New Home Sales in December, Mortgage rates edged higher, Cash Sales for Home Purchases Rose
January 26, 2017
New Home Sales in December fell 10.4% from November to an annual rate of 536,000 versus the 589,000 expected. Higher mortgage rates and increasing home prices are the culprits. This was the lowest level since February of 2015, down 0.4% from December 2015. Within the report it showed that the median sales price rose nearly 8% from a year ago to $325,500. In addition, there is a near six-month supply of new homes for sale, which is viewed as a healthy balance between supply and demand.
Mortgage rates edged higher this week after the surge in rates as investing dollars shifted out of the Bond markets and into Stocks, which usually has a negative effect on rates. The 30-year fixed conventional mortgage rate ($424,000 or less) rose to 4.19% this week from 4.09% last week with 0.4 in points and fees, as reported by Freddie Mac. However, to put it in historical perspective, mortgage rates were near 19% back in the early 1980s.
Analytics firm CoreLogic reported on Thursday that cash sales for home purchases rose again in October, the fourth consecutive monthly increase, but are lower than they were in October 2015. Cash sales made up 31.8% of total home sales in October, down 2.7% from October 2015. Before the housing crisis began in 2008, cash sales averaged around 25% of total home sales. The 25% mark could be reached again by mid-2018if the share of cash sales continues to decline at the same annual rate it as it did in October.
