New Home Sales Rock Steady
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. Coming off a strong January report that showed new home sales spiked 8.1% to an annualized 482,000 units in December 2014, the February new home sales report showed continued momentum with new home sales coming in at an annualized 481,000 units in January 2015. The January new home sales figure exceeded expectations as analysts were anticipating a drop-off as compared to the robust December figure. The January median new home sales price decreased 2.6% to $294,000 as compared to $298,000 in December. The number of new homes available for sale, known as supply, remained relatively flat at 218,000 units. Supply as compared to monthly sales declined slightly to 5.4 months in January as compared to 5.5 months in December. The sustained activity in the new home sales market and the relatively low supply figures are welcome developments for both home buyers and builders. The strong February new home sales report contrasts with the disappointing existing home sales report which showed an unexpected drop in sales. (Source: Bloomberg)
What it Means for Mortgage Borrowers
The housing market is off to a mixed start in 2015 with strong new home sales and weak existing home sales. Because the existing home sales market is significantly larger than the new home sales market, the overall trend for the housing market is sluggish. From a home buyer and mortgage borrower’s standpoint, both reports showed a decline in the median home sales price which is a positive for prospective home buyers. Additionally, interest rates remain relatively low which helps borrowers afford larger mortgages and buy more house for their money. Check out our Mortgage Qualification Calculator to determine what size mortgage you can afford at today’s mortgage rates and use the INTEREST RATES feature on FREEandCLEAR to compare rates and fees for lenders in your area.
The FREEandCLEAR Mortgage Expert
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