Home sales dropped in July, according to the National Association of REALTORS®, marking the first time in four months that home sales slipped on a seasonally-adjusted, annualized basis; and, taking some steam from this year's roaring market for existing homes.
Current mortgage rates are their lowest in history -- but buyers are having a hard time finding "good homes" to buy.
5.39 million existing homes sold on a seasonally-adjusted, annualized basis last month, an decrease of three percent from the month and a small decline from July one year ago.
July's Existing Home Sales data is lower on a year-over-year basis. This had not happened in nine months.
First-time home buyer activity accounted for 32 percent of last month's market, which is near a 4-year high.Click to see today's rates (Sep 29th, 2016)
The National Association of REALTORS® (NAR) released its July 2016 Existing Home Sales report, which showed 5.39 million homes sold on a seasonally-adjusted, annualized basis.
An "existing home" is a pre-owned house that is being sold again and does not include newly constructed homes.
Existing Home Supply rose slightly, to 4.7 months nationwide. A reading lower than six months is generally believed to indicate a "seller's market".
Low home supply might actually be good news, indirectly.
Homeowners are realizing the staggering equity they have built since early this decade. NAR reports that year-over-year home prices have risen 53 months in a row.
As owners become sellers, more homes become available, bringing the market back into balance. At least, that's the hope. For now, homes remain scarce.
Fortunately, first-time home buyers are not deterred by a challenging environment.
In July, these buyers represented 32 percent of the market, which is near the multi-year high. Low mortgage rates are likely enticing new buyers.
Although homes prices are rising in real terms, low mortgage rates are holding monthly payments in check, which is helping to keep homes affordable.
NAR says it's possible a wider selection of affordable homes are coming on-market. Homeowners are finally listing their homes for sale as they upsize or downsize.
Today's market is becoming more favorable to those who have never owned a home before.Click to see today's rates (Sep 29th, 2016)
A wave of rate-friendly news has been a boon to U.S. buyers this summer.
In May, lackluster job growth signaled potential weakness in the economy. In response, investors snatched up mortgage bonds, which are considered among of the safest investments. This drove down rates.
But that was only the beginning.
In June, Brexit happened. This is the term coined to describe Britain's historic vote to leave the European Union, a 28-member conglomerate of countries from which no country has ever exited.
Mortgage rates tanked to new three-year lows. And there they've stayed for the last 8 weeks. Mortgage rates have not been this low for this long in history.
Evidently, home buyers are getting the message. Homes are suddenly more affordable. A home buyer today can purchase a home worth $14,000 more today as compared to the start of 2016.
Mortgage rates have dropped fast enough to keep homes affordable, and well within the budgets of millions of buyers.
Also contributing to home sales: buyer-friendly mortgage programs.Click to see today's rates (Sep 29th, 2016)
Mortgage rates alone are not enough to extend opportunity to buyers. The more important piece is actually available mortgage programs.
Today's market offers first time home buyer down payment flexibility, the likes of which hasn't been seen in nine years.
Even mainstays of affordable housing, such as FHA loans, have made it even easier to buy. Mortgage insurance premiums were reduces last year. And, more lenders are offering these loans at the FHA-suggested 580 minimum score.
Conventional lenders have eased downpayment requirements. The minimum down for loans backed by Fannie Mae and Freddie Mac is now 3%. The Conventional 97 mortgage and the HomeReadyTM loan are both lenient about the amount of money you need upfront.
The USDA home loan goes further than even FHA and conventional loans: it requires zero downpayment. And, closing costs can come from a gift or even a seller contribution.
Another zero-down loan comes from the U.S. Department of Veterans Affairs. The VA loan is a veteran-only mortgage for which current and former military service members earn eligibility with as little as 90 days of active service.
These mortgage programs and others are even more affordable because of today's record-breaking mortgage rates. Home sales are rising, with little question that today's home buying environment is one of the best in history.
The U.S. housing market is advancing through 2016, and into 2017. It's an excellent time to buy a home, and the first step is getting a rate quote for your home mortgage.
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 (Sep 29th, 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)