Mortgage Rates Help Housing Numbers

American bought more homes last month than previously expected by the forecast of a consensus of economist across the financial sector.  The government reported that October sales of existing homes was up by over one percent when the expectation of economists were that they would be down by more than two percent. Much of this slightly higher demand is being driven by near all-time low mortgage rates.

The National Association of Realtors reported that the annualized rate for home sales would be four million nine-hundred seventy thousand units up slightly from the fore-casted four million eight-hundred thousand units previously expected. September’s existing home sales also had a minimal upward revision.

Existing home sales were also up by thirteen and one-half percent year over year as compared to last year. Of course mortgage rates are also much lower now than mortgage rates were this same time last year. The combination of foreclosed homes in the lower price ranges coupled with these incredibly low mortgage rates are providing some short-term stability to the housing market.

On the other hand the average sales price continues to drop on a nationwide as the median price on a home dropped to $162,500 down from a sales price of $170,000. As always with real estate the declines vary from one region of the country to another region. Home sales fell the most in the Northeast part of the nation. Nationwide there is still an eight month supply of homes on the market. A normal supply of homes would be less than six months.

We still contend that the overall real-estate market for the entire nation will not improve for quite some time. There is just too much shadow inventory still held by the nation’s largest banks. Shadow inventory are homes that banks are not receiving mortgage payments on them, but have yet to foreclose on the mortgage holder. Banks are not foreclosing because if they did they have to report the loss and it would be devastating to their stock-price.

It’s not always the front-line numbers that tell the real story. So while these numbers appear to make the housing market look rosy – it’s really not.

 

 

 

 

This entry was posted in Mortgages, News and tagged , , . Bookmark the permalink.

Leave a Reply