|**Secondary Market Report** | **November 1998**
|--------------------------- | -----------------



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Secondary Market Prices and Yields
and Interest Rates for Home Loans
November 1, 1998



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`News Release
HUD No. 98-631                                                  FOR RELEASE:
L. Richard Keyser (202) 755-7500 x137                           November 30, 1998
www.hud.gov/fha/comp/rpts/fharpts.html.`



`WASHINGTON � The U.S. Department of Housing and Urban Development today 
released the results of its latest survey of market conditions for fixed rate, 
long-term, level payment home loans as well as interest rates for home con-
struction funds.
 
        The November 1, 1998, 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 7.00 percent. Typical prices for 7.00 percent contract interest 
rate loans produced a national average secondary market yield of 7.07 percent.

        FHA secondary market yields were up in all regions. Changes in secondary 
market yields on the most frequently quoted Section 203(b) contract rate ranged from 
an increase of 50 basis points in the Southeast and Southwest regions to an increase 
of 60 basis points in the West. 

        In the FHA primary mortgage market, the average FHA effective rate for all 
reported primary market quotes was 6.94 percent. Lenders reported that the most 
frequent rate being quoted to potential FHA homebuyers for 60 days or more "lock-in" 
commitments was 7.00 percent with an average of 30 basis points and an effective 
interest rate of 7.04 percent.
 
        Average basis points for the 7.00 percent primary rate were: zero basis points 
in the Northeast, 17 basis points in the Southeast, 33 basis points in the North 
Central, 50 basis points in the Southwest, and 19 basis points in the West.
 
        The national average contract rates for commitments on conventional loans for 
new and existing homes in the primary mortgage market went up 22 basis points to 6.86 
percent in new home loans, and up 20 basis points to 6.85 percent in existing home loans. 
 
        The proportion of HUD offices reporting an adequate supply of construction funds 
on November 1 was 98 percent for FHA and 98 percent for 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 November 1 was 76 percent for low-priced homes, 64 percent for moderate-priced homes, 
and 60 percent for high-priced homes.

        On November 1, the proportion of HUD Field Offices reporting a stable trend in 
builders' unsold inventory of new homes was 75 percent, while 14 percent noted a declining 
trend and 11 percent 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 somewhat of a sellers' market, where demand would be relatively stronger 
than supply. One year ago the proportion of offices reporting a stationary trend was 
78 percent, a declining trend 13 percent, and an advancing trend 9 percent.`

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Date of next release: November 24, 1998



`The entire news release and all tables are now available on the Web:
 http://www.hud.gov/fha/comp/rpts/fharpts.html.`

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Date Last Modified: 12/01/98**