HUD RELEASES APRIL 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 April 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 7.00 percent. Typical prices for 7.00 percent contract interest rate loans produced a national average secondary market yield of 7.07 percent.

FHA secondary market yields were mixed. Changes in secondary market yields on the most frequently quoted Section 203(b) contract rate ranged from an increase of 4 basis points in the North Central region to a decrease of 1 basis point in the Southeast.

In the FHA primary mortgage market, the average FHA effective rate for all reported primary market quotes was 7.21 percent. Lenders reported that the most frequent rate being quoted to potential FHA homebuyers for 60 days or more "lock-in" commitments was 7.00 percent with an average of 37 basis points and an effective interest rate of 7.05 percent. Average basis points for the 7.00 percent primary rate were zero basis points in the Middle Atlantic region, 17 basis points in the Southeast, 18 basis points in the North Central, 50 basis points in the Southwest and 117 basis points in the West.

The national average contract rates for commitments on conventional loans for new and existing homes in the primary mortgage market went up 1 basis point to 7.03 percent in new home loans and up 1 basis point to 7.05 percent for existing home loans.

The proportion of HUD offices reporting an adequate supply of construction funds on April 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 April 1 was 64 percent for low-priced homes, 62 percent for moderate- priced homes, and 60 percent for high-priced homes.

On April 1 the proportion of HUD Field Offices reporting a stable trend in builders' unsold inventory of new homes was 65 percent, while 27 percent noted a declining trend and 8 percent 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 78 percent, a declining trend 20 percent, and an advancing trend 2 percent.

Date of next release: May 24, 1999
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