Home sales down but experts not worried

Mortgage rates fell this week as global market concerns resurfaced and government bond yields moved lower. Meanwhile, more data shed light on the housing market's strengthening recovery.

Sales slow down, prices inch up

Sales of existing homes fell from a downwardly revised, seasonally adjusted annual rate of 5.58 million in July to 5.31 million in August, which amounts to a 4.8 percent decrease, according to data released this week from the National Association of Realtors.

However, the August rate is 6.2 percent higher than the same time last year.

"The housing report may be viewed as negative, but I think we can dismiss the decline as being a normal down after several ups," says Joel Naroff, president and chief economist at Naroff Economic Advisors in Holland, Pa.

Also released this week was the Federal Housing Finance Agency's monthly house price index. Prices increased 0.6 percent on a seasonally adjusted basis from June to July and were up 5.8 percent from July 2014.

Yields take a tumble

U.S. Treasury yields continued falling this week following the Federal Reserve's decision last week to hold off raising the federal funds rate.

"We did see a pretty decent drop in the 10-year (Treasury yield), which has a high correlation to where mortgage rates are priced," says Bryan Sullivan, chief investment and strategy officer at loanDepot in Foothill Ranch, Calif.

Falling oil prices and China's ongoing economic turmoil added to the demand for government bonds, MarketWatch reported Tuesday. With bonds, yields fall as prices rise.

A look at this week's rates

• The benchmark 30-year fixed-rate mortgage fell to 4 percent from 4.06 percent, according to Bankrate's Sept. 23 survey of large lenders. A year ago, it was 4.3 percent. Four weeks ago, the rate was 4.03 percent. The mortgages in this week's survey had an average total of 0.26 discount and origination points. Over the past 52 weeks, the 30-year fixed rate has averaged 4 percent. This week's rate is equal to the 52-week average.

• The benchmark 15-year fixed-rate mortgage fell to 3.18 percent from 3.25 percent.

• The benchmark 30-year fixed-rate jumbo mortgage fell to 3.89 percent from 3.97 percent.

• The benchmark 5/1 adjustable-rate mortgage fell to 3.19 percent from 3.28 percent.

Rates will stay on roller coaster

Mortgage applications jumped nearly 14 percent last week compared with the previous week, according to the Mortgage Bankers Association's weekly survey. Purchases were up 9 percent and refinances soared by 18 percent.

It's common to see a surge in refinances around this time of year due to lower mortgage rates, says Michael Becker, branch manager at Sierra Pacific Mortgage in White Marsh, Md. But don't expect this decline to last very long.

"I think we're still going to see volatility moving forward," he says.

If the current interest rate environment suits your financial situation, take advantage of it, Sullivan says.

"It's probably good for the consumer in terms of historically low rates staying at these levels," he says.