Low interest rates, fueled by the Federal Reserve's monthly purchase of mortgage-backed bonds and 10-year U.S. Treasury notes, are one of the components that helped lead the housing recovery—and they’re yet another reason that investors will be closely watching U.S. Federal Reserve Chairman Ben Bernanke later this week.
According to SNL Financial, the US average for the 30-year fixed rate stands at 3.94 percent, or higher by 43 basis points since January 1. Jason Lail, manager of the real estate research team at SNL, told Big Data Download, “Some investors are of the opinion that the Fed could ease up on the bond-buying program that has helped to keep rates so low over the last year or so. Others feel as if the current recovery trajectory is unsustainable without continued bond buybacks by the Fed.”
Investors will get a clearer picture of where rates stand after the Fed’s Bernanke speaks later this week. He is expected to indicate whether the Fed will taper its long-running bond-buying program.
Homebuilders that have the most exposure in the Western region have given investors hefty returns this year. Shares of KB Home, Meritage Homes and Standard Pacific all have risen more than 20 percent since the beginning of the year. Lail points out a 27 percent increase in new home sales and 40 percent growth in housing starts year-over-year in the Western region.