In addition to being able to qualify for a mortgage and make a down payment, home prices are one of the most important factors that determine your ability to buy a home.  The higher the home price, the larger the mortgage and down payment you need to purchase a home so it is a statistic we watch closely at FREEandCLEAR.

There are two primary measures of housing prices: the Federal Housing Finance Agency (FHFA) House Price Index , which uses certain nationwide mortgage activity to track home prices and the S&P / Case-Shiller Home Price Index, which tracks home prices in 20 U.S. metropolitan markets.  There are pros and cons to the way both indices are calculated so we like to keep track of both and analyze what they mean for mortgage borrowers.  Both indices are reported on a monthly basis and include information for the month that is two months prior to the reporting date.  For example, the report released in August contains information on housing prices in the month of June.

The FHFA House Price Index for August 2014 showed that June housing prices increased a modest 0.4% as compared to May and 5.1% on a year-over-year basis (so as compared to June 2013).  The S&P / Case-Shiller Home Price Index for August 2014 showed that housing prices declined 0.2% as compared to May but increased 8.1% on a year-over-year basis, although this increase was less than the 9.3% year-over-year increase reported for May 2014.  Taken together, the FHFA and S&P / Case-Shiller home price indices show that nationwide housing prices appear to be flattening after several years of strong price increases.  It is important to highlight that these indices reflect the trend in nationwide housing prices and housing prices for a specific region or city can vary significantly. (Source: Bloomberg)

What it Means for Mortgage Borrowers

Flattening or declining home prices make homeownership more affordable for prospective home buyers.  The combination of low interest rates and stabilizing home prices means now could be a good time for first-time home buyers or current homeowners who are looking to upgrade to buy a home, depending on what market you live in.  Check out the COMPARE LENDERS function on FREEandCLEAR to review interest rates for lenders in your city and use our Home Purchase Mortgage Guide to help you master the mortgage process.

The FREEandCLEAR Mortgage Expert

www.freeandclear.com

In our effort to cover important trends that affect the mortgage market, the FREEandCLEAR Mortgage Expert recently analyzed the latest Housing Market Index report and what it meant for borrowers.  The Housing Market Index only addresses the new home sales market which is only one piece of the overall housing market.  The other, larger piece of the housing market is existing home sales, which is the number of previously constructed housing units that are sold in a month.  This figure is also known as home resales.  An increase in existing home sales reflects improvement in the housing market while a decrease in existing home sales reflects a weakening of the housing market.  In addition to reporting the number of housing units sold, the existing home sales report also includes information on the supply of units for sale as wells as the median and average existing home sales price.

The existing home sales report, published by the National Association of Realtors, is typically issued on a monthly basis and includes statistics for the prior month. For example, the report issued in August 2014 includes existing home sales figures for July 2014. The report for August 2014 showed that existing home sales increased 2.4% in July to 5.15 million units on an annualized basis (so if you take the home sales figure for July and multiplied it by twelve).  The number of existing homes available for sale, known as supply, increased 3.5% to 2.37 million units.  The median existing home sales price increased 0.4% to $222,900 and the average existing home sales price increased 0.2% to $268,700.  The increase in existing home sales, supply and sales price reflect building momentum in the housing market. (Source: Bloomberg)

What it Means for Mortgage Borrowers

The increase in existing home sales and continued improvement in the housing market means that qualified borrowers are able to obtain mortgages to buy houses.  The increase in the supply of existing homes suggests that there is more housing inventory available to prospective home buyers which may help offset pricing pressure, although every local housing market has a unique supply-demand dynamic.  Before you embark on the home purchase process, check out our Mortgage Qualification Calculator to determine what size mortgage you qualify for and review the FREEandCLEAR Mortgage Process Guides to become a highly-informed mortgage consumer.

The FREEandCLEAR Mortgage Expert

www.freeandclear.com

At FREEandCLEAR, we are always developing new features and functionality to help borrowers make better decisions and save money when they get a mortgage.  We recently added the First-Time Home Buyer Mortgage Cheat Sheet to our wide range of mortgage topic cheat sheets. The First-Time Home Buyer Mortgage Cheat Sheet  focuses on the key questions that borrowers have when getting a mortgage for the first time and offers insightful explanations, helpful mortgage process recommendations and links to relevant resources on FREEandCLEAR, including our informative mortgage topic videos.  The cheat sheet complements the FREEandCLEAR First-Time Home Buyer Basics Guide which offers a more comprehensive review of the the mortgage process for first-time borrowers.

We love to hear from the FREEandCLEAR community so check out our new cheat sheet and use use the CONTACT US function at the bottom of any page on FREEandCLEAR to let us know what you think.

The FREEandCLEAR Mortgage Expert

www.freeandclear.com

At FREEandCLEAR, we are focused on keeping you up to date on the latest developments in the mortgage market and explaining how those developments impact mortgage consumers.  Because the housing market and the mortgage market go hand-in-hand, that means that we also keep tabs on housing market news and trends.  Although many factors contribute to the strength of the mortgage market including interest rates, refinancings and general economic conditions, a strong housing market usually has a positive impact on the mortgage market.

The National Association of Home Builders Housing Market Index is one of the key housing market statistics that we track at FREEandCLEAR.  The Housing Market Index incorporates factors such as current and expected new home sales and interest level from potential new home buyers.  It is important to highlight that the index focuses on new home sales, so homes built by builders that have never been lived in before, as opposed to existing home sales, which represents a larger portion of the overall housing market.  This means that the Housing Market Index only captures one piece of the overall housing market, but it is a very important piece.  The index is typically reported on a monthly basis, with an increase in the index reflecting an improvement in the new home sales market and a decrease in the index reflecting a decline in the new home sales market.  In August 2014, the Housing Market Index increased to 55 as compared to 53 in July 2014.  The August figure came in at the high end of expectations reflecting increasing demand for new homes. (Source: Bloomberg)

What it Means for Mortgage Borrowers

The continued strengthening of the new home sales market should have a positive impact on the mortgage market although it is important to point out that some new home builders offer their own financing for buyers or special programs that require lower down payments.  If you are in the market for a new home be sure to compare any mortgage offered by the builder to programs offered by other lenders in your area.  Always remember that you have lender options when getting a mortgage and creating lender competition can save you a lot of money over the life of your mortgage.  Check out the COMPARE LENDERS feature on FREEandCLEAR to review interest rates for lenders where you live.

The FREEandCLEAR Mortgage Expert

www.freeandclear.com

Our goal at FREEandCLEAR is to empower borrowers to make better mortgage decision and save money through education and information. We typically focus on providing tools, resources and content that help mortgage consumers understand and manage the mortgage process. From time-to-time we will also highlight key mortgage industry statistics or trends to keep the FREEandCLEAR community informed on the overall performance of the mortgage market. In addition to reporting the statistics we will also try to communicate its relevance to borrowers.

One important statistic that measures the strength of the mortgage market is the Mortgage Bankers’ Association (MBA) mortgage applications index which measures both purchase and refinance applications for mortgage lenders across the country (on a related note, FREEandCLEAR provides an overview and example of a mortgage application as part of our Home Purchase Mortgage Process Guide). The MBA applications index is typically reported on a weekly basis with an increase in the index reflecting an increase in mortgage applications and a decrease in the index reflecting a decrease in mortgage applications. For the week ended August 8th, 2014, the purchase application index declined 1.0% as compared to the prior week and the refinance application index declined 4.0% as compared to the prior week. The composite index, which includes both purchase and refinance mortgage applications, declined 2.7% as compared to the prior week. (Source: Bloomberg)

What it Means for Borrowers
Flat-to-declining mortgage applications mean that home buyers continue to face some challenges finding properties they can afford while the refinance market remains weak as many borrowers have already refinanced. Fewer mortgage applications should increase lender competition for qualified borrowers, which should benefit mortgage consumers. You can always use the COMPARE LENDERS function on FREEandCLEAR to review interest rates and costs for lenders in your area to see how this increased competition benefits you.

The FREEandCLEAR Mortgage Expert

www.freeandclear.com