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In our effort to cover important trends that affect the mortgage market, 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.
New home sales are on a two month winning streak with the June report showing that new home sales increased 2.2% in May to 546,00 annualized units. The May new home sales figure exceeded the top half of industry analyst expectations and builds upon a robust report for April. In a positive sign for buyers, the increase in demand failed to create meaningful price pressure with the May median new home sales price dipping 2.9% on a monthly basis to $282,800. The number of new homes available for sale remained relatively flat at 206,000, which combined with the uptick in sales to cause supply as compared to monthly sales to drop to 4.5 months in May as compared to 4.6 months in April. The West led all regions in sales, posting a 13.1% monthly gain in May. Sales in the South, the largest housing region, dipped 4.3% on the month although sales are up significantly on a year-over year basis. This is the fifth positive new home sales report in the past six months indicating that market strength continues to build. (Source: Bloomberg)
What it Means for Mortgage Borrowers
The new and existing home sales reports for June provide a strong one-two punch demonstrating the growing momentum of the housing and mortgage markets. Additionally, as evidenced by the strong June housing starts report, developers are ramping up new construction to satisfy buyer demand. The one oddity in the new home sales report is that the median sales price dipped, which is great news for buyers but unlikely to be a long term trend given rising demand for housing. Prices will not stay down forever so now may be a good time to start the home buying process. As a first step, use our Mortgage Qualification Calculator to determine what size mortgage you can afford and use our INTEREST RATES feature to monitor mortgage rates and fees for lenders in your area. Getting organized and prepared for the mortgage process will enable you to move quickly when you find a home that you want to buy.
The FREEandCLEAR Mortgage Expert