New Home Sales

3 03, 2014

What’s Ahead For Mortgage Rates This Week – March 3, 2014

2014-03-03-WhatsAheadThisWeekLast week’s economic news was mixed, with new home sales increasing and weekly jobless claims higher than expected.

Case-Shiller and FHFA home price reports reflected slower growth in home prices. Mortgage rates moved higher for the third consecutive week.

Weakness in the jobs sector and harsh winter weather were seen as factors contributing to economic events, but sales of new homes jumped unexpectedly to their highest since 2008.

Case-Shiller, FHFA Report Slower Growth for Home Prices

The Case-Shiller composite home price index for December reported that home prices declined by 0.10 percent in December, which was the second consecutive monthly decline.

On a seasonally adjusted basis, home prices rose 0.80 percent in December as compared to November’s reading of 0.90 percent. Year-over-year, home prices grew at a rate of 13.40 percent, their fastest pace since 2005.

The momentum of year-over-year home prices declined in December as compared to November’s year-over-year reading of 13.70 percent. 11 of 20 cities included in the Case-Shiller composite index declined.

Analysts said that low inventories of available homes, higher mortgage rates and severe winter weather contributed to slower growth in home prices.

FHFA’s quarterly House Price Index for the fourth quarter of 2013 posted its tenth consecutive gain in quarterly home prices. Seasonally adjusted home prices rose by 0.80 percent from November to December 2013.

FHFA, which oversees Fannie Mae and Freddie Mac, reported that home prices increased by 7.70 percent from the fourth quarter of 2012 to the same period in 2013. Adjusted for inflation, the agency reported a year-over-year increase of 7.0 percent.

FHFA House Price Index data is based on sales information for homes with mortgages held or securitized by Fannie Mae and Freddie Mac.

Fixed Mortgage Rates, New and Pending Home Sales Rise

Freddie Mac reported that average rates for fixed-rate mortgages rose last week, with the rate for a 30-year fixed rate mortgage rising 4 basis points to 4.37 percent.

The rate for a 15-year mortgage also increased by 4 basis points to 3.39 percent. The average rate for a 5/1 adjustable rate mortgage fell by 3 basis points to 3.05 percent. Discount points were unchanged at 0.7 0 percent for fixed rate mortgages and 0.50 percent for a 5/1 adjustable rate mortgage.

Weekly jobless claims also rose to 348,000 against projections for 335,000 new jobless claims. The four-week average for new jobless claims remained steady at 338,250.

The Department of Labor noted that weekly readings are more volatile than the four -week average reading. Poor winter weather and a softer labor market were cited as possible causes for the jump in new claims.

New home sales provided unexpected good news; they jumped by 9.60 percent in January, to a seasonally-adjusted annual rate of 468,000 sales against expected sales of 405,000.

December’s reading was upwardly revised from 414,000 to 427,000 new homes sold.

January’s reading was the largest increase in new home sales since July 2008, and there may be more positive housing news ahead as builders said that some of the sales lost during winter months may be recouped during spring.

Pending home sales increased by 0.10 percent in January to an index reading of 95 as compared to December’s reading of 94.9, which was the lowest reading since November 2011.

Whats Coming Up

This week’s scheduled economic news includes construction spending, the Federal Reserve’s beige book report, weekly jobless claims, and Freddie Mac’s report on mortgage rates.

On Friday, the Bureau of Labor Statistics releases its Non-Farm Payrolls and National Unemployment reports for February.

3 02, 2014

What’s Ahead For Mortgage Rates This Week – February 03, 2014

Whats Ahead For Mortgage Rates This Week February 03 2014Last week brought mixed news; while the Department of Commerce reported a dip in new home sales, mortgage rates also fell. The Federal Reserve’s FOMC statement revealed that quantitative easing would be further reduced by an additional $10 billion monthly.

New Home Sales: Y-O-Y Reading Best Since 2008

December’s reading of 414,000 for new home sales fell short of November’s revised reading of 445,000 new homes sold as well as expected sales of $455,000. The consensus figure was based on November’s original sales reading of 464,000 new homes sold.

The inventory of new homes available rose from last month’s level of 4.70 month supply to a 5 month supply in December. Cold weather was cited as a cause of lower new home sales.

New home sales increased by 4.50 percent year-over-year; this was the highest reading since 2008. The median price of a new home rose by 0.60 percent in December to $270,299. 

The national median home price was $265,800 in 2013, an annual growth rate of 8.40 percent and the highest annual growth rate for median home prices since 2005.

Economists cited rising mortgage rates, new mortgage rules and a lagging labor market as signs that slower home sales could be expected in 2014.

Pending home sales echoed the slowing trend in home sales; the index reading fell by -8.70 percent to a reading of 92.4 in December.

All Four Regions Reported A Drop In Pending Sales As Compared To November:

Northeast              -10.30 percent

West                    -9.80 percent

South                   -8.80 percent

Midwest                -6.80 percent

This was the lowest reading for pending home sales since October 2011.

Case-Shiller: Home Prices Up 13.7%

The Case-Shiller 10 and 20 city home price indices for November reported a 13.70 percent gain in home prices year-over-year. This was the fastest annual growth rate in home prices since 2006. Further evidence of slower growth in home prices was evident as nine of 20 cities tracked reported lower home prices.

Fed Continues Stimulus Reduction

Wednesday’s FOMC statement confirmed expectations that the Fed would continue tapering its monthly asset purchases made under its quantitative easing program.

Monthly purchases of mortgage-backed securities and Treasury securities will be reduced from January’s level of $75 billion to $65 billion in February. Economists expected this reduction to occur.

Freddie Mac’s Primary Market Survey reported lower average mortgage rates. The rate for a 30-year fixed rate mortgage fell by 7 basis points to 4.32 percent with discount points unchanged at 0.7 percent.

15-year mortgage rates also fell to 3.40 percent with discount points lower at 0.60 percent. The average rate for a 5/1 adjustable rate mortgage fell by 3 basis points to 3.12 percent with discount points unchanged at 0.50 percent.

This was welcome news as homebuyers and mortgage lenders have felt the effects of higher home prices and new mortgage rules that became effective January 10.

New Jobless Claims Higher

Weekly jobless claims jumped to 348,000 from the prior week’s 339,000 new jobless claims. This was the highest level of new jobless claims in six weeks. Reasons for increased claims were unclear, but were possibly caused by lingering influences of the holiday season or a sinking labor market.

Consumer confidence rose in January to a reading of 80.7 as compared to December’s reading of 77.5 as compared to January 2012’s reading of 58.4.

This Week

This week’s scheduled economic and housing news includes construction spending, non-farm payrolls and the national unemployment rate. Freddie Mac’s PMMS report and weekly jobless claims will be released as usual on Thursday.

31 12, 2013

New Home Sales Show Healthy Year-Over-Year Increase

New Home Sales Show Healthy Year-Over-Year IncreaseThe holiday season and winter weather slowed home sales in November. Last week, the NAR reported that sales of existing homes had slumped to their lowest level in nearly a year, but this was not unexpected.  

Short supplies of available homes and rising mortgage rates have increased pent-up demand for homes have kept some buyers on the sidelines.

Improvement In The Labor Market

4.90 existing homes were sold in November; this was lower than the 5.13 million existing homes sold in October, as well as lower than expectations of 5.00 million existing home sales in November.

Existing home sales for November 2013 were also 1.20 percent lower than for November 2012; this is the first time in 29 months that existing home sales were lower year-over-year.

Lawrence Yun, chief economist for NAR, described the slow-down in sales as a “clear loss of momentum.” The outlook for 2014 is better, as analysts expect continued improvement in the labor market. 

The pent-up demand for homes will ease as homeowners begin to list their homes for sale as home prices increase. Mr. Yun also noted that prices for existing homes are increasing at their highest rate in eight years.

The national median home price of existing homes rose to $196,000 in November, which represents a year-over-year increase of 9.40 percent. There was a 5.1 month supply of previously homes available at the current sales rate.

Housing Market Continues To Progress Over Long Term

The Census Bureau and HUD report that 464,000 new homes were sold in November. This was 2.10 percent lower than October’s rate of 474,000 new homes sold. This represents an increase of 16.60 percent as compared to the 398,000 new homes sold in November 2012.

The national median home price for new homes in November was $270,900; with an average new home price of $340,300. The seasonally-adjusted estimate of new homes for sale in November was 167,000; this reading represents a 4.30 month supply of new homes for sale.

While home builder confidence is up and recent labor reports indicate improving job markets, the Fed’s decision to taper its quantitative easing program in January is generating some uncertainty as mortgage rates will likely rise as the Fed winds down the QE program.

29 11, 2012

New Home Sales Remain Elevated Into Q4 2012

New Home SalesSales 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, 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.

29 10, 2012

What’s Ahead For Mortgage Rates This Week : October 29, 2012

The jobs report puts the economy is focusMortgage 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 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 will rise and purchasing power will shrink.

The U.S. economy has added jobs in each of the previous 24 months. 

26 10, 2012

New Home Supply Remains Firmly In “Seller’s Market” Territory

New Home Supply chartThe 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.

27 09, 2012

New Home Supply Remains Firmly In “Seller’s Market” Territory

New Home Supply chartThe 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 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.

29 08, 2012

New Home Sales Reach Multi-Year High

New Home Sales 2010-2012The market for newly-built homes remains strong.

As reported by the U.S. Department of Commerce, 372,000 new homes were sold in July on a seasonally-adjusted, annualized basis. A “new home” is a home that can be considered new construction.

July’s New Home Sales report highlights what today’s buyers of new construction and the nation’s home builders have witnessed for themselves already — that the market for newly-built homes is improving nationwide.

The number of new homes sold in July on a seasonally-adjusted, annualized basis matches the tally from May 2012, and is the highest reading since April 2010, the last month of that year’s federal home buyer tax credit.

The South Region continues to account for the majority of new construction sales, posting a 48% market share in July. South Region sales were up 9.1 percent as compared to one year ago. The other 3 regions posted higher sales volume as well :

  • South Region : +9.1% from July 2011
  • Northeast Region : +30.4% from July 2011
  • Midwest Region : +21.7% from July 2011
  • West Region : +63.8% from July 2011

Also noteworthy is that the increase in new home sales is coming at a time when new home supplies are slipping.

At the end of July 2012, there were just 142,000 new homes for sale nationwide. This is the smallest new home housing stock in at least 7 years, and a signal that buyers are buying homes faster than builders can build them. At the current pace of sales, the national supply of new homes would sell out in 4.6 months.

Because economists believe that a 6.0-month supply represents a market in balance, the current new home market is decidedly a “sellers market”. Buyers should expect higher new home prices ahead.

Dating back to October 2011, the housing market has shown slow, steady growth. Home prices have moved higher and so has builder confidence. If you’re in the market for new construction consider going into contract soon. The longer you wait to buy, the more you may be asked to pay.

26 07, 2012

New Home Sales Slow After Fast Start To 2012

New Home Supply 2010-2012

The number of newly-built homes sold slipped 8 percent in June from the month prior, says the U.S. Census Bureau in its latest New Home Sales report. The June data shows 350,000 homes sold nationwide on a seasonally-adjusted, annualized basis.

The home sale tally fell short of Wall Street expectations but the Census Bureau revised higher its previously-released results for March, April and May by a collective 33,000 units. This left the June New Home Sales report as the weakest of the last five months, yet still stronger than the 21 months preceding February.

In other words, despite retreating from May, the June New Home Sales data was still quite strong. As compared to June of last year, sales of newly-built homes are higher by 15% and the national inventory of new homes for sale is down to 144,000 units.

This marks a 13 percent inventory reduction in just twelve months.

At the current sales pace nationwide, the complete stock of new homes would “sell out” in 4.9 months, a noteworthy data point because analysts believe that a 6.0-month supply of homes marks a market in balance. Home supplies of below 6.0 months suggest a “seller’s market” where sellers have pricing power and excess leverage in negotiations. 

Home supplies have been south of 6.0 months since October 2011. This is the same month that marked a shift with other housing data points, too, including Existing Home Sales and the Home Price Index.

Since October 2011, the average new home sale price is higher by 6% nationwide, a trend that should continue through the end of 2012 and into 2013 — especially with mortgage rates at new all-time lows and home affordability at all-time highs. As more buyers enter the market amid limited supply, prices are expected to rise.

If you’re a home buyer in search of new construction, therefore, the best new home “deals” you may find may be the ones you find today.

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