In our effort to cover important trends that affect the mortgage market, FREEandCLEAR keeps a close eye on existing home sales, which is the number of previously constructed housing units that are sold in a month. The existing home sales figure is reported separately from the new home sales figure, which is the number of newly constructed homes that are sold in a month. 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, issued on a monthly basis, includes statistics for the prior month. The report for November 2014 showed that existing home sales in October increased 1.5% on a month-over-month basis and increased 2.5% on a year-over-year basis to an annualized 5.26 million units (so if you take the home sales figure for September and multiplied it by twelve), which exceeded expectations. Sales of condominiums increased 3.3% to 630,000 units while sales of single-family homes increased 1.3% to 4.63 million units. The number of existing homes available for sale, known as supply, decreased by 8,000 units, or 2.6%, to 2.22 million units. The median existing home sales price decreased approximately 1.0% to $208,300 from $209,700. For the fourth consecutive month, first-time home buyers represented 29% of all home buyers, consistent with our recent blog post about the decline in first-time home buyers over the past several years. The October existing home sales figure came in above market expectations for the second consecutive month due to due to moderating housing prices and relatively low interest rates pulling buyers into the real estate market. (Source: Bloomberg, National Association of Realtors)
What it Means for Mortgage Borrowers
The uptick in existing home sales for the second straight month is an encouraging sign for the mortgage and real estate markets. Although the increase in existing home sales is not very large, the latest figure signals that the housing and mortgage sectors are gradually heading in the right direction. Consistently low participation by first-time home buyers, however, continues to hold the market back. More first-time home buyers will need to enter the market to truly jumpstart home sales. First-time home buyers should check out FREEandCLEAR’s Mortgage Expert Insights to review money and time-saving mortgage tips and advice from a true mortgage expert with over 40 years of industry experience.
The FREEandCLEAR Mortgage Expert