The 30-Year mortgage rate retraced and remained at or below 3 percent for the sixth straight week. The move kept supporting housing prices, which already rose at the fastest pace since at least 2013.

30-Year Mortgage Rate Remained At or Below 3 Percent For The Sixth Straight Week

According to Freddie Mac, the 30-year fixed-rate mortgage (FRM) averaged 2.95 percent for the week ending May 27, 2021. It was down from the previous week when it averaged 3 percent. A year ago at this time, the 30-year FRM averaged 3.15 percent.

Over the same period, Freddie Mac report also showed the 15-year fixed-rate mortgage declined slightly. It averaged 2.27 percent, down from 2.29 percent last week. A year ago at this time, the 15-year FRM averaged 2.62 percent.

Low Mortgage Rates Kept Supporting Housing Prices

Coupled with a shortage of homes for sale, low mortgage rates are supporting housing prices. On Tuesday, the S&P CoreLogic Case-Shiller index (20-City Composite) soared 13.27 percent in March (up from 12 percent in February). In the meantime, the S&P CoreLogic Case-Shiller index of national property values climbed 13.19 percent YoY, the biggest jump since December 2005. Furthermore, the FHFA (Federal Housing Finance Agency) purchase-only price index rose 13.9 percent YoY in March, the largest jump on record.

🇺🇸 #Housing Prices Skyrocketed In March, Increasing Pressure For #Fed Taperinghttps://t.co/gflx226j2I

— Christophe Barraud🛢 (@C_Barraud) May 25, 2021

Even though housing prices growth will slow this summer (due to unfavourable base effects, a rebound in inventory, the end of foreclosure moratorium and mortgage forbearance), the trend will gain traction in the short term. According to my proxies, the S&P Corelogic index for April — that will be released on June 29th — should increase by more then 14 percent on a YoY basis.

Focusing on monetary, the debate concerning MBS purchases from the Fed will gather more attention in the coming months. It will likely result in tapering before year-end.