23
Oct
By support
Market Outlook

Sales of Pre-Owned Homes Hit Second Highest Level in 8 Years

Sales of Pre-Owned Homes Hit Second Highest Level in 8 YearsHousing markets show continued strength as the National Association of Realtors® reported that sales of existing homes reached their second highest level since February 2007. Sales of pre-owned homes increased by 4.70 percent and reached 5.55 million sales on a seasonally adjusted annual basis against analyst expectations of 5.34 million sales and August’s reading of 5.30 million sales of previously owned homes.

August’s reading for existing home sales was revised downward from 5.31 million sales. Economists said that August’s lower than expected sales of existing homes may have been influenced by volatility in financial markets and concerns over mortgage rates may have kept would-be home buyers on the sidelines, but September’s reading showed that August’s dismal readings were an aberration rather than a trend.

Higher Home Sales Driven by Low Mortgage Rates

Low mortgage rates are making homes more affordable, a fact that’s reflected by current inventories of available homes. At the current sales pace, there is a 4.8 month supply of available homes as compared to September 2014’s reading of a 5.40 month supply of available homes. 

In addition to average mortgage rates hovering below four percent, industry advocates s cited stronger job markets and also indicated that a slight easing of mortgage credit standards are driving home sales. Increased demand for homes is causing home prices to rise. The national average price of a home rose to $221,900, which was 6.10 percent higher than for September 2014.

Housing Recovery: 2015 Could Show Best Results Since 2007

Lawrence Yun Chief Economist for the National Association of Realtors® said that although some economists expect home sales to cool down before the end of 2015, it’s possible that 2015 will end with the best home sales figures since 2007. Mr. Yun said characterized the housing recovery as “a slow steady process” and said “This year, it’s finally coming out.”

On the other hand, some analysts are skeptical about how housing markets can maintain their momentum into 2016. First-time buyers are losing market share in home sales, with their participation rate decreasing from 32 percent in August to 29 percent in September. First-time buyers play an integral role in housing markets, as their purchase of starter homes allows first-time homeowners to buy larger homes. First-time buyers also represent new demand for homes, which is essential to expanding housing markets.

23
Sep
By support
Market Outlook

National Association of REALTORS – Sales of Pre-Owned Homes Dip

National Association of REALTORS Sales of PreOwned Homes Dip Sales of previously owned homes dropped in August by 4.80 percent on an annual basis for the first time in four months; the dip was likely caused by rising home prices. August sales were reported at a rate of 5.31 million; July’s rate was 5.58 million sales of previously owned homes.

Sales of existing homes have risen 6.20 percent year-over-year; stronger labor markets and low mortgage rates were seen as contributing factors. Although economists expect the Federal Reserve to raise its target federal funds rate before year end, home sales are expected to stay strong through 2016. A Fed rate hike would mean that lending rates for consumer credit and mortgage loans would increase.

Analysts noted that July sales of pre-owned homes hit a post-recession high and characterized August’s lower reading as a “hiccup.” Month-to-month readings often reflect volatility caused by transitory influences; analysts typically rely on month-to-month rolling averages to track trends in housing markets.

Home Sales Thwarted by Slim Supply of Available Homes

Low inventories of homes for sale are likely keeping sales of previously owned homes from achieving their potential. In August, there were 2.29 million homes on the market, which represents a 5.20 month supply under current market conditions. August’s volume of available homes was 1.70 percent lower than for August 2014.

The national median sale price for a home was $228,700 in August; this represents a year-over-year increase of 4.70 percent.

First-time Buyers Getting Back in the Game

First-time home buyers accounted for 32 percent of existing home sales in August as compared to a normal reading of 40 percent of existing home sales. Investors purchased 12 percent of pre-owned homes sold in August as compared to a post-recession high of 25 percent. Less competition from investors should allow more owner-occupant buyers to purchase homes without being priced out of bidding wars. 

On another positive note, distressed sales of pre-owned homes comprised only 7 percent of sales, this is a strong indication that the tide of post-recession foreclosures is ending. 

FHFA House Price Index Also Shows Higher Home Prices

FHFA, the agency that oversees Fannie Mae and Freddie Mac, reported that home prices of homes associated with mortgages owned or backed by the two government-sponsored entities rose by 0.60 percent in July as compared to June’s reading of 0.20 percent. Home prices were up 5.80 percent year-over-year in July, which is 1.10 percent below the peak index reading of 2007 and was near the November 2006 index reading.

Year-over-year home price readings for the nine census divisions were all positive and ranged from + 2.20 percent in the New England division to +9.40 percent in the Mountain division. Month-to month house prices ranged from -1.20 percent in the New England division to +1.60 percent in the Mountain division.

27
Jul
By support
Market Outlook

What’s Ahead For Mortgage Rates This Week – July 27, 2015

Whats Ahead For Mortgage Rates This Week July 27 2015Last week’s scheduled economic news releases were limited as no news was released on Monday or Tuesday, but good news did arrive in the form of a dip in mortgage rates for fixed rate loans. The National Association of Realtors® reported higher sales of pre-owned homes and FHFA reported that home price growth associated with mortgages held or backed by Fannie Mae and Freddie Mac held steady in May.

Sales of Pre-Owned Homes and FHFA House Prices Rise

According to the National Association of Realtors®, June sales of existing homes reached their highest level since February 2007. Sales of used homes reached a seasonally-adjusted annual rate of 5.47 million previously owned homes sold against expectations of 5.42 million homes and May’s reading of 5.32 million pre-owned homes sold. By comparison, sales of existing homes remain about 24 percent below a pre-recession peak. Lawrence Yun, chief economist for the National Association of Realtors® cited improving labor markets and home buyer concerns over rising mortgage rates as factors contributing to May’s reading for existing home sales.

FHFA, the federal agency that oversees Fannie Mae and Freddie Mac, reported that home prices associated with sales of homes financed with loans owned or backed by Fannie and Freddie rose by 0.40 percent month-over-month in May and held steady with April’s revised reading of 0.40 percent. FHFA home prices rose by 5.70 percent year-over-year in May.

Mortgage Rates Mixed

Freddie Mac reported that average rates for 30 and 15-year mortgages fell while the average rate for a 5/1 adjustable rate mortgage ticked upward by one basis point. The average rate for a 30-year fixed rate mortgage fell by five basis points to 4.04 percent; the average rate for a 15-year fixed rate mortgage fell by four basis points to 3.21 percent. The rate for a 5/1 adjustable rate rose by one basis point to 2.97 percent. Average discount points were unchanged at 0.60 percent, 0.60 percent and 0.50 percent respectively.

Expected reports on weekly jobless claims and new home sales were not released last week.

What’s Ahead

Scheduled economic reports for this week include the usual weekly reports on jobless claims and mortgage rates along with the Case-Shiller Home Price Index reports for May and the Commerce Department’s report on pending home sales. The Federal Open Market Committee of the Federal Reserve has scheduled an announcement on Wednesday, and reports on consumer confidence and consumer sentiment will also be released next week.