Posted On April 23, 2018
Mortgage rates trended slightly upward last week, and mortgage application submissions surged with many buyers looking to lock rates ahead of future increases. This week, there are numerous important housing reports scheduled for release including existing home sales, new home sales, and the S&P CoreLogic Case-Shiller home price index.
Existing home sales or resales make up the majority of real estate transactions. After two months of declines, existing home sales rebounded in February, up 3.0% month-over-month and 1.1% year-over-year, to a seasonally adjusted annual pace of 5.54 million. Based on the current pace, it would take about 3.4 months to sell off all existing inventory. In March, housing supply was a substantial 8.1% lower than one year ago, and homes spent an average of only 37 days on the market.
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 January, every city in the twenty-city index showed home price appreciation, led by double digit annual gains in Seattle, Las Vegas, and San Francisco. Month-over-month prices are up 0.8%, and year-over-year prices are up 6.4%. Inventory constraints continue to drive prices up with buyers bidding over many of the same properties.
New home sales make up a smaller segment of real estate transactions than existing home sales but are still used to gauge housing market momentum. In February, new home sales were almost flat month-over-month but nearly 10% higher year-over-year at a seasonally adjusted annual rate of 618,000. Based on this data, it would take 5.9 months to exhaust available new home inventory. Despite the decline, available inventories are rising, up 16.0% year-over-year, as builders attempt to satisfy strong buyer demand.
In the midst of the spring buying and selling season, the market is competitive. However, home builders are optimistic and construction activity in the fourth quarter of 2017 was the strongest since the first quarter of 2016, despite some winter weather delays. Analysts expect average mortgage rates to continue to trend upward, but by historic standards rates are low. One way for home buyers to get their offer accepted is by having the ability to close their loan faster. Financing with a direct lender, like CMG Financial, is one way to achieve this.