Housing Market Index Bounces Back in November
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.
For November 2014, the Housing Market Index rebounded to 58 as compared to 54 in October 2014. The November figure exceeded expectations driven by increases in the three components that comprise the index — new home sales, future sales and home buyer traffic. The new home sales component of the index increased 5 points, the future sales component increased two points and the home buyer traffic component, which has been lackluster most of the year, increased 4 points. The November figure bodes well for new home sales and the boost in future sales and home buyer traffic provide signs for optimism as we close out 2014 and look toward 2015. Lower interest rates and flattening home price appear to be having a positive effect on the housing market index although it is too early to tell if the November figure is the beginning of a sustained improvement in the new home market. (Source: Bloomberg)
What it Means for Mortgage Borrowers
The rebound in the Housing Market Index after a decline in October means that home buyers may be responding to lower interest rates although many first-time home buyers continue to sit on the sidelines due to tighter lending guidelines and down payment requirements. Although smaller than the existing home market, the new home market may offer compelling entry point for buyers looks to purchase a home for the first time. The FREEandCLEAR First-Time Home Buyer Mortgage Cheat Sheet addresses the key topics borrowers should understand before getting a mortgage for the first time. Borrower should also keep tabs on mortgage rates using the INTEREST RATES feature on FREEandCLEAR.
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