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 June 1, 2000, 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 8.50 percent. Typical prices for 8.50 percent contract interest rate loans produced a national average secondary market yield of 8.58. FHA secondary market yields on the most frequently quoted Section 203(b) contract rate increased just two 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 8.43 percent. Lenders reported that the most frequent rate being quoted to potential FHA homebuyers for 60 days or more "lock-in" commitments was 8.50 percent with an average of 17 basis points and an effective interest rate of 8.52 percent. Average basis points for the 8.50 percent primary rate were: 1 basis point in the West, 33 basis points in the Northeast and
0 in the Southeast and North Central. The Middle Atlantic and Southwest did not have any quotes for the dominant rate in June.

The national average contract rate for commitments on conventional loans for new home loans in the primary mortgage market decreased 3 basis points from 8.29 percent in May to 8.26 percent for June. Existing home loans remained the same for June at 8.27 percent.

The proportion of HUD offices reporting an adequate supply of construction funds on
June 1 was 100 percent for both FHA and 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 June 1 was 84 percent for low-priced homes, 81 percent for moderate-priced homes, and 83 percent for high-priced homes.

On June 1 the proportion of HUD Field Offices reporting a stable trend in builders' unsold inventory of new homes was 77 percent, while 20 percent noted a declining trend and only
3 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 67 percent, a declining trend of 23 percent, and 10 percent reported an advancing trend.