(Updates with existing-home sales in fifth paragraph.)
Oct. 20 (Bloomberg) -- U.S. mortgage rates were little changed, keeping borrowing costs close to the lowest level on record as demand for home loans slumps.
The average rate for a 30-year fixed loan declined to 4.11 percent in the week ended today from 4.12 percent, Freddie Mac said in a statement today. The average 15-year rate increased to 3.38 percent from 3.37 percent, according to the McLean, Virginia-based mortgage-finance company. The longer-term lending rate fell to 3.94 percent two weeks ago, the lowest level in Freddie Mac records dating back to 1971.
Americans remain cautious about buying homes as property values decline, lenders tighten credit and the jobless rate sticks above 9 percent. Mortgage applications dropped 15 percent in the period week Oct. 14, the biggest decline this year, according to a Mortgage Bankers Association index. A gauge of refinancing tumbled 17 percent and the purchasing measure fell 8.8 percent, the most in two months.
“If you look at mortgage applications, the low interest rates have done nothing to stimulate housing,” said Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts. “The single-family home market is stuck at the bottom.”
Sales of previously owned homes fell 3 percent to a 4.91 million annual rate in September, figures from the National Association of Realtors showed today. The median price declined 3.5 percent from a year earlier. Transactions involving financially distressed properties -- comprising foreclosures and short sales, where the price is less than the loan balance -- accounted for 30 percent of the total.
Builders began work on more U.S. homes than forecast in September, largely because of a surge in construction of apartments and other multifamily dwellings, Commerce Department data showed yesterday. Single-family housing starts climbed 1.7 percent from the previous month while work on multifamily homes surged 51 percent.
The Standard & Poor’s 1500 Homebuilding Index rose the most in two years on Oct. 18 after a measure of developer sentiment unexpectedly increased to its highest level since May 2010. The National Association of Home Builders/Wells Fargo index climbed to 18 in October from 14 the previous month, the Washington- based group showed. Readings below 50 mean more respondents said conditions were poor.
--Editors: Christine Maurus, Kara Wetzel
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