Home Sales Continued Their Decline Last Week

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Peoples Home Equity comments on last week's home sales data according to DQnews.com.

Peoples Home Equity was discouraged to find out that both median home sales and prices declined for the 2nd consecutive week on February 6th. Peoples Home Equity expects sales volume to rise again out outperform median home prices.

According to DQnews.com, week over week home sales volume dropped a whopping -8.5%, to 172,508 on February 6th. The decline puts home sale volume on the same low level as April 2013. In total, the recent decline in weekly home sales is down approximately -36% from its recent peak of roughly 270,000 in September 2013. Peoples Home Equity knows the cause of this large decline has been increasing mortgage rates. However, the lender believes the trend is unsustainable, especially when 3 of the past 4 weekly mortgage application reports have been positive, as shown on TradingEconomics.com. In addition, with springs months coming up, it is only a matter of time before seasonal demand returns to the market.

Prices, while declining for the past 2 weeks have outperformed the relative decline in home sales volume. That is, the correlation between sales volume and home prices is not 1 to 1. Median home prices have only declined approximately -18% from its peak of roughly 260,000 in September 2013. This decline is half of the one seen in home sales volume which emphasizes the point, that America is experiencing a lack of housing inventory which is propping up home prices.

Peoples Home Equity expects weekly mortgage applications to continue to be positive. Additionally, the lender expects to see more housing starts to report near record highs. The addition of new home will eventually instill enough new supply of homes to ease the demand inflated prices on properties across America. For now, however, Peoples Home Equity thinks prospective home applicants have gained an advantage at least at a mortgage rate perspective. With mortgage rates easing considerably from a month ago, buying a home with a loan has become less expensive. If considering a home purchase, please contact a Peoples Home Equity loan officer today, they can offer mortgage details at: (855)-897-0300.

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Giorgio Urbano Ferrero
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