New Home Sales Surge Into Q4 2013; Should You Hurry Up And Buy A Home, Plus Mortgage Rates
The new construction housing market is finishing this year with strength, and appears prepped for a blowout beginning in 2014. Sales of new homes remains strong nationwide and homebuilder confidence has equaled a 7-year high.
Buyers may see higher home prices and fewer free upgrades with next year's collection of new homes. Builders have less reason to negotiate. New construction mortgage rates may be higher, too.
Scarcity Of New Construction : Inventory Drops
According to the Census Bureau, 464,000 newly-built homes were sold in November 2013 on a seasonally-adjusted, annualized basis. The figure represents a two percent drop from October's upwardly-revised reading, and a 17% improvement from last year.
November's tally also marks the second-largest New Home Sales figure in more than five years ago, a period which includes the $8,000 homebuyer tax credit-fueled rally of 2009-2010, and the ultra-low mortgage rates of 2012.
Furthermore, the increase in sales is occurring as the national inventory of new homes for sale shrinks.
There were 7% fewer homes for sale at the end of November as compared to the end of the month prior, dropping the national new home housing inventory to its lowest point since June.
At the current pace at which buyers are buying, the U.S. stock of new homes would "sell out" in just 4.3 months. This is more than one month faster than the pace of just 60 days ago and it's a pace which suggests that new construction is in a "seller's market".
Buyers have less leverage in negotiations as compared to early-2013. That may be one reason why new home prices have moved to multi-year highs.
The average new home sale price was $340,300 in November, up 10% from the summer.
Pre-Qualifying For New Construction
In addition to a rise in November New Home Sales, earlier this month, the Census Bureau reported a sharp rise in housing starts.
The number of single-family homes on which builder broke ground last month leaped 20% to reach its highest annualized total since early-2008. Because Housing Starts correlate with New Home Sales, we can expect new construction to remain in demand through early-2014, at least.
Homebuilder confidence is at a multi-year high, too. Buyer foot traffic remains strong, and offers are getting written for homes. Builders expect the first six months of 2014 to be among the best six months in a decade.
For today's buyers, the strength of the new home market means that mortgage pre-approvals may be more important than ever. In a multiple-offer situation, builders will consider the total quality of an offer and this may include the presence of a well-written pre-approval letter.
Getting pre-approved for a property demonstrates that you spoke with a lender regarding your ability to purchase the home; and that the lender intends to approve your pending mortgage application.
As a buyer, you can request pre-approval for any number of mortgage programs.
For example, if you plan to make a 3.5% downpayment via the FHA mortgage program, you can ask your lender to pre-approve you for an FHA mortgage. FHA loan limits vary by county, however, so you'll want to make sure that your requested loan amount does not exceed the local county limits.
You may also request a pre-approval under the USDA 100% financing program. The USDA loan is available in many suburban and rural neighborhoods and offers reduced mortgage insurance costs and, typically, lower mortgage rates than a comparable conventional loan.
Other popular loan types include VA loans for military borrowers; condotel loans for buyers of a condotel; and investor loans for buyers with more than 4 properties already financed.
Purchase offers with an accompanying pre-approval letters are strong than those without.
Get Pre-Approved For New Construction, Plus Rates
For buyers of new construction, next year's market is expected to bring higher prices, stiffer competition, and a scarcity of supply. The best deals for new homes, then, may be the ones you get today.
Get today's mortgage rates live, plus an optional pre-approval letter to accompany your offer. Rates are available online, with no cost and no additional obligation. Same for pre-approval letters.