New Home Sales Lag (Again)
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. The report for December 2014 showed that new home sales in November declined 1.6% to an annualized 438,000 units as compared to the revised 445,000 units figure for October. The November figure came in below estimates as analysts had projected approximately 460,000 annualized units. The November median home sales price declined 3.2% to $280,000 reversing a significant increase in the median new home sales price in October and continuing a trend of stabilizing new home prices over the course of 2014. The number of new homes available for sale, known as supply, increased slightly from 210,000 units in October to 232,000 units in November. The disappointing New Home Sales report comes a day after the Existing Home Sales report which also failed to meet analyst expectations. (Source: Econoday)
What it Means for Mortgage Borrowers
The disappointing one-two punch for both new and existing home sales in November underscores the sluggish nature of the housing and mortgage markets. The one positive note for mortgage borrowers from the November New Home Sales report is that the median new home sales price declined after an unusually sharp increase in October. An unsteady housing market benefits from moderating home prices and a continued increase in prices could have pushed more prospective buyers out of the home purchase market. Moderating home prices and continued low interest rates are both positives for home buyers who may look to enter the market in early 2015. Use the INTEREST RATES feature on FREEandCLEAR to monitor mortgage rates for lenders in your area and check out our Home Purchase Mortgage Process Guide which offers money and time-saving tools, resources and information to prospective home buyers.
The FREEandCLEAR Mortgage Expert
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