Newly-built homes are selling quickly.
According to the U.S. Census Bureau, December New Home Sales added to a strong 2016.
New home sales hit an estimated 563,000 in 2016, a 12% increase from the year prior.
A favorable mortgage environment is pushing new home sales ahead.
Current mortgage rates are still historically low, and mortgage lenders have¬†made it simpler for first-time¬†home buyers to get mortgage-approved for a home loan.
A program requiring just 3.5% down is the popular FHA loan. Its credit standards are loosening by the day. It's no surprise this government-backed program now makes up 20% of the market according to loan software firm Ellie Mae.
It's an excellent time to be shopping for a home. The best deals you find in housing may be the ones you find today.Click to see today's rates (Feb 22nd, 2017)
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 December 2016, HUD reports 536,000¬†new homes sold on a seasonally-adjusted, annualized basis, marking a 10.4 percent decrease from the month prior, and a 0.4% drop from one year ago.
Despite lower numbers, 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 the first half of 2017 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 left to purchase. At the end of December,¬†there were just 259,000¬†new homes for sale nationwide, a supply of 5.8 months.Click to see today's rates (Feb 22nd, 2017)
New home sales will end 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 5.8 months. This means that all newly-built homes for sale would be "sold out" prior to June of next year.
Builders could have the upper hand on buyers right now -- it's¬†a seller's market. 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 2017, including free upgrades and/or price breaks.
New Home Supply has been south of¬†six months through 61 of the last 62 months. It's no surprise, then, that home prices have moved markedly higher during that time.
The median price of a new home jumped to $322,500, an eight percent increase from one year ago.
Nationwide, home values are up 35% since 2012.Click to see today's rates (Feb 22nd, 2017)
Home prices are rising but, thankfully,¬†mortgage rates remain low.
According to Freddie Mac's weekly Primary Mortgage Market Survey, the average conventional 30-year mortgage rate is currently 4.19% 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 $424,100¬†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 (Feb 22nd, 2017)
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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2017 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)