Newly-built homes continue to sell quickly.
According to the U.S. Census Bureau, July¬†New Home Sales leaped to a near-9-year high¬†with home supply firmly in Bull Market territory.
A favorable mortgage environment is pushing new home sales ahead.
Current mortgage rates¬†have remained lower-than-expected, and mortgage lenders have¬†made it simpler for first-time¬†home buyers to get mortgage-approved for a home loan.
Fannie Mae recently added the 3% down¬†HomeReady‚ĄĘ mortgage program to the full complement of low- and no-down payment loans available to today's buyers; and purchase mortgage applications are getting approved at the highest rate since the start of the decade.
It's an excellent time to be shopping for a home. The best deals you find in housing may be the deals you find today.Click to see today's rates (Oct 22nd, 2016)
Each month, in conjunction with the¬†U.S. Census Bureau, the U.S. Department of Housing & Urban Development (HUD) releases its New Home Sales report.
A "new home" is a home which has not been previously occupied; one which can be considered new construction.
For July¬†2016, HUD reports 654,000 new homes sold on a seasonally-adjusted, annualized basis, marking a 12¬†percent increase from the month prior, and a 31% increase from one year ago.
New homes haven't sold at this pace since November 2007.
Builders are feeling good about their prospects.
Earlier this month, the National Association of Homebuilders (NAHB) released its¬†Housing Market Index (HMI), a monthly homebuilder confidence survey.
The most recent Housing Market Index shows¬†homebuilder confidence near¬†its highest point in a decade, with¬†home builders projecting new home sales for 2016 to be near¬†multi-year bests.
Demand for new homes has been strong, too, as evidenced by the high number of buyers requesting tours of model units.
If you're hoping to buy new construction, there aren't many homes to left to purchase. At the end of July,¬†there were just 233,000¬†new homes for sale nationwide, a supply of 4.3 months.Click to see today's rates (Oct 22nd, 2016)
New home sales have started the¬†year strong, with buyers snapping up homes at every¬†available price point -- faster than builders can build them, even.
At the current pace of sales, the complete stock of new homes for sale would be sold in¬†4.3 months. This means that all newly-built homes for sale would be "sold out" by¬†the first months of 2017.
Home sales show no sign of slowing down. In July, analysts expected "only" 580,000 new homes to sell, on an annualized basis. The actual count surpassed that number by nearly 75,000. Buyers are getting serious about owning.
But builders could have the upper hand.
It's a seller's market for housing. Home supply of less than six months typically favors sellers over buyers in home negotiations.
Today's new home buyers, therefore, have little leverage over builders and may be unlikely to receive purchase incentives in 2016, including free upgrades and/or price breaks.
New Home Supply has been south of¬†six months through 56 of the last 57 months. It's no surprise, then, that home prices have moved markedly higher during that time.
Nationwide, home values are up nearly 35% since 2012.Click to see today's rates (Oct 22nd, 2016)
Home prices are rising but, thankfully,¬†mortgage rates remain cheap.
According to Freddie Mac's weekly Primary Mortgage Market Survey, the average conventional 30-year mortgage rate is currently 3.43% for prime borrowers; with¬†rates for VA loans, FHA loans and USDA loans even lower.
Low rates help to make homes affordable. Low- and no-down payment mortgages make them easier¬†to purchase.
FHA mortgages, for example, allow a downpayment of just 3.5 percent and require a credit¬†score of 580 or better to get qualified.
Then, there is the HomeReady‚ĄĘ mortgage, which is a 3-percent downpayment program available via¬†Fannie Mae. HomeReady‚ĄĘ¬†is valid for loan sizes up to $417,000 and¬†can be used by multi-generation households with non-documented rental income; and by home buyers in lower-income census tracts.
For buyers with military experience, the VA mortgage can be an attractive option.
VA loans allow for 100% financing and never require mortgage insurance. VA mortgage rates also tend to be the lowest of all commonly-available mortgage rates, based on data from loan software company Ellie Mae.
The USDA Section 502 loan is another no-downpayment mortgage option.
Commonly called the "Rural Housing Loan", USDA loans provide 100% financing to qualified borrowers in low-density neighborhoods. This can include rural and suburban neighborhoods.
Sales of new construction homes are strong¬†and demand for homes remains high. Thankfully, today's mortgage rates are low. Buyers have purchasing power¬†even as builders hold¬†leverage in negotiation.
Get today's live mortgage rates now. Your social security number is not required to get started, and all quotes come with access to your live mortgage credit scores.Click to see today's rates (Oct 22nd, 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)