The 2015 housing market was exceptional one. 2016 may finish even better.
According to the National Association of REALTORS¬ģ, the March¬†2016¬†Pending Home Sales Index posted above its year-ago levels;¬†and the index continues to read¬†above its benchmark value of 100.
A home sale is "pending" once it's under contract between a buyer and a seller.
It's not surprising that contract signings are up. With¬†today's mortgage rates¬†lingering near 3.625%, U.S. rents rising, and lenders offering¬†mortgage guidelines, today's housing market¬†favors home¬†buyers in a big way.
Low- and no-down payments remain popular, and new programs such as the¬†HomeReady‚ĄĘ mortgage¬†make it even easier to get mortgage-qualified.
Given today's market conditions, the¬†best deals in housing may be the ones you find today. By¬†this time next year, home prices and interest rates may be higher -- and so might your rent.Click to see today's rates (Jul 24th, 2016)
The Pending Home Sales Index (PHSI) is a monthly report, published by the National Association of Realtors¬ģ (NAR). It measures homes under contract, and not yet closed.
The Pending Home Sales Index is different from most housing market metrics.
Unlike traditional metrics¬†which measure how housing performed in the past, the Pending Home Sales Index forecasts how housing will perform in the future.
The Pending Home Sales Index is forward-looking.
The index tallies U.S. homes recently under contract to project future, closed home sales. This is possible because the National Association of REALTORS¬ģ knows that 80% of homes under contract "close" within 2 months of contract.
In March, the Pending Home Sales Index read 110.5 -- the¬†index's 23rd¬†straight month above its¬†baseline reading of 100.
Beating the baseline is a big deal.
When the Pending Home Sales Index crosses¬†100, it's an indication that U.S. homes are going to contract at a faster pace than during 2001, the first year in which the¬†index was published.
2001 is generally considered a good year for U.S. housing. The current market, then, by comparison, is exceptional.
Results for the Pending Home Sales Index, mixed by region:
For today's renters, it's an excellent time to consider buying a home.Click to see today's rates (Jul 24th, 2016)
According to NAR, first-time home buyers account for about one-third of the today's housing¬†market.
Rising rents, plus an abundance of low- and no-down payment mortgage loans, is making¬†homeownership look more attractive.
More than 6 million homes are expected to change hands in 2016.
Renters are finding it less expensive to purchase than rent, at times; and lenders have programs to help make that happen.
Getting home-loan qualified is getting simpler.
Mortgage lenders have reduced their minimum FICO scores required to get approved; lenders are now less stringent with respect to loan-to-value restrictions; and,¬†the piggyback loan has re-emerged as a popular home-buying option.
Fannie Mae and Freddie Mac have even gone so far as to reintroduce a program known as the Conventional 97, which is a three percent downpayment loan¬†for borrowers with above-average credit; and to also create a brand-new 3% downpayment product known as the¬†HomeReady‚ĄĘ loan.
Both are exceptional vehicles for getting into homeownership.
Even FHA loans are easier for which to get approved.
FHA loans¬†require downpayments of just 3.5%¬†and its credit score minimum is in the 500s. Plus,¬†the FHA lowered its mortgage insurance premium (MIP) structure in 2015 which makes FHA loans even more affordable to U.S. home buyers.
FHA loans account for close to 25% of home loans made today.
Other¬†common low- and no-down payment choice include¬†the VA loan via the Department of Veterans Affairs, which require no down payment whatsoever; and the¬†USDA "Rural Housing" mortgage (which is actually available in many suburban cities, too).
USDA loans are also no-money-down.
Across the country,¬†homes are going to contract quickly. Demand from buyers is huge and, because of today's low rates and rising rents, the pool of potential buyers has stayed strong.
Take a look at today's real mortgage rates. Your social security number is not required to get started, and all quotes come with instant access to your live credit scores.Click to see today's rates (Jul 24th, 2016)
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.
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2016 Conforming, FHA, & VA Loan Limits
Mortgage loan limits for every U.S. county, as published by Fannie Mae & Freddie Mac, the Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA)