With the current real estate slow down in progress it comes as no surprise that the home builders of America have their level of confidence down a bit.

On Monday the National Association of Home Builders released their latest report on their housing index. The builders that were surveyed had their lowest confidence level since February 1991 with a reading of 28.

Builders are asked about their perception of the future outlook for the coming six months as well as rate the current amount of traffic of prospective buyers. The answers are then used to calculate a seasonally adjusted index. Any number over 50 means more builders view sales conditions as good than poor.

Unfortunately it’s going to get worse before it gets better according to NAHB chief economist David Seiders:

“Home sales most likely will erode somewhat further in the months ahead and improvements in housing starts probably will not be recorded until early next year. As a result, we expect housing to exert a drag on economic growth during the balance of 2007.”

It looks like new construction home buyers will continue to see builders offering free upgrades to get them to sign the dotted line on the purchase agreement.

Good news for all experienced home sellers that are looking to sell their home by owner.

A new company called Iggys House is offering free MLS listings in 20 different states covering over 65% of the United States real estate market, Inman News reports. The service is available in California, Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, New York, North Carolina, Oregon, South Carolina, Tennessee, Texas, Virginia and Washington.

In a press release the company’s CEO Joseph Fox said: “By breaking open the MLS we are providing over $500 million worth of services for free to millions of home buyers each year”

“For the 1.1 million people who try to ‘sell by owner’, we provide incredible exposure to millions of buyers via the MLS. For the over 400,000 sellers who pay a fee to be MLS-listed, we now offer it for free” Fox continued.

If you’re not comfortable selling your home yourself, then Iggys House is not for you.

You would be the primary contact for your MLS listing and Iggys House does not offer sellers any personal help.

If you’re comfortable doing this then Iggys House will save you $250-400 that flat-fee MLS brokers normally charge to list your home.

Bad news for home borrowers and the real estate industry. Mortgage rates have gone up significantly this summer.

On Friday June 15, a home buyer was quoted between 6.75% and 7.00% with 0 points for a 30 year fixed conforming mortgage depending on the broker or lender he or she was talking to. A jumbo 30 year fixed mortgage was between 7.00% and 7.25% with 0 points. Adjustable rate mortgages were pretty much in the same range.

So what does this mean? If you’re buying or refinancing a home in California and want to borrow $500,000 you’re paying $409 more per month at 7.00% than at 5.75% which was a common rate available 2-2.5 years ago.

The pain will be quite severe for an already stretched and over-leveraged home owner in San Diego that has an adjustable rate mortgage that reset this summer.

If you’re borrowing $200,000 to buy a home in Indiana you would fork over $1,297 a month today at 6.75%. Some fortunate borrowers currently sit with 30 year fixed mortgages at 5.50% paying $1,136 a month or $161 less than the current rates. That’s a car payment.

So what to do? If you’re in the process of buying a home right now and got pre-qualified in March or April then you should get in touch with your loan officer. If you were stretching yourself back then you might need to adjust the price range you’re looking at.

For a home buyer it’s really hard to time mortgage rates. Your only bet is to make sure you get the best rate the day you’re ready to lock your rate.

Will rates go up or down? It depends on which economist or pundit you ask. But it’s not unreasonable to assume that mortgages will be in the 7.00% to 8.00% range for a while.

Does that sound high to you? In the short-term perspective it sure is.

But our collective memory is short. It’s quite possible that even your loan officer has no personal recollection of interest rates above 8%.

To add some perspective:

In June of 2000 the average 30 year fixed mortgage rate was 8.43% according to HSH Associates, a research firm located in Pompton Plains, NJ. In June of 1987 the same mortgage rate was 10.60%.

But tell that to the family that is about to refinance their adjustable rate mortgage this summer…

-Ola