Sales of new homes rose more than expected last month to the highest level in more than a year as the housing market shows stability after its historic collapse.
The Commerce Department says sales rose 6.2 percent to a seasonally adjusted annual rate of 430,000 from an upwardly revised 405,000 in September. Economists surveyed by Thomson Reuters had expected a pace of 410,000.
Home shoppers in October were acting before lawmakers decided to extend a tax credit for first-time buyers and expand it to existing homeowners. Nevertheless, sales were up 5.1 percent from a year ago, the first yearly increase since November 2005.
The median sales price of $212,200 was off 0.5 percent from $213,200 a year earlier, but up 0.7 percent from September’s level of $210,700. Typical Story Inserts (as found in CNBC/Components/Data-Market folder):
Sales of previously owned U.S. homes rose in October at a faster-than-expected pace to the highest in more than 2-1/2 years as buyers rushed to take advantage of a popular tax credit, a survey showed Monday.
The National Association of Realtors said sales surged a record 10.1 percent to an annual rate of 6.10 million units, the highest since February 2007, from a downwardly revised 5.54 million unit pace in September.
Analysts polled by Reuters had expected October sales to jump to a 5.70 million unit pace from the previously reported 5.57 million units in September. Compared to October last year, home sales were up by a record 23.5 percent.
In January, Mike Rowland was so broke that he had to raid his retirement savings to move here from Boston.
A week ago, he and a couple of buddies bought a two-unit apartment building for nearly a million dollars. They had only a little cash to bring to the table but, with the federal government insuring the transaction, a large down payment was not necessary.
“It was kind of crazy we could get this big a loan,” said Mr. Rowland, 27. “If a government official came out here, I would slap him a high-five.”
In its efforts to prop up a shattered housing market, the government is greatly extending its traditional support of real estate, including guaranteeing the mortgages of middle-class and even upper-class buyers against default.
In 2007, the government did not insure a single mortgage in this city, one of the most expensive in the country. Buyers here, as well as in Manhattan, Santa Monica and every other wealthy area, were presumed to be able to handle the steep prices and correspondingly hefty down payments on their own.
The percentage of homes bought in the United States by first-time buyers will rise significantly this year, helped by a popular $8,000 tax credit, the National Association of Realtors predicted Friday.
Home for sale – Coldwell
About 47 percent of all sales will be first-time homebuyers this year, up from 41 percent in 2008, the group said, adding that it expects somewhere between 2.3 million and 2.4 million first-time homebuyers this year.
The group also predicted that home prices will grow modestly next year and sales will keep rising as the housing market continues to recover from the worst downturn since the Great Depression.
Home resales are projected to total 5.7 million next year, up from an estimated 5 million this year. Prices will climb 4 percent after a projected decline of 13 percent this year, according to Lawrence Yun, chief economist for the trade association.
The 30-year fixed-rate mortgage averaged 4.91 percent for the week ending November 12, 2009, down from last week when it averaged 4.98 percent, according to Freddie Mac.
The 30-Year has been below 5 percent for five of the last seven weeks. Last year at this time, the 30-year FRM averaged 6.14 percent.
The 15-year this week averaged 4.36 percent , down from last week when it averaged 4.40 percent. A year ago at this time, the 15-year averaged 5.81 percent.
The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.29 percent this week, down from last week when it averaged 4.35 percent. A year ago, the 5-year ARM averaged 5.98 percent.
Washington, November 02, 2009
Pending home sales rose again, marking eight consecutive monthly gains – the longest streak since measurement began in 2001, according to the National Association of Realtors®.
The Pending Home Sales Index,* a forward-looking indicator based on contracts signed in September, rose 6.1 percent to 110.1 from a reading of 103.8 in August, and is 21.2 percent higher than September 2008 when it stood at 90.9. The gain from a year ago is the largest annual increase on record, and the index is at the highest level since December 2006 when it was 112.8.
Lawrence Yun, NAR chief economist, said the momentum is understandable. “What we’re witnessing is a rush of first-time buyers trying to beat the expiration of the tax credit at the end of this month,” he said. “Home values will stabilize sooner rather than over-correcting. That, in turn, will mean wealth stabilization for the vast number of middle-class families and lay the foundation for a durable economic recovery.”
Given the current buyers market, some investors may find property more attractive, never mind rewarding, than stocks; and for those convinced that the federal government’s borrowing-spending binge will bring a nasty bout of inflation down the road, real estate is the hedge for you.
“As inflation occurs the value of your property will go up,” says Todd Huettner, president of Huettner Capital, a Denver-based real estate financing brokerage. “Then there’s the financing. You’re borrowing dollars when they’re cheap today and paying them back when they’re worth less.”
That and a sea of foreclosed properties make your dollar go a very long way.
But depending on how you get into real estate, it can be a time consuming, complex and (as the recent bust proves) risky proposition.
There are many ways to invest—in properties or funds; in commercial, residential or industrial; in single-family homes or condos. Each strategy has advantages and disadvantages, but experts say there are a few principles that hold true across the board. Continue reading
Hello and welcome to this week’s edition of Moorings. We are coming down to the wire with the $8,000 first time home buyer tax credit as it expires on the last day of this month. Just a quick recap, you need to have closed on your home by the 30th of this month to take advantage of the tax credit or else you will be too late. Something to consider if you are in fact still looking, make sure you are working with a mortgage banker who can actually close your loan in time. Many brokers are now quoting 30-45+ days to close a loan which would put you outside of the time limits.
On another note, I thought it would be a good idea to take a look at how the this tax credit has affected our industry. As of September 2009, existing-home sales were up nationally by 9.4% from the previous month and up 9.2% from the previous year. The total housing inventory (listed homes) fell by 7.5% to 3.63 million homes. A total of 5.57 million homes having been sold with five gains in the past six months. As everyone knows, home values have declined over the past few years and which has also helped fuel new purchases, but declining home values also serves to negatively affect the economy. At some point these values will begin to go on the rise again and with most of the 75 million homeowners in the country having a majority of their wealth tied in their home, this is largely a positive thing with regards to the economies overall performance.
While the tax credit has indeed positively affected the housing industry as well as the overall U.S. economy, it will also have an effect if the government allows it to end while we are still in the midst of a recovery AND during a time of year that is historically the worst for housing (the months leading up to Christmas). Obviously most everyone in the real estate and mortgage industries want the federal government to extend the credit until our sector is well on its way to being in the black again but also this is simply a bad time of year to let it end. Historically people don’t buy homes at the same time they are saving up for the holidays for gifts, vacations and time off. Currently this isn’t the case since they are being offered an incentive, but take that away and we run the risk of plunging from a period of high-sales into one of extreme low’s. While I completely understand that the cost of this program is massive (around one billion dollars per month) I also realize that housing is one of the biggest industries in the country and quite simply we must do whatever is necessary to assure it’s jumpstart is continued until all is well. Continuing the tax credit is a great second-step to this end. Until next week, Numbers 6:24-26 be on you.