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