New Home Sales Boom in August
In our effort to cover important trends that affect the mortgage market, the FREEandCLEAR keeps a close eye on new home sales, which is the number of newly constructed housing units that are sold in a month. The new home sales figure is reported separately from the existing home sales figure, which is the number of previously constructed homes that are sold in a month. The new home sales market is smaller than the existing home sales market but it is still an important indicator for the real estate and mortgage markets. In addition to reporting the number of housing units sold, the new home sales report also includes information on the supply of units for sale as wells as the median and average new home sales price.
The new home sales report, issued on a monthly basis, includes statistics for the prior month. The report for September 2014 showed that new home sales in August increased 18% on a month-over-month basis to an annualized 504,000 units (so if you take the home sales figure for August and multiplied it by twelve). The number of new homes available for sale, known as supply, increased slightly from 201,000 units in July to 203,000 units in August. Despite the increase in demand, the median new home sales price decreased 1.6% on a month-over-month basis to $275,600. The August new home sales figure came in well above market expectations as buyers attracted by flattening house prices and relatively low interest rates appear to be increasingly focused on the new home market. (Source: Bloomberg)
What it Means for Mortgage Borrowers
The robust new home sales figure for August mirrors the continued strength in the housing market index which we reviewed in a recent blog post. The housing market index also focuses on the new home sales market and gauges existing and projected new home sales as well as buyer interest level. Both statistics for August indicate that buyers appear to be shifting their attention to the new home market, potentially as a result of being able to buy more house for their money. With home prices stabilizing on a nationwide basis, first-time home buyers may finally be feeling more confident about entering the market. Our Rent Payment Mortgage Affordability Calculator is great for first-time home buyers who want to understand what size mortgage they can afford based on their monthly rent payment.
The FREEandCLEAR Mortgage Expert
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