The Real Estate News Brief: Mortgage Rates Rise, Forbearances Dip, California to Pay 100% of Back Rent


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In this Real Estate News Brief for the week ending June 26th, 2021... mortgage rates are back above 3%, forbearance programs are dwindling, and California renters could get their back rent paid off.

Economic News

We begin with economic news from this past week. The latest report on inflation shows the PCE index rose 3.4% in May, compared to a year earlier. (1) That’s the largest annual increase in almost 30 years, according to CNBC. The Personal Consumption Expenditures index tracks changes in the price of goods and services. It’s considered a more wide-reaching index than the Consumer Price Index, and is the one used by the Federal Reserve.

The weekly unemployment report shows the job recovery may be hitting a speed bump. (2) The Labor Department says that initial jobless claims only fell 7,000, and are still above 400,000. MarketWatch says that Wall Street economists had expected a much bigger drop in new claims. The total number of people collecting unemployment from state and federal programs was 14.8 million as of June 5th.

Consumer spending has settled down from a reopening surge in recent months. The government says it was about the same last month as it was in April, but spending is still higher than it was before the pandemic. MarketWatch says it’s increasing enough to “keep the economy humming.” (3)

Turning now to the housing market, economists say that new home sales were disappointing. The Census Bureau says they were down 5.9% in May compared to the month before. (4) But even with that drop, they are still up more than 9% from May of 2020. says about 20% of builders are putting limits on production because of high lumber and material prices and a labor shortage. Lumber prices have started to come down, however. (5)

Existing home sales are also down. They were down .9% in May, to a seasonally adjusted annual rate of 5.8 million. But they are still 45% higher than they were a year ago. (6) Although economists say the pandemic-inspired home buying frenzy may be cooling off, they don’t expect a huge drop in demand. Michael Gregory of BMO Capital Markets told MarketWatch that “demand should remain warm” because of low mortgage rates, millennials moving ahead with home buying plans, and pandemic savings that are helping people come up with a down payment.

Mortgage Rates

Mortgage rates moved back above the 3% mark. Freddie Mac says the annual 30-year fixed-rate mortgage was up 9 basis points, to 3.02%. The 15-year moved up 10 basis points to 2.34%. Freddie Mac economists expecte that rates will continue to move higher, but gradually. (7)

In other news making headlines...

Housing Affordability Falls

Housing affordability has fallen in all four regions of the U.S. thanks to higher home prices. says the median family income has dropped about $7,000 to $88,500 while mortgage payments have risen. NAR’s index shows they have gone up 16% year-over-year. The average was $1020 in April of 2020 and it’s now $1,184. (8)

As a percent of income, mortgage payments accounted for 13.7% of a family’s paycheck last year. This year, they account for about 16%. NAR’s research data specialist, Michael Hyman, says the combination of higher prices and smaller paychecks “is not a good combination for a potential home buyer.”

Forbearances Dip Below 4%

Some homeowners are getting their mortgage payments back on track. The Mortgage Bankers Association says that forbearances have dipped below 4% for the first time in a year. (9)

According to an association survey, they fell 11 basis points last week, to 3.93%. The report also shows that new forbearance requests have dropped to an extremely low level.

California Extends Eviction Ban But Will Pay Back Rent

California landlords may appreciate this next story. Governor Gavin Newsom and lawmakers announced a plan to extend the moratorium through September, and pay 100% of all back rent for eligible tenants. (10)

The current moratorium is set to expire on June 30th, which is the same day that Federal eviction protections expire. The agreement between Newsom and the leaders of the state Senate and Assembly, could be approved as early as Monday, June 28th.

Senate President Pro Tem, Toni Atkins, says the goal is to avoid mass evictions. Atkins said in a statement that the “housing situation in California was a crisis before COVID, and the pandemic has only made it worse.”

New Record for Digital Real Estate

Real estate that only exists in cyberspace is gaining ground as an investment option, although it’s considered to be very speculative and volatile. reports that a chunk of digital real estate in the online world of Decentraland sold for almost a million dollars. This kind of real estate is bought and sold with a type of cryptocurrency called nonfungible tokens, or NFTs, and is based on a blockchain.

In a news release for an NFT Summit that took place recently, it says: “From music to sports, real estate to digital fashion, art to collectibles: non-fungible tokens (NFTs) are transcending industries and transforming economies. They’ve led to an explosion of disruptive technologies, the digitization of culture and assets, and the creation of an immersive internet.

The piece of digital real estate that was purchased consisted of 259 units of land. That’s equal to 16 square acres. Earlier this month, another large purchase was made for digital real estate in a virtual world, or “metaverse,” called The Sandbox. That piece of cyberspace was bought for $650,000.

You might wonder what people do with this real estate. explains that “users purchase land to show off their digital art collections, walk around with friends, visit buildings, or to attend events.”

Okay, wrap your head around that one! You’ll find links to our sources in the show notes at

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