Slower Months Ahead, But Still up From a Year Ago

By
Mortgage and Lending with PrimeLending, Plains Capital Bank Company

According to the National Association of REALTORS, existing-home sales were down in September compared to that of August, yet remain well above a year ago.

Total existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, declined 3.0 percent to a seasonally adjusted annual rate of 4.91 million in September from an upwardly revised 5.06 million in August, but are 11.3 percent above the 4.41 million unit pace in September 2010.

Existing-home sales have bounced around this year, staying relatively close to the current level in most months, though what can be frustrating is affordability conditions have improved to historic highs and more creditworthy borrowers are trying to purchase homes. That being said the share of contract failures has double the level of September 2010. Even so, the volume of successful buyers is higher than a year ago and is remaining fairly stable.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 4.11 percent in September, down from 4.27 percent in August; the rate was 4.35 percent in September 2010.

Many creditworthy home buyers are being denied mortgages. On top of that, loan limits have been lowered, which means buyers of higher priced homes, including many in more expensive housing markets, now have to pay a higher interest rate for a jumbo mortgage than buyers who can qualify for a conventional loan.

All-cash sales accounted for 30 percent of purchase activity in September, up from 29 percent in August and 29 percent also in September 2010; investors make up the bulk of cash purchases. Investors purchased 19 percent of homes in September, down from 22 percent in August; they were 18 percent in September 2010. First-time buyers accounted for 32 percent of transactions in September, unchanged from August; they were also 32 percent in September 2010.

Total housing inventory at the end of September declined 2.0 percent to 3.48 million existing homes available for sale, which represents an 8.5-month supply at the current sales pace, compared with an 8.4-month supply in August.

Regionally, existing-home sales in the Northeast rose 2.6 percent to an annual level of 790,000 in September and are 6.8 percent above a year ago. Existing-home sales in the West fell 8.8 percent to an annual pace of 1.14 million in September but are 10.7 percent higher than September 2010. The median price in the West was $207,400, which is 4.5 percent below a year ago.

We’ve all been experiencing that the market has been stable… although at low levels, and there is plenty of room for improvement. We need to remove the roadblocks to a housing recovery and not place more obstacles in the way of financially qualified buyers and ultimately, unless Congress reinstates the higher limits, the overall housing market recovery will be slower than it otherwise could be, and will hold back the broader economic recovery

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