Navy Fellas Realty Group

Real Estate, Residential sales and purchase

Existing Home Sales Dip More Than Expected

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The 3 Golden Rules of Staging - Follow These and Sell Your Home FasterNovember sales of pre-owned homes dipped lower than expected and prior month’s readings according to the National Association of Realtors® (NAR). Analysts expected existing home sales to slow to a seasonally-adjusted annual rate of 5.30 million sales, which was based on October’s reading of 5.32 million sales. Instead, November’s reading dropped to 4.76 million sales. November’s drop represented a decline of 10.50 percent drop in existing home sales month-to-month; existing home sales were 3.80 percent lower year-over-year.

November’s reading represented the first time since September 2014 that the year-over-year reading for sales of pre-owned homes was lower than for the previous month. November’s reading was also the sharpest dip in pre-owned home sales since July 2010 and was cited as a “statistical anomaly.” Such a sharp drop in sales is unusual except when housing tax credits expire and cause home sales to drop after a last minute increase in home purchases by home buyers rushing to gain a tax credit advantage.

Tight Supply of Homes, New Regulations Cited as Cause for Lower Sales

A lean supply of available homes has caused rising demand for homes in 2015; an inadequate supply of homes typically causes prices to rise and sales to fall as affordability decreases. First-time buyers accounted for 30 percent of all home buyers in November, but the first-time buyers usually account for 40 percent of buyers. The national average home price rose to $220,300 in November, which represents a year-over-year increase of 6.30 percent. Home prices are rising faster than wages, which presents a major obstacle for would-be home buyers.

There was a 5.1 month supply of existing homes for sale in November, while the average supply is six months. Lawrence Yun, NAR’s chief economist, said that new regulations that increased the closing period for many home sales may have pushed more sales into December that otherwise would have closed in November.

Distressed property sales involving bank-owned homes and short sales increased in November, but this was due to financial institutions offering more homes for sale than in previous months. Analysts said that the increase in distressed sales did not represent an increase in mortgage default and foreclosure rates.

NAR forecasts that existing home sales will reach 5.20 million during 2016; this represents an increase of 2.90 percent. Upcoming reports on new and pending home sales will help provide a general picture of housing market trends as 2015 winds down.

Existing Home Sales Fall More Than Expected

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Existing Home Sales Fall More Than Expected

Sales of previously owned homes reached 5.36 million sales on a seasonally adjusted annual basis and fell by 3.40 percent in October according to the National Association of Realtors®. Rising home prices and a shortage of available homes strained housing markets. Concerns over potentially higher mortgage rates may have sidelined home buyers as concerns over an anticipated rate hike by the Federal Reserve persisted. Many analysts expect the Federal Reserve to raise rates at its December meeting of the Federal Open Market Committee, which oversees the Fed’s monetary policy. Raising the target federal funds rate would cause consumer interest rates and mortgage rates to increase as well.

Shortage of Available Homes Could Lead to “Inventory Crunch” Next Spring

Lawrence Yun, Chief Economist for the National Association of Realtors®, cited concerns over the shortage of homes for sale. He said that a persisting shortage of available homes could lead to an inventory crunch during next spring’s peak selling season.

Home prices increased by 5.80 percent year over year to an average of $219.600. Rising home prices impacted decreasing sales in the West and South while home sales held steady in the Northeast, where home price growth was the slowest.

First-time Home Buyers Lag in Home Purchase Numbers

Although first-time buyers represented 31 percent of home buyers in October, which was a two percent increase over September’s participation, first-time home buyers usually represent approximately 40 percent of buyers of existing homes. First-time buyers are important to housing markets as they generate sales of homes by homeowners wishing to move up or relocate.

First-time buyers can be adversely affected by home prices and mortgage rates; a shortage of first-time buyers could create further slowdowns in home sales. There is good news due to steady job growth, which is important to those who are considering buying a home. Strict mortgage credit requirements are showing signs of relaxing and home builders are encouraged by current and future housing market conditions.

The National Association of Realtors® forecasts that 2015 sales of pre-owned homes at a level of 5.3 million sales, which would be the highest sales rate since 2007. Sales of existing homes are expected to rise by 3 percent in 2016, but mortgage rates and affordability will continue to influence actual sales and overall health of housing markets in the New Year.

What’s Ahead For Mortgage Rates This Week – August 17, 2015

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What's Ahead For Mortgage Rates This Week August 17 2015Last week’s economic reports related to housing were few and far between other than weekly reports on new jobless claims and Freddie Mac’s mortgage rates survey.

Mortgage Rates Mixed, Jobless Claims Up

Freddie Mac reported that average mortgage rates rose for fixed rate mortgages and dropped for 5/1 adjustable rate mortgages. The average rate for a 30-year fixed rate mortgage rose by three basis points to 3.94 percent. The rate for a 15-year fixed rate mortgage rose by four basis points to 3.17 percent. The average rate for a 5/1 adjustable rate mortgage fell by two basis points to 2.93 percent. Discount points were unchanged at 0.60 percent for fixed rate mortgages and rose from 0.40 percent to 0.50 percent for 5/1 adjustable rate mortgages.

Jobless claims rose to 274,000 last week from the prior week’s reading of 269,000 new jobless claims filed. Analysts expected a reading of 270,000 new jobless claims. New claims were lower by 1750 claims for the past month at a seasonally adjusted rate of 266,250 new jobless claims. This was the lowest level since April of 2000. Analysts consider the four week average a less volatile reading for new jobless claims than weekly readings, which fluctuate more due to transitory influences.

What’s Ahead

Next week’s scheduled reports include several releases related to housing. Expected releases include: the National Association of Homebuilders Housing Market Index, Commerce Department reports on Housing Starts and Building Permits and the National Association of Realtors® report on sales of previously owned homes.

What’s Ahead For Mortgage Rates This Week – May 26, 2015

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Whats Ahead For Mortgage Rates This Week May 26 2015Last week’s economic reports included several readings related to housing The Wells Fargo/National Association of Home Builders Housing Market Index, the Commerce Department’s releases on Housing Starts and Building Permits, and the National Association of Realtors® report on Existing Home Sales supplied mixed news on recent developments in housing. Freddie Mac and the Labor Department released their usual reports on mortgage rates and weekly jobless claims. The details:

NAHB: Builder Confidence Slips, But Remains Positive

The Wells Fargo/ National Association of Home Builders (NAHB) released its Housing Market Index report for April. Although April’s reading was two points lower at 54, any reading over 50 indicates that more builders consider housing market conditions positive than not. April’s reading on builder confidence was the 11th consecutive index reading over 50.

According to NAHB, builder confidence in present housing market conditions dropped by two points to a reading of 59, while builder confidence in market conditions over the next six months rose one point to 64. Builder expectations for buyer foot traffic dropped by one point to 39. The lower readings for buyer traffic could be related to more home shoppers starting their home search online.

Building Permits, Housing Starts Show Improvement

The Commerce Department reported that building permits for April were higher at 1.14 million as compared to the March reading of 944,000 permits issued in March. Analysts expected a reading of 1.03 million permits issued, This was the highest reading for building permits since mid-2008.

Housing starts rose by a noteworthy 20 percent to a reading of 1.14 million in April, but analysts cautioned that this reading was inconsistent with the more moderate pace of improvement in overall housing markets. The Commerce Department reported that starts of single family homes rose by 17.60 percent to a reading of 666,000 starts. This was the highest rate of single-family starts since early 2008, but analysts noted that April’s high reading for housing starts could reflect delayed starts that were impacted by winter weather.

Existing Home Sales Fall Due to Rising Home Prices

The National Association of Realtors® reported that sales of previously owned homes dropped as home prices increased. A tight supply of available homes and higher home prices slowed the sales pace of existing home sales. April sales of existing homes fell from the March level of 5.21 million sales to 5.04 million sales; analysts had forecasted a higher sales volume of 5.24 million existing homes sold.

Rising home prices pose challenges to first-time and moderate income home buyers, and strict mortgage standards can make it tough for those with less than stellar credit scores to qualify for mortgages. Rising home prices are good news for homeowners as bidding wars have been reported in high-demand areas.

Mortgage Rates Lower, Jobless Claims Up

Freddie Mac reported that average mortgage rates were slightly lower. Mortgage rates for a 30-year fixed rate mortgage dropped by one basis point to 3.84 percent. Discount points rose from 0.60 to 0.70 percent. Mortgage rates for a 15-year fixed rate mortgage averaged 3.05 percent with average discount points of 0.60 percent. The average rate for a 5/1 adjustable rate mortgage was one basis point lower at 2.88 percent; discount points were unchanged at 0.50 percent.

Weekly jobless claims rose to 274,000 new claims filed. This reading exceeded expectations of 269,000 new claims and the prior week’s reading of 264,000 new claims. Analysts said that although this was a four-week high for new unemployment claims, layoff s remain low. Year-over-year, new jobless claims were 16 percent lower. New jobless claims remain close to a 15-year low and layoffs hit their lowest level on record. This news could build prospective home buyer confidence as job security plays a major rrole in most decisions to buy a home.

What’s Ahead

This week’s housing related reports include the S&P Case-Shiller 10 and 20-City Home Price Indexes and the FHFA Home Price Index. New and Pending Home Sales reports and the usual mortgage rates and weekly jobless claims reports are also scheduled.