Blog posted On February 24, 2020
Mortgage rates have trended lower this month and will likely stay low. This week, both the S&P CoreLogic Case-Shiller home price index and the Federal Housing Finance Agency (FHFA) house price index are scheduled for release. The new home sales report will come out on Wednesday.
The Case-Shiller home price index tracks changes in the value of homes involved in two or more sales transactions across twenty major metropolitan areas throughout the country. In November, the index appreciated 0.1% month-over-month and just 2.6% year-over-year in November. Phoenix led gains with a 5.9% annual increase, followed by Charlotte up 5.3% and Tampa up 5%.
The FHFA house price index tracks changes in the value of homes financed through conventional mortgages. Though this data subset is smaller than the data used in the Case-Shiller home price index, it’s still used to gauge home price appreciation trends. In November, the index appreciated 0.2% month-over-month and 4.9% year-over-year.
New home sales, the sales of newly constructed homes, account for about 10% of real estate transactions. In December, new home sales fell slightly, down 0.4% month-over-month to a seasonally adjusted annual rate of 694,000. Although buyer demand is high, the decline may be due to a shortage of available homes for sale.
Lower mortgage rates continue to incentivize prospective home buyers to buy and homeowners to refinance. The biggest obstacle home buyers are facing is shortage of available homes for sale. However, home builders are confident and working to replenish inventory. Home buyers may still face an uphill battle this season searching for homes. If you’re in the market to buy a home, get preapproved for mortgage financing first. When you have your mortgage preapproval the seller knows you’ve already started the financing process and you can make a stronger offer.
Sources: CNBC, CNBC, Econoday, MarketWatch, Mortgage News Daily