My Mortgage Blog

Mortgage Market Update 10-01-2014

October 1st, 2014 11:44 AM by Nick Rapplean

There was give and take in real estate with new home sales posting solid gains while existing home sales dropped. Meanwhile, initial jobless claims grew slightly but remained at low levels.

New Home Sales

New home sales skyrocketed to a six-year high in August with transactions of new single-family homes hitting an annual average of 504,000 for the month, the Census Bureau and the Department of Housing and Urban Development reported last week. August’s sales represented an 18 percent gain over July’s revised average of 427,000, and were 33 percent higher than August 2013’s average of 379,000.

August’s gain was welcome news after July’s sudden drop, and helped calm any jitters real estate market watchers might have had over the housing market’s recovery.

“We expect some of this buoyancy to be reversed in the coming month, but continue to believe that the underlying fundamentals of the housing sector remain favorable,” TD Securities’ deputy chief economist Millan Mulraine told the Reuters news service.

Looking at price and inventory, August’s median sales price for new homes was $275,600, and the average sales price was $347,900. There were an estimated 203,000 new homes for sale at the end of August, representing a 4.8-month supply at the month’s sales pace.

Existing Home Sales

Meanwhile, existing home sales fell in August after four consecutive months of gains, but the cause most likely had more to do with investors than the economy, according to data released last week from the National Association of Realtors.

Sales of existing single-family homes, townhomes, condominiums and co-ops, declined 1.8 percent to an annual rate of 5.05 million in August. That performance marked the second-highest sales pace of 2014, but August’s rate still came in 5.3 percent below the August 2013’s 5.33 million-unit level.

NAR chief economist Lawrence Yun chalked up August’s drop to some investors begging off from the market. All-cash transactions — typical of investors — comprised 23 percent of August’s sales, compared to 29 percent in July, marking the second consecutive monthly drop in cash transactions the lowest share since December 2009.

“There was a marked decline in all-cash sales from investors,” he explained. “On the positive side, first-time buyers have a better chance of purchasing a home now that bidding wars are receding and supply constraints have significantly eased in many parts of the country. … As long as solid job growth continues, wages should eventually pick up to steadily improve purchasing power and help fully release the pent-up demand for buying.”

While volume was down, prices were still up. August’s median price for existing-homes of all types $219,800, which was 4.8 percent higher than August 2013, and marked the 30th consecutive month of year-over-year price gains. August’s housing inventory dropped 1.7 percent to 2.31 million existing homes for sale, representing a 5.5-month supply at August’s rate.

Initial Jobless Claims

First-time claims for unemployment benefits filed by the newly jobless increased, but remained at pre-recession levels. Initial jobless claims filed during the week ending Sept. 20, notched up to 293,000, a gain of 12,000 claims from the prior week’s revised total of 281,000, according to the Employment and Training Administration.

The four-week moving average, considered a more accurate measure of near-term employment activity, dipped to 298,500, a decline of 1,250 from the preceding week’s revised average of 299,750.

Posted in:General

Posted by Nick Rapplean on October 1st, 2014 11:44 AM

My Mortgage Blog

Mortgage Market Update 10-01-2014

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