What Home Buyers Need to Know for the Week of June 30, 2014
The best news came from the National Association of REALTORS® Existing Home Sales report for May. It was the highest in seven months and mortgage rates trended down during the same time, but strict lending standards were cited as a significant obstacle to first-time homebuyers.
The report pointed to 4.89 million previously owned homes sold on a seasonally-adjusted annual basis. Analysts had projected a seasonally-adjusted annual figure of 4.75 million based on April’s reading of 4.65 million existing homes sold. April’s reading was later adjusted to 4.66 million.
May’s reading represented a monthly increase of 4.90 percent over April’s reading and was the second consecutive monthly increase in previously owned home sales. The median sales price for existing homes sold in May was $213,400, which represented a 5.10 percent increase year-over-year.
The Case-Shiller Home Price Index and FHFA’s House Price Index for April showed slowing rates of home price growth. Case-Shiller reported a 10.80 percent year-over-year growth in home prices for April, and FHFA reported a year-over-year gain of 5.90 percent rate of appreciation for home sales associated with mortgages owned by Fannie Mae and Freddie Mac.
Analysts noted that home price growth is leveling out after last year’s steep appreciation. While home owners may disagree, economists say that a slower rate of home price growth can actually bode well for housing markets; as more buyers can afford a home and adds stability to housing markets. First-time buyers provide a foundation for home sales; if they cannot buy homes, then homeowners can’t sell existing homes and buy new ones.
The U.S. Department of Commerce reported that new home sales for May reached a six-year high with a reading of 504,000 new homes sold on an annual basis. April’s reading exceeded expectations of 440,000 new homes sold, as well as April’s adjusted reading of 425,000 new homes sold. The month-to-month increase in new home sales from April to May was the largest monthly increase in home sales in 22 years.
Although analysts caution that month-to-month seasonally-adjusted sales reports are volatile, this uptick in new home sales may help bolster builder confidence in housing markets. May prices for new homes also rose with the median home price at $282,000. This reading represents a year-over-year increase of 6.0 percent.
The Northeast led in new home sales with its reading of 54.50 percent; The West reported an increase of 34.00 percent. New home prices in the Southeast rose at an annual rate of 14.20 percent and the Midwest region reported a 1.40 percent increase.
While analysts characterized the Northeast region’s May reading as exaggerated, overall results for new home prices indicate a comeback for new home prices.
More good news came from Freddie Mac with its weekly mortgage rates report. Average rates for a 30-year fixed rate mortgage dropped to 4.14 percent with discount points lowered to 0.50 percent. The average rate for a 15-year fixed rate mortgage fell by eight basis points to 3.22 percent with discount points unchanged at 0.50 percent. The average rate for a 5/1 adjustable rate mortgage fell by two basis points to 2.98 percent with discount points lower at 0.40 percent.
Weekly Jobless Claims Report reading fell by 6000 new claims to a seasonally adjusted reading of 312,000 with 214,000 new jobs being added per month to the economy from January to May 2014.
The Consumer Sentiment Index for June posted a reading of 82.5 against an expected reading of 81.9 and May’s reading of 81.2.
What’s Ahead for the Week?
Economic news impacting housing includes Pending Home Sales, Construction Spending, the ADP Private Sector Jobs Report, and the Non-Farm Payroll Report. The National Unemployment Rate Report along with Freddie Mac’s PMMS and Weekly Jobless Claims end the week.
Happy Independence Day.