stakeholders in the real estate market predict a better year for home sales in 2015 due to several factors
Chicago, IL (PRWEB) January 30, 2015
The Federal Savings Bank, a Midwest based lender, was pleased with the latest National Association of Realtors report stating that December sales increased, up 3.5 percent from the same month the previous year. The report released on January 23, 2015 states December sales maintained an annual pace of 5 million sales for the sixth time in seven months. Low interest rates helped to boost sales in December and economists predict this upward trend in sales could continue into 2015.
The NAR report noted sales picked up in the second half of the year after a slow start.
Overall, sales in 2014 declined slightly from 2013, decreasing 3.1 percent to 4.93 million. Despite the drop, stakeholders in the real estate market predict a better year for home sales in 2015 due to several factors.
Changes in FHA policies could increase sales in 2015
The U.S. Federal Housing Administration previously announced it would reduce insurance premiums, which could allow more first-time home buyers to enter the market.
Realtors anticipate the change in FHA policies could strengthen the market, according to Chris Polychron, president of NAR.
"NAR is a strong supporter of the FHA and its vital role in the mortgage marketplace for homebuyers," Polychron said in a statement. "Realtors support responsible lending to qualified borrowers and the move to lower premiums will enable more buyers to enter the market while continuing to protect taxpayers from the risky lending practices that led to the housing crash."
The White House also voiced support for the FHA policies on January 7th that will help increase homeownership rates and make owning a home less expensive for current homeowners.
"Existing homeowners who refinance into an FHA mortgage will see similar reductions to their mortgage payments as well," the White House said in a statement. "In total, this action will help millions of families save billions of dollars in mortgage payments in the coming years, helping to support the housing market recovery."
In addition to changes in lending policies, low interest rates could further push up sales and increase housing affordability. Freddie Mac noted the average 30-year fixed-rate mortgage dropped in December to its lowest level since May 2013.
Mortgage applications, refinancing activity up
As a result of these low rates, mortgage applications surged 49 percent in the week ended Jan. 9, according to the Mortgage Bankers Association. The index measuring refinancing increased 66 percent from the previous week to reach its highest level since July 2013, as homeowners aimed to take advantage of mortgage rates near historic lows. Refinancing activity represented 71 percent of total applications compared to 65 percent the previous week.
The MBA said home buyers are likely positive about the direction of the housing market this year following gains in the job market as well as news that credit availability has widened.
With low rates and greater affordability in the housing market, first-time home buyers are more likely to have the confidence to jump into the market and begin their home buying journey this year compared to last year.
Contact the Federal Savings Bank, a veteran owned bank, to learn more about mortgages.