Existing Home Supply Sinks To 10-Month Low; Too Few Homes For Buyers
The number of homes sold is rising nationwide despite far fewer homes listed for sale..
According to the National Association of REALTORS®, the December Existing Home Sales report showed 4.87 million units sold on a seasonally-adjusted, annualized basis -- a 1 percent increase from the month prior.
The median home sale price has climbed 9.9% in the last 12 months. The typical U.S. home buyer is now faces the highest home prices in more than eight years.
Home Sales Climb Despite Higher Mortgage Rates
NAR's Existing Home Sales report tallies home sales of previously-occupied homes and 2013 proved to be a strong year for housing. Not since 2006 have so many "used homes" been sold on an annual basis, a 7-year span which encompasses the tax-credit fueled sales figures of 2009 and 2010.
Furthermore, NAR reports just 1.86 million homes for sale nationwide -- a 9% reduction from one month ago and the fewest homes for sale in 10 months. At the current pace of sales, the entire U.S. stock of homes for sale would "sell out" in 4.6 months.
Today's home buyers may want to worry.
Housing market analysts believe that a 6.0-month supply represents a market in balance between buyers and sellers; with neither group gaining negotiation leverage. When supply dips below 6.0 months, though, leverage often shifts toward sellers and home supply has been south of 6.0 months since mid-2012.
With home supply low, more buyers are competing for fewer homes, a situation which leads to "multiple offers" and competitive bidding. Nationwide, homes are selling more quickly, at at higher list prices.
It's tough for a buyer to get a great deal in seller's housing market -- just ask any buyer who's recently "won" a bidding war. The price paid was likely inflated, and the terms of the deal likely favored the seller's needs.
Buying a home in 2014? It may be best to move quickly.
Home Prices Up, "For Sale" Days Down
The Existing Home Sales report revealed other relevant housing data for today's home buyers and sellers.
Most notably, the average home's Time on Market climbed sixteen days in December to 72 days nationwide. Usually, this would be a bad sign for housing overall, but harsh weather delayed showings and closing across much of the country.
Still, 28% of homes sold in 30 days or fewer.
The average conforming mortgage rate in December was 4.46 percent for buyers willing to pay discount points -- a 1.11 percentage point from December 2012. Home buyers paid approximately $64 more per month per $100,000 borrowed as compared to the year prior.
Changes in FHA, VA and USDA mortgage rates were similarly large. Yet, total home sales increased nationwide. Rising mortgage rates may not be as bad for housing as Wall Street analysts have loudly declared.
The 2014 housing market has started strong. Demand continues to outstrip supply.
Low Downpayment Mortgage Options For Buyers
Historically, today's mortgage rates are cheap. Freddie Mac says that mortgage rates have averaged over eight percent since they been tracked. Today's rates are in the low 4s. Plus, low- and no-downpayment mortgages remain plentiful.
The FHA requires just 3.5% down, for example, and the USDA and VA both offer No Money Down mortgages.
See how today's mortgage rates fit your budget, get started with a rate quote. Rates are free and without obligation. See how much home you can afford.