Aug 26, 2014 | Housing Market
The Department of Commerce reported July sales of new homes dropped by 2.40 percent over June to a four month low. Analysts noted that although July’s reading of 412,000 new homes sold fell short of expectations and June’s reading, the new homes sector is volatile and subject to change.
June’s reading of 406,000 new homes sold was revised to 422,000 new homes sold; expectations were based on the original reading. Three of four regions posted a slower rate of growth for home prices with only the South posting a gain.
The average price of a new home in the U.S. rose to $269,800, which is 2.90 percent higher than June’s average home price. Inventories of new homes increased to a six-month level based on current sales pace.
This was the highest inventory of new homes available since 2011. Strict mortgage credit requirements and an elevated national unemployment rate contributed to the lower rate of home value appreciation and higher inventories of new homes.
The good news: New home sales increased by 12.90 percent year-over-year in July.
Existing Home Sales Rise: Steady Mortgage Rates, Rising Rents Cited
The National Association of REALTORS® reported that July sales of previously-owned homes rose from June’s revised figure of 5.03 million sales to 5.15 million sales and achieved the highest reading for 2014.
The existing home sales readings are calculated on a seasonally adjusted annual basis. Existing home sales were 4.30 percent lower than for July 2013, which had the highest reading for existing home sales in 2013.
Lawrence Yun, chief economist for the NAR, said that a growing inventory of available pre-owned homes for sale and strengthening labor markets contributed to sales growth. Mr. Yun said that July’s pace of sales was expected to continue based on mortgage rates holding steady and rising rents for apartments.
The inevitable rise of mortgage rates and increasing home prices were cited as factors that could cool existing home sales in coming months. With the Fed scheduled to complete its asset purchase program in October and changes to the Fed’s target federal funds rate expected within months, mortgage rates are expected to rise. Affordability looms as an obstacle to sales; home prices continue to rise as wages grow at a slower pace than home prices.
The national median price for existing homes was $222,900, which was a year-over-year increase of 4.90 percent. This was the 29th consecutive month for year-over-year price gains for existing homes. The inventory of existing homes for sale increased by 3.50 percent to 2.37 million available homes and represents a 5.50 month supply. Unsold inventory of existing homes is 5.80 percent higher year-over-year. As compared to July 2013’s reading of 2.24 million available pre-owned homes.
Homes sold through foreclosure or short sales have steeply declined from 36 percent of existing home sales in 2009 to approximately 9 percent in July and were down from 15 percent of existing home sales in June.
Nov 29, 2012 | Housing Analysis
Sales of newly-built homes took a small step lower in October, but remain strong.
According to the Commerce Department, New Home Sales slipped 1,000 units last month, falling to 368,000 units on a seasonally-adjusted, annualized basis.
The final reading fell short of Wall Street expectations, and the government revised downward its initial findings from August and September by 2,000 units and 20,000 units, respectively.
A “new” home is a home that is considered new construction.
Furthermore, the number of new homes for sale nationwide ticked higher to 147,000 — the highest reading in 9 months.
However, in taking a broader look at October’s New Home Sales report, we see obvious strengths. For example, although home sales slipped last month, it remains the third-highest tally since the April 2010 expiration of the federal home buyer tax credit.
The highest reading? Last month’s 369,000.
In addition, the national new home inventory has dropped, off 8% from last year. Fewer homes for sales has been a driving force behind rising home prices. As compared to one year ago, the median new home price is up nearly six percent. More demand for buyers is a factor, too.
At the current sales pace, the complete U.S. inventory of new homes for sale would “sell out” in 4.8 months. This is a noteworthy data point because, as analysts point out, a 6.0-month supply of homes marks a market in balance.
Today’s new homes market, therefore, is a seller’s market; one in which home builders may be gaining pricing power and negotiation leverage over buyers. It’s one reason why home builder confidence has climbed to a 5-year high.
For buyers of new construction, then, in Worcester County area and nationwide, 2013 is a critical year. Home prices may rise and mortgage rates may, too. And, along the way, it may get tougher to get a “great deal” on new construction.
If you’re planning to buy, therefore, consider moving up your time frame. After October’s small step backward, the time to buy a newly-built home may be now.
Oct 29, 2012 | Mortgage Rates
Mortgage markets ended the week slightly better last week. Wall Street took its cues from U.S. economic data, from developments in Europe, and from the Federal Reserve, moving mortgage rates lower in Worcester County area and nationwide.
Pricing for both conforming and FHA mortgage rates improved between Monday and Friday, with the majority of gains occurring late in the week.
The timing of the gains explains why Freddie Mac’s weekly mortgage rate report showed the average 30-year fixed rate mortgage rate rising this week when, in fact, it did not. Because Freddie Mac conducts its mortgage rate survey at the start of the week, its survey respondents had no time to acknowledge late-week improvements.
Freddie Mac said the 30-year fixed rate mortgage rate rose to 3.41% for home buyers and refinancing households willing to pay 0.7 discount points at closing plus a full set of closing costs.
Mortgage applicants choosing zero-point mortgages should expect a higher rate.
The biggest event of last week was the Federal Open Market Committee’s seventh scheduled meeting of the year. The FOMC’s post-meeting press release described the U.S. economy as growing, and inflation as stable. The Fed re-iterated its pledge to QE3, a stimulus program geared at keeping mortgage rates suppressed. The group also said it would hold the Fed Funds Rate low until at least mid-2015.
Lastly, the Fed showed optimism about the broader U.S. housing market — and for good reason. Since October 2011, housing has trended higher and last week saw the release of the September New Homes Sales report and the September Pending Home Sales Index. Both showed strength.
This week, the market’s biggest story is Friday’s release of the October Non-Farm Payrolls report. Jobs are a keystone in the U.S. economic recovery so the monthly jobs report holds sway over mortgage rates. If the number of jobs created exceeds Wall Street expectations, mortgage rates in Worcester County area will rise and purchasing power will shrink.
The U.S. economy has added jobs in each of the previous 24 months.
Oct 26, 2012 | Housing Analysis
The U.S. housing market appears headed for a strong close to 2012.
According to the U.S. Census Bureau, the number of new homes sold jumped to 389,000 units in September 2012 on a seasonally-adjusted, annualized basis.
Not since the expiration of the $8,000 federal home buyer tax credit in April 2010 have new homes sold at such volumes.
September’s tally marks a 5.7 percent increase from the month prior, and a 27 percent increase from September 2011. There are now just 145,000 new homes for sale nationwide and, according to the National Association of Homebuilders, buyer demand continues to grow.
At today’s pace of home sales, the entire U.S. inventory of new homes for sale would sell out in 4.5 months. By way of comparison, in January 2009, new home supply was 12.1 months.
When home supplies dip below 6.0 months, analysts say, it signifies a “seller’s market”; one in which sellers tend to benefit from negotiation leverage over buyers. The national New Home Supply has been below 6.0 months since October 2011.
Perhaps that’s one reason why the average new home sale price has climbed 14.5 percent over the past 12 months to $292,400; and why median new home sales prices have made a similar jump.
With builders reporting prospective buyer foot traffic at its highest level since 2006, home supplies are shrinking at a time when buyer demand is rising. Low mortgage rates and affordable housing choices contribute, too.
30-year fixed rate mortgage rates have been under 4 percent for all of 2012, and are now under 3.50% nationwide. Low rates make for low monthly payments but, like home prices, conditions can’t remain buyer-friendly forever.
For today’s home buyers of new construction, the outlook for finding “great deals” in 2013 may be grim. New home prices are expected to rise and supplies will continue to get scarce. The best homes in the new construction market, therefore, may be the ones you buy today.
By early-next year, low home prices may be gone, and low mortgage rates may be, too.
Sep 27, 2012 | Housing Analysis
The market for new construction homes remains strong nationwide.
According to the U.S. Census Bureau, the number of new homes sold slipped 0.3 percent in August 2012 to a seasonally-adjusted, annualized 373,000 units sold — just 1,000 units less than July 2012 and the second-highest reading since April 2010.
April 2010 was the last month of that year’s tax credit which granted home buyers up to $8,000 off of their federal tax bill.
As compared to one year ago, sales of new homes are higher by 28%.
Furthermore, during the same time frame, the median sale price of a new home moved higher by 17 percent. The rising prices, in part, are the result of a shrinking national new home inventory.
When August ended, there were just 141,000 homes for sale nationwide — a 12% drop from the year prior. This suggests that home builders have stopped building without buyers; that some lessons were learned in last decade’s homebuilding frenzy.
At today’s pace of home sales, the entire stock of new homes nationwide would sell out in 4.5 months. As a comparison point, in January 2009, the new home supply reached 12.1 months.
With home supply below 6.0 months, analysts say, it signifies a “seller’s market” and home supplies have not been north of 6.0 months since October 2011. And, based on recent homebuilder confidence surveys, supply doesn’t appear headed back over 6.0 months anytime soon.
Builders in Worcester County area and nationwide report that prospective buyer foot traffic is at its highest point in 6 years. Low mortgage rates and affordable housing choices have held demand for new homes strong. Rising rents contribute, too.
For today’s home buyers of new construction, then, shrinking supply amid rising demand portends higher home prices into 2013 and beyond. If you’re a buyer of new construction, therefore, think about moving up your time frame.
The best deals left in housing may be the ones you grab while the calendar still reads 2012. By January, low prices may be gone, and low rates may be, too.
