Existing Home Sales Reach 10-Month Best; Low Mortgage Rates Boost …

by Shelton on August 30th, 2014

filed under Below Average Credit

Existing Home Sales Reach 10-Month Best; Low Mortgage Rates Boost Purchasing Power

  • Real Estate Sales

Low Mortgage Rates Boost Home Sales

Todays mortgage rates are the lowest theyve been in 61 weeks; and the effects of low rates may be trickling up to housing.

In July, home resales crossed five million on a seasonally-adjusted, annualized basis for the second consecutive month — despite a limited number of homes for sale nationwide. Purchasing power is high and todays home buyers are taking advantage.

Low mortgage rates wont likely last.

Click to see todays mortgage rates.

Existing Home Sales Up For 5th Straight Month

The National Association of REALTORS® recently released its July 2014 Existing Home Sales report, which showed 5.15 million homes sold on a seasonally-adjusted, annualized basis. Its a 2.4 percent improvement over the month prior and the fifth straight month in which home sales have climbed.

Julys homes sales tally is the highest annualized total of the year and the largest in 10 months. Yet, on a year-over-year basis, home resales are off.

As compared to July of last year, home resales are down four percent.

Meanwhile, over the same period of time, the average home sale price is up five percent. This is because home sales have shifted toward high price points and away from low ones.

  • Home sales between $0-100,000 : -13% since last year
  • Home sales between $100,000-$250,000 : -3% since last year
  • Home sales between $750,000-$1,000,000 : +1% since last year
  • Home sales over $1,000,000 : +5% since last year

Furthermore, Julys jump in Existing Home Sales was mostly unexpected; it had been forecast by the Pending Home Sales Index, which is also published by NAR.  

The Pending Home Sales Index measures the number of US homes under contract, but not yet closed. 80% of homes under contract close within 60 days, so there is a very high correlation between the Pending Home Sales Index and the monthly Existing Home Sales report.

The most recent Pending Home Sales Index data projected Julys home resales to tally near 5.1 million on an annualized basis. The actual Existing Home Sales reading exceeded its projection, slightly.

One reason why may be that mortgages are closing more quickly in todays market. Lenders have used technology to get more efficient, and approve more loans. Purchase loans now average 38 days from application-to-closing — a 17% improvement from one year ago.

Plus, mortgage rates are getting quoted in the 3s.

Click to get a live mortgage rate quote. 

Buying Homes With Low Or No Downpayment 

Home sales are rising nationwide. Prices are rising as demand for home stays strong.

In July, according to the Existing Home Sales report, the national home supply was 5.5 months. This means that, at the current pace of sales, the entire inventory of US homes for sale would sell out in five-and-one-half months.

Home supply of less than 6.0 months connotes a Sellers Market; one in which home sellers have negotiation leverage over buyers and in which demand for homes is high.

Existing Home Supply has been below six months since August 2012.

The good news is that todays home buyers are able to finance their purchases via a growing number of mortgage programs, including low-downpayment loans, no downpayment loans, and loans for luxury homes.

Among the most popular options with todays low-downpayment buyers is the FHA loan. FHA loans require just 3.5% down and offer flexible mortgage approval terms, including an allowance for average and below-average credit scores.

Another common low-downpayment option is the Fannie Mae 95% program. This government-backed loan tends to work well for buyers with above-average credit scores who are buying single-family, detached properties (ie not condos or town homes).

For buyers in rural and suburban areas, the USDA loan is an excellent no-downpayment option. The zero-down loan is backed by the US Department of Agriculture and can provide below-market mortgage rates to applicants who use it.

Lastly, as the mortgage market has loosened, so have requirements for the fixed-rate and adjustable-rate jumbo mortgages.

Many banks now require just 10% down for a jumbo loan; and have lowered their minimum credit score requirement. This has helped spur the luxury housing market forward and is one reason why home sales over $750,000 continue to make gains.

Get Todays Mortgage Rates Now 

Buoyed by the lowest mortgage rates in more than one year, the US housing market is advancing. Home sales are rising and so are home values. Its an excellent time to consider your options as a buyer; and plan for your future as a homeowner.

See todays live mortgage rates now. Rates are available at no cost and with no social security number required to get started. There is no obligation to proceed whatsoever.

Click here to get started.

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