Pending Home Sales Decline But Do Not Disappoint

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Peoples Home Equity comments on the latest National Association of Realtors Pending Home Sales report.

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Winter is when buyers have the highest chance of relatively lower home prices and interest rates.

Pending Home Sales were announced by the National Association of Realtors (NAR) on Monday, September 29th as falling -1% in August. Despite the decline, Peoples Home Equity thought the report was mostly in line with market expectations.

Peoples Home Equity highlighted in a Monday release titled “Awaiting Results of Pending Home Sales” that pending home sales were forecasted to decline a modest -0.5% to -0.68%. Though pending home sales declined -1%, in August, the report was the 2nd highest of the year. Lawrence Yun, chief economist at the NAR said that the market is seeing “Fewer distressed homes at bargain prices” and that “a rising interest rate environment likely caused hesitation among investors last month.” Further, Lawrence says “With investors pulling back, the market is shifting more towards traditional and first-time buyers who rely on mortgages to purchase a home.” Peoples Home Equity notes this opinion with caution. On the one hand, less investor’s means implies more first-time home buyers will have the opportunity to purchase their desired home with less competition. On the other hand, higher interest rates may discourage borrowing. Indeed higher interest rates are coming since the US Federal Reserve will end its third quantitative easing program next month. Readers should know that even as interest rates increase so too will home prices. The high demand for housing in American is greater than the supply available.    Regardless of how individuals feel about higher interest rates, prospective mortgage applicants should submit their home loan paperwork in hopes of a pre-approval. Winter is when buyers have the highest chance of relatively lower home prices and interest rates. Lawrence Yun is confidence in the majority of first-time home buyers, “first-time buyer participation should gradually improve despite tight credit conditions and the inevitable rise in rates.” Peoples Home Equity agrees as the number of unemployed Americans has been on a strong decline for months.

Contact a Peoples Home Equity loan officer today at: 262-563-4026

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Giorgio U Ferrero
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