. 13, 2013)

New Mobile App Released for My Home On The Gulf

I have some exciting news to share with you as I have just launched my very own mobile real estate app that you can download and use on your iOS or Android mobile device. Click HERE for instructions on how to set up your own personalized app that you can start using immediately. You can now search for properties while on the go, and at the touch of button I will receive your requests for further information or showing requests in real time! 

This will help you stay ahead of the competition when buying real estate in Sarasota, Lakewood Ranch or Bradenton.

Financial Considerations for Homebuyers Over 40

Most people wade into homeownership for the first time in their 20s and early 30s, when they still have the bulk of their working years ahead of them and time to build equity – key to moving up to a bigger home.

But what if you’ve reached midlife and still envision buying a home one day? Tackling that first home purchase after 40 can be easier in some ways than when you’re just staring out in your career, but it also brings its own set of financial factors.

A National Association of Realtors survey of people who bought a home between July 2011 and June 2012 showed that nearly 80 percent of first-time homebuyers were 32 years old or younger.

In the next age bracket, those age 33-47, 36 percent were first-time buyers; between the ages of 48 to 57, only 19 percent were first-time buyers. The rates of first-time homeownership generally declined as buyers got older, according to the survey, which featured 8,500 respondents.

Even so, the last decade’s economic downturn and housing crash has forced many to put off that first home purchase.

Check out the following link from Florida Realtors for some things to consider if you’re over 40 and eyeing homeownership.

Home Prices Rising at Fastest Pace in 36 Years

During the first six months of this year, home prices jumped 10 percent, the fastest pace in 36 years, CoreLogic reports. Mark Fleming, chief economist with CoreLogic, called the 10 percent jump "remarkable." In June, the latest data available, home prices were up 11.6 percent year over year, according to CoreLogic’s home price index, which reflects distressed sales as well. June marked the 16th consecutive month of increases. 

The pace of home price appreciation is showing signs of slowing. In June, prices rose 1.9 percent compared to May -- a slower pace for increases than in recent months. From April to May, prices rose 2.6 percent, while they rose nearly 2.8 percent in April from March.

Some analysts point to a slowing due to rising mortgage rates, fewer investors making purchases, and a rise in inventory levels of homes for sale. The National Association of REALTORS® reported that inventories of existing homes for sale rose to 5.2 months in June from 5 months in May. A six- to seven-month supply is considered a balanced market.

Still, prices are not showing signs of stalling. CoreLogic analysts predict that home prices will be up 12.5 percent year over year in July.

Source: “Home Prices Rising at Fastest Pace in 36 Years,” Mortgage News Daily (Aug. 6, 2013) and “Home prices rise again, but at a slower pace,” USA Today (Aug. 6, 2013)

Million Dollar Homes Rising Fast as Wealthy Homebuyers Return to the Market

Sales of homes priced at more than $1 million jumped an average 37 percent in 2013’s first half from a year earlier to the highest level since 2007, according to real estate research firm DataQuick Inc. Transactions priced at less than $1 million rose 11 percent in the same period to the highest since 2009, data from the National Association of Realtors show. That means that homes priced at more than $1 million are gaining at triple the pace of the broader market, according to DataQuick.

"When the real estate market was booming, people sat in Starbucks and talked about how much they paid for a house,” said Craig Moe, who in June bought a $1.2 million property discounted 25 percent from its sale six years ago. “Now, they talk about how little they paid and what a bargain they got.”

“The real estate recovery has been built on purchases by middle-class families, even though they haven’t been the ones to flourish during the recovery,”  said Susan Wachter, a professor of real estate and finance at the University of Pennsylvania’s Wharton School in Pennsylvania. “Now, the economy is getting a vote of confidence from wealthy homebuyers.”

Source: Bloomberg

US Mortgage Delinquency Rate Plummets

The national mortgage delinquency rate fell nearly 26 percent in the second quarter compared to the same period last year, according to TransUnion. Every state and the District of Columbia saw an improvement in the mortgage delinquency rate year-over-year.

“This marks the third quarter in a row where we have posted all-time highs in terms of delinquency improvement, and that is very welcome news for both borrowers and their lenders,” said Tim Martin, group vice president of U.S. Housing in TransUnion’s financial services business unit.

Several markets have posted double-digit drops: Phoenix saw a 47.7 percent decrease in the delinquency rate, and San Francisco posted a 43.7 percent drop. The states that have had some of the highest mortgage delinquency rates — Florida and Nevada — also posted big drops. Florida saw a 26.8 percent decrease, and Nevada dropped 28.7 percent, according to TransUnion.

“Improving house prices and low interest rates have helped some home owners across the country refinance or sell their way out of mortgage payments they were having difficulty affording,” Martin says.

Source: “Mortgage delinquency rates improve across key markets,” HousingWire (Aug. 6, 2013)

Sellers Could Pre-Test Prices with New Approach to Listing Their Home for Sale

A real estate brokerage has launched a new service called the “price whisperer” that allows home owners to get feedback on a price for their home before actually listing it for sale. Redfin’s new “price whisperer” tool allows potential sellers to gauge the pricing of their home from potential buyers while giving buyers a “sneak peek” at homes not yet on the market.

"The most important decision when selling a home is what price to charge," says Redfin CEO Glenn Kelman. "The traditional process often amounts to a high-stakes guessing game with tens of thousands of dollars at stake for the owner.”

Home owners provide the price they want for their home, while also getting advice from an agent. An agent then takes photos of the property and e-mails up to 250 active buyers with a question whether they would pay that price for this home. The address is not disclosed. Buyers are also asked if they’d like to tour the home.

Redfin says the service is not intended to generate pocket listings. If there is interest in the property, the agent will recommend that the home owner list the property on the Multiple Listing Service before selling.

“Selling directly to a buyer without listing the home on the MLS is called a ‘pocket listing,’ and generally does not benefit the seller,” according to a release from Redfin.

The service is being launched in Boston; Chicago; the Los Angeles area; New York; Portland, Ore.; San Diego; San Francisco Bay area; Seattle; and Washington, D.C.

Source: Redfin

Expansion of Buy-to-Rent Market Predicted

According to a report by Morgan Stanley, the buy-to-rent market is only a fraction of where it could be, and the market is ready for major growth in the coming years.

Morgan Stanley analysts predict that the buy-to-rent market will grow from $17 billion today to more than $100 billion in the next several years. They called it a “sustainable business with a long runway for growth.”

According to analysts, institutional investors may be able to anticipate a more than 10 percent return on investments, as rents nationwide continue to rise.

"Over the past three years, investor activity has removed significant amounts of distressed supply from Southern California, Phoenix and Las Vegas," according to the report. "Consequently, select MSAs in Florida, the Midwest and the Northeast now constitute a greater proportion of the nation’s distressed properties, making them potentially more attractive to institutional buy-to-rent investors."

Source: “Morgan Stanley predicts buy-to-rent boom,” HousingWire (July 31, 2013)

How to Spot a Healthy Housing Market

Houston-based real estate consulting firm Metrostudy uses "drive-bys" to help it gauge the health of the residential market in different U.S. metro areas. Employees drive through newly built—or still under construction—housing developments from Texas to Florida and begin observing.

If there are toys on a house's front lawn, for example, that is a good sign that a family has moved in. Another positive sign is if a garden hose is attached to the side of the house. Not only is the home occupied, it also has an owner who cares about his or her property.

Among the bad signs are the absence of curtains in the windows, a high number of empty lots, and newly completed but clearly vacant houses. Metrostudy researchers say these are indicators that a developer may have badly overestimated demand and could soon be saddled with inventory.

Brad Hunter, chief economist of Metrostudy, is projecting double-digit increases in new-home prices for the remainder of 2013. He sees the speculative excess mostly gone from the market. In 2014, though, Hunter forecasts that new-home prices will increase only 6 percent as interest rates continue their upward climb. He concludes, "Mortgage rates could pose a challenge to affordability."

Source: "To Figure Out Where Real Estate Is Headed, Start Driving," Business Week (Aug. 5, 2013)

Average Rate on 30-year Loan up to 4.39%

Average rates on U.S. fixed mortgages ticked up this week but are still low by historical standards, a trend that has helped the housing market recover.

Mortgage buyer Freddie Mac said Thursday that the average on the 30-year loan rose to 4.39 percent from 4.31 percent last week. Rates are a full percentage point higher than in early May.

The average on the 15-year fixed loan increased to 3.43 percent from 3.39 percent last week.

Rates spiked in June after the Federal Reserve indicated it could slow its bond purchases later this year, which have kept long-term interest rates low.

But on Wednesday the Fed hinted it might hold off because the economy remains sluggish. And it noted for the first time that mortgage rates, which have fueled home sales, “have risen somewhat” from record lows.

Mortgage rates tend to follow the yield on the 10-year Treasury note, which has also jumped on speculation that the Fed could slow its stimulus.

Despite the increases, mortgages are still a bargain for those who can qualify. And low rates are helping boost home sales in most markets and driving home prices up.

Home prices jumped 12.2 percent in May compared with a year earlier, according to the latest Standard & Poor’s/Case-Shiller 20-city index released Tuesday. That’s the biggest annual gain since March 2006.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country on Monday through Wednesday each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for a 30-year mortgage was 0.7 point this week, down from 0.8 point last week. The fee for a 15-year loan also declined to 0.7 point from 0.8 point.

The average rate on a one-year adjustable-rate mortgage dipped to 2.64 percent from 2.65 percent. The fee was unchanged at 0.4 point.

The average rate on a five-year adjustable mortgage rose to 3.18 percent from 3.16 percent. The fee declined to 0.6 point from 0.7.

Copyright © 2013 The Associated Press, Marcy Gordon

Big Builders Move into Lakewood Ranch

Lakewood Ranch welcomes national home builders alongside local favorites such as Lee Wetherington Homes, Todd Johnston Homes, Anchor Builders and John Cannon Homes. 

Lennar broker ground last week at Bridgewater community, and Lakewood Ranch now has three of the top 14 national home builders by closings, according to Builder Magazine.

The others are: Taylor Morrison (No. 14), at Esplanade Golf & Country Club and Haddington in Country Club East; D.R. Horton (No. 1) in Greenbrook Village.

“Lakewood Ranch is a place that we wanted to be for a long time,” said Matt Devereaux, Lennar’s vice president of sales for Southwest Florida. “It is not just a place to sleep and shower. It is a lifestyle — schools, shopping, restaurants, entertainment."

Lakewood Ranch’s builders includes Anchor Builders, Cardel Homes, Homes by Towne, John Neal Homes, Lennar, No. 64 Neal Communities, Nutter Custom Construction, Todd Johnston Homes, Arthur Rutenberg/Nelson Homes, John Cannon Homes, Lee Wetherington Homes, London Bay Homes, Neal Signature Homes, Taylor Morrison and Westwater Construction, and D.R Horton in a limited capacity. Horton is building about a dozen houses on foreclosed lots it bought from banks in Greenbrook Village.

Rex Jensen, president and CEO of Schroeder-Manatee Ranch, Lakewood Ranch’s parent, said the addition of big national builders to his lineup is “a function of the market. These are the strong guys in today’s world."

“And it’s also the fact that Lakewood Ranch has gained some credibility and some critical mass that makes companies like that very interested,” Jensen added. “We are a proven product. They as companies want to be part of it and we are happy to have them.”


Mike Storey, a Neal Communities executive, doesn’t see Lennar as competing for Neal buyers, but welcomes the big boys. “When national builders are willing to reinvest in the market, it shows confidence in the overall marketplace.”

Source: Herald Tribune

Existing Home Owners Join Market Recovery

Existing home owners are taking a bigger share of the housing market while investors—who have been the powerhouse until late—are slowly retreating.

“A sustainable housing market typically includes a more balanced share of first-timers, move-up buyers and investors, and that's how the housing recovery is beginning to shake out,” Realty Times reports.

Taking the lead: Current home owners—whether move-up, move-down, or move-over buyers—accounted for nearly 45 percent of the market share in home sales in June, up from 43.8 percent in May, reports the Campbell/Inside Mortgage Finance HousingPulse. Recent home price gains and the return of equity is prompting more to make the move, particularly as concerns rise that mortgage rates may soon cut into housing affordability.

Meanwhile, first-time home buyers are still being held back, with a slight drop in their market share from 36 percent in May to 35.7 percent in June, according to HousingPulse. Rising housing costs and mortgage rates as well as toughening up of lending standards have continued to shut out some first-timers.

The investor share in home purchases dropped to 19.7 percent in June from 23.1 percent share in February. It’s the lowest level recorded since September 2012, HousingPulse reports. Rising home prices and fewer distressed homes are prompting more investors to pull out of the market, which they had been dominating up until recently.

Source: “Shifting Share of Homebuyers Supports Sustainable Recovery,” Realty Times (July 26, 2013)

Florida has 4 out of Top 10 Cash Deals

Home buyers who require financing for their home purchase can struggle to compete against buyers who have offers of all-cash.

Where are all-cash deals are the most prevalent? Cash deals represented 80 percent of home sales in June in Vermont; 58 percent in Nevada; 57 percent in Florida, and 51 percent in New York, according to RealtyTrac. Cash deals represent a very small percentage in Texas, Utah, and New Mexico.

The markets with the most all-cash transactions tend to have a high number of foreclosures and depressed home prices, which attracts investors and private equity firms, according to RealtyTrac.

The following 10 metros had 40 percent or more all-cash deals out of the total home sales in June, according to RealtyTrac:
Miami/Ft. Lauderdale: 64%
Las Vegas: 62%
Tampa, Fla.: 58%
Detroit: 56%
Orlando: 53%
New York: 49%
New Orleans: 43%
Memphis: 43%
Jacksonville, Fla.: 42%
Atlanta: 42%

Source: “Housing markets where cash is king,” CNNMoney (July 25, 2013)

Average Rate on 30-Year Loan Falls to 4.31%

Average rates on U.S. fixed mortgages fell for the second straight week, a welcome sign for homebuyers hoping to lock in lower rates that had spiked earlier this month.

Mortgage buyer Freddie Mac said Thursday that the average on the 30-year loan fell to 4.31 percent. That’s down from 4.37 percent last week but nearly a full percentage point higher than in early May. The rate reached a two-year high of 4.51 percent two weeks ago.

The average on the 15-year fixed loan declined to 3.39 percent, down from 3.41 percent last week

While rates remain low by historical standards, they have risen in recent weeks after the Federal Reserve indicated it might slow its bond purchases later this year. The $85-million-a-month in bond purchases have kept long-term interest rates low, encouraging more borrowing and spending.

Mortgage rates tend to follow the yield on the 10-year Treasury note, which rose sharply after Chairman Ben Bernanke said the Fed might reduce its bond-buying program. But the yield has since stabilized after Bernanke and other members emphasized that any change in the bond purchases would be tied to the economy’s health – not a calendar date. And Bernanke said the Fed would likely continue other low-interest rate policies for the foreseeable future because unemployment remains high and inflation low.

Low mortgage rates have contributed to a housing recovery that has helped drive economic growth this year.

Greater demand, along with a tight supply of homes for sale, has pushed up home prices. It also has led to more home construction, which has created more jobs.

This week the government said U.S. sales of new homes rose 8.3 percent to a seasonally adjusted annual rate of 497,000, the highest since May 2008.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country on Monday through Wednesday each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for a 30-year mortgage was 0.8 point this week, up from 0.7 point last week. The fee for a 15-year loan also rose to 0.8 point from 0.7 point.

The average rate on a one-year adjustable-rate mortgage dipped to 2.65 percent from 2.66 percent. The fee was unchanged at 0.4 point.

The average rate on a five-year adjustable mortgage eased to 3.16 percent from 3.17 percent. The fee rose to 0.7 point from 0.6.

Copyright 2013 The Associated Press, Marcy Gordon, AP Business Writer.