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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 October 2014 showed that existing home sales in September increased 2.4% on a month-over-month basis and decreased 1.7% on a year-over-year basis to an annualized 5.17 million units (so if you take the home sales figure for September and multiplied it by twelve). Sales of condominiums increased 5.2% to 610,000 units while sales of single-family homes increased 2.0% to 4.56 million units. The number of existing homes available for sale, known as supply, decreased by 10,000 units to 2.30 million units. The median existing home sales price decreased 4.0% to $209,700. The September existing home sales figure came in above market expectations due to due to lower housing prices and attractive interest rates pulling buyers into the real estate market. (Source: Bloomberg)
What it Means for Mortgage Borrowers
The uptick in existing home sales reverses the decline reported in August and suggests that buyers are slowly moving into the market. The recent decline in interest rates combined with the moderate pullback in housing prices could accelerate the pace of home sales. As always, FREEandCLEAR will closely watch the existing home sales report for November to monitor this trend. Check out the COMPARE LENDERS feature on FREEandCLEAR to keep track of interest rates and visit the FREEandCLEAR Mortgage Expert Blog to stay updated on the latest developments in the mortgage market.
The FREEandCLEAR Mortgage Expert