HUD RELEASES OCTOBER SURVEY OF SECONDARY MARKET PRICES AND YIELDS AND INTEREST RATES FOR HOME LOANS

WASHINGTON - The U.S. Department of Housing and Urban Development today released results of its latest survey of market conditions for fixed rate, long-term, level payment home loans as well as interest rates for home construction funds. The October 1, 1999 survey found that the most frequently quoted contract rate for HUD/FHA Section 203(b) mortgages being sold in the secondary market for immediate delivery was 8.00 percent. Typical prices for 8.00 percent contract interest rate loans produced a national average secondary market yield of 8.05 percent.

FHA secondary market yields decreased slightly. Secondary market yields on the most frequently quoted Section 203(b) contract rate went down 5 basis points for the U.S. average.

In the FHA primary mortgage market, the average FHA effective rate for all reported primary market quotes was 8.02 percent. Lenders reported that the most frequent rate being quoted to potential FHA homebuyers for 60 days or more "lock-in" commitments was 8.00 percent with an average of 30 basis points and an effective interest rate of 8.04 percent. Average basis points for the 8.00 percent primary rate were 100 basis points in the Southwest region, 50 basis points in the North Central, 33 basis points in the West, 25 basis points in the Middle Atlantic, 17 basis points in the Southwest and 0 basis points in the Northeast.

The national average contract rates for commitments on conventional loans for new home loans in the primary mortgage market went down 11 basis points from 7.87 percent in September to 7.76 for October. Existing home loans dropped 9 basis points from 7.89 percent to 7.80 percent for the same period.

The proportion of HUD offices reporting an adequate supply of construction funds on October 1 was 100 percent for FHA and for conventional financings. For the trend of builders' plans, in the latest survey the majority of builders remained in the stable building plan category for each home price class. The proportion on October 1 was 72 percent for low-priced homes, 76 percent for moderate-priced homes, and 73 percent for high-priced homes.

On October 1 the proportion of HUD Field Offices reporting a stable trend in builders' unsold inventory of new homes was 79 percent, while 14 percent noted a declining trend and 7 percent reported an advancing situation. An advancing trend is indicative of a growing inventory of homes, meaning either over-production and/or slower new home sales. Conversely, a declining inventory of new homes indicates demand would be relatively stronger than supply. One year ago the proportion of offices reporting a stationary trend was 74 percent, a declining trend of 17 percent, and 9 percent reported an advancing trend.

Date of next release: November 23, 1999
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