Blog posted On August 24, 2018
Mortgage rates have not moved much this week, trending downward according to some sources. Steady mortgage rates triggered some mortgage activity, with both new purchase and refinance applications increasing. The Mortgage Bankers Association (MBA) weekly mortgage application survey increased 4.2% week-over-week. Existing home sales and new home sales each declined and the FHFA house price index appreciated.
Existing home sales or resales make up the majority of real estate transactions. In July, existing home sales declined slightly, down 0.7% month-over-month and 1.5% year-over-year to a seasonally adjusted annual rate of 5.34 million. This figure marks the slowest pace since February 2016. On average, homes for sale stayed on the market for 27 days in July, up from June’s average of 26 days. First-time home buying activity has started to pick up. The National Association of Realtors reports first-time home buyers accounted for 32% of all July buyers, below long-time averages, but signaling an upward trend.
The FHFA house price index increased slightly in June, up 0.2% month-over-month and 6.5% year-over-year. The data is based on homes that are financed through mortgages that are securitized by Fannie Mae and Freddie Mac, so it is a smaller subset than the Case-Shiller home price index, but still used to gauge appreciation trends. Prices rose in all states and the District of Columbia, and 99 out of the 100 largest metros saw increase. Only El Paso, TX saw a marginal decrease of 0.03% year-over-year.
New home sales, or the sales of newly constructed homes, make up a smaller selection of sales than existing home sales, but are used to review construction activity. New home sales declined 1.7% month-over-month but improved 12.8% year-over-year to a seasonally adjusted annual pace of 627,000. The Northeast, in particular, drove sales down with a 52.3% drop, followed by the South down 3.3%. The West and Midwest each posted positive numbers. The annual increase in sales, however, signals that construction activity may be regaining some steam. Home builders are optimistic as buyer demand continues to outpace supply.
Low for-sale inventory continues to hamper housing activity. Homes are selling in record times in today’s competitive market. Buyers looking to stay competitive should get preapproved for mortgage financing before they start shopping. Mortgage preapproval shows the seller you are a serious contender and have already started the mortgage financing process.