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.
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.
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.
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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