Although the drop in inventory could increase competition, prospective buyers can still make competitive offers with mortgage pre-approvals
Chicago, IL (PRWEB) September 26, 2014
The Federal Savings Bank was intrigued by the recent September 24th new residential sales report from the U.S. Census Bureau and Department of Housing and Urban Development, suggesting that August was a popular month to make a new home purchase.
According to the data, new-home sales were at a seasonally adjusted annual rate of 504,000 units in August. This pace marked an 18 percent gain compared to July's rate of 427,000 units, as well as a 33 percent improvement from August 2013's pace of 379,000 units.
The pace of new-home sales in August marked the highest rate since January 1992, Bloomberg Businessweek reported. The news source also noted the gains exceeded projections made by 74 economists surveyed by Bloomberg. They predicted a pace of 430,000 units, and the estimates ranged from 405,000 to 455,000.
Prices present mixed results:
Employment sector gains will be welcome, as the Census data indicated sale prices for new homes sold in August showed some positive results. The average sales price increased from $345,100 in July to $347,900 in August. Between August 2013 and the same month this year, the average was up from $310,800.
The median sales price dipped month over month in August, falling from $280,100 to $275,600. The year-over-year comparison, on the other hand, marked an improvement from $255,300 in August 2013.
The month-over-month comparisons of average and median new-home sale prices indicate the often-cited trend of slowing price appreciation. Weaker price gains could slow the pace of the housing market's recovery from the mortgage crisis, as it will take underwater homeowners more time to regain equity, as reported by MarketWatch on September 23rd.
However, there is one positive effect of the trend. Some prospective home buyers have been priced out of the market by hot home prices, and the cooling rate will likely encourage more consumers to purchase a new home.
New-home inventory dips:
As the pace of new-home sales heated up, the number of new properties on the market declined. The supply was 4.8 months at the current sales rate in August, down from 5.6 months in June.
Although the drop in inventory could increase competition, prospective buyers can still make competitive offers with mortgage pre-approvals. Plus, Bloomberg Businessweek said borrowing costs are historically low, which means consumers can get financing for a nice price.
For information about affordable, low cost mortgage services and first-time home buyer programs, contact the Federal Savings Bank, a veteran owned bank.