The Commerce Department said Tuesday new home sales sank by 7.8% last month following another down month in April. This as mortgage rates are also down, too — 30-year mortgages rates are 3.8% on average, just a hair above a nearly two-year low.
Rates like these can make buying a home seem a lot cheaper.
“In the last few months, we’ve seen big gains in purchasing power or house-buying power for consumers,” said Mark Fleming, chief economist with First American.
But monthly fluctuations in mortgage rates probably aren’t going to make or break a decision to buy a house, said Blair DuQuesnay, an investment adviser at Ritholtz Wealth Management.
“If we just look at a $200,000 mortgage, a 1 percentage point drop in a 30-year rate equates to about 100, maybe $125 a month in savings,” DuQuesnay said.
Plus, those ultra-low mortgage rates aren’t for everybody. DuQuesnay said a lot of factors can affect a homebuyer’s mortgage rate, such as their credit score, their income and even the type of house they’re buying.
“The single largest impediment for the first-time homebuyer to becoming a homeowner isn’t the cost of financing, it’s accumulating that downpayment,” Fleming said.
And if a borrower doesn’t accumulate enough of a downpayment, the mortgage rate can rise, too.