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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 April 2015 showed that existing home sales in March spiked 6.1% on a month-over-month basis to an annualized 5.19 million units (so if you take the home sales figure for March and multiplied it by twelve), which came in at the top end of industry analyst expectations. The March increase represented one of the biggest gains in the history of the existing home sales report. On a year-over-year basis, existing home sales increased a whopping 10.4%. The increase in sales was seen across all property types with multi-family property sales increasing 11.1% on a monthly basis and single family home sales increasing 5.5% on a monthly basis. Additionally, sales increased across all geographies with the Midwest leading all regions with a 10.1% growth in sales. March also saw a modest increase in inventory with annualized existing homes available for sale increasing to 2.0 million from 1.9 million in February. The increase in home sales was greater than the increase in inventory causing inventory relative to sales to dip slightly to 4.6 months of available supply, down from 4.7 months of supply in February 2015. The jump in demand led to an increase in prices with the median existing home sales price rising to $212,100, representing a 5.1% increase on a monthly basis and a 7.8% increase on a year-over-year basis. The strong existing home sales report for March shows building momentum in the housing and mortgage markets. (Source: Bloomberg)
What it Means for Mortgage Borrowers
The robust existing home sales report shows that home buyers are buying and mortgage lenders are lending. Low interest rates and gradually growing housing supply are pulling home buyers into the market after several sluggish months. Although price appreciation makes it harder for buyers to afford homes, an increase in prices should attract more sellers and bring more supply onto the market. Continued low interest rates help to offset higher prices and make now a good time to start the home buying and mortgage processes. Prospective buyers can use our Mortgage Selector Calculator to determine what size mortgage they can afford as well as the mortgage program that is right for them. Additionally, use the INTEREST RATES function on FREEandCLEAR to review rates and fees for lenders in your area to find the mortgage that is right for you.
The FREEandCLEAR Mortgage Expert