While the cold weather has dampened some housing market activity, rising rates and higher prices have also decreased affordability for many Americans
Chicago, IL (PRWEB) February 28, 2014
While many reports have suggested that the cold weather and heavy snowfall in many regions of the U.S. slowed down the housing market over the last few months, The Federal Savings Bank thinks that new data has revealed that homebuying remained strong despite the harsh winter conditions.
According to a recent report from the U.S. Census Bureau, new home sales reached a seasonally adjusted annual pace of 468,000 units in January, exceeding previous estimates of 400,000 sales. New single-family home sales rose 9.6 percent nationwide during the first month of 2014 from December, the highest rate since July 2008. New home sales were up 2.2 percent from the same time last year.
The Northeast led the country in home sales, with a 73.7 percent rise, reaching a seven-month high. At the same time, new home sales rose 10.4 percent in the South while the West experienced an 11 percent increase. Home sales is the South were at a five-year high last month. While these regions fared well at the start of the new year, the Midwest, which experienced brutal temperatures from the polar vortex, saw home sales declined 17.2 percent.
A rise in new home sales is a positive sign for the housing market, but other economic reports have indicated that existing-home sales and residential construction starts have declined as of late, which could impact the housing market in 2014. New home sales represent a small portion of the entire housing market. Rising mortgage rates and higher home prices also caused the momentum to slow at the end of 2013, which could continue to carry over throughout 2014.
Last month, the median home price rose 3.4 percent nationally from January 2013. The supply of new homes stayed steady from the previous month at 184,000 units, an inventory pace of 4.7 months, down from December's pace of 5.2 months.
In a separate report, weekly new home purchase applications for home loans fell, according to the Mortgage Bankers Association. MBA reported that mortgage applications fell 4 percent in the last week of February compared to the previous week, the lowest level since 1995. While the cold weather has dampened some housing market activity, rising rates and higher prices have also decreased affordability for many Americans. Overall, mortgage applications for both new purchases and mortgage refinance declined 8.5 percent from the previous week. While it is not unusual for the housing market to slow down in the winter, purchase applications have declined more than typical seasonal changes. During the same time, mortgage rates reached their highest rate since Jan. 17, rising to an average of 4.53 percent for a 30-year fixed-rate mortgage.
"Purchase applications were little changed on an unadjusted basis last week, but this is the time of a year we would expect a significant pickup in purchase activity, and we are not yet seeing it," said MBA Chief Economist Mike Fratantoni.
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