New Home Sales Sizzle
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 of strong reports for the past two months, the March new home sales report report blew past expectations, with the February new home sales coming in at an annualized 539,000 units. The February new home sales figure greatly exceeded the average analyst estimate for 459,000 annualized new home units sold. Attractive interest rates and a drop in prices seems to have pulled buyers into the market. The February median new home sales price decreased 4.8% to $275,000. Driven by the jump in sales, supply as compared to monthly sales declined slightly to 4.7 months in February as compared to 5.1 months in January. The robust March new home sales report combines with a positive February report for the strongest back-to-back monthly performance since Spring of 2008. The consistently positive activity in the new home sales market over the past several months represents a bright spot for the housing and mortgage markets. Similar to February, the strong March new home sales report contrasts with the disappointing existing home sales report which showed a relatively small gain in sales. (Source: Bloomberg)
What it Means for Mortgage Borrowers
The March new home sales report provides several bright spots for mortgage borrowers. First, the increase in sales activity suggests that buyers are finding attractive homes to purchase and are able to successfully arrange mortgage financing. Second, the decrease in median sales price is a positive for home buyers as lower prices make purchasing a home more affordable for prospective buyers. The dip in new home inventory is a minor concern for home buyers as less supply could drive up prices in the medium-to-long term. The boost in home sales, however, should motivate developers to produce more housing which will alleviate pressure on supply. All in all, the March new home sales report is a positive for mortgage borrowers as low interest rates and favorable home prices create attractive conditions for home buyers. If you are thinking about buying a home use our Mortgage Selector Calculator to determine what size mortgage you can afford and the mortgage program that is right for you. You can also use the INTEREST RATES feature on FREEandCLEAR to keep a close eye on mortgage rates and costs for lenders in your area. FREEandCLEAR reminds you that comparing rates from multiple lenders is the best way to save money on your mortgage.
The FREEandCLEAR Mortgage Expert
www.freeandclear.com
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