Even With Lower Mortgage Rates
Lower mortgage rates in September did not urge potential home buyers to purchase. Signed contracts to buy homes were stagnant for the month, rising just 0.3% from August, according to the National Association of Realtors. Pending home sales are now 1% higher than September of 2013, which is the first yearly gain in 11 months. "Housing supply for existing homes was up in September 6 percent from a year ago, which is preventing prices from rising at the accelerated clip seen earlier this year," said Lawrence Yun, chief economist for the NAR. "Additionally, the current spectacularly low mortgage rates should help more buyers reach the market."
While the average rate on the 30-year mortgage was very close to historical lows, being able to qualify for a loan continues to be a problem for potential home buyers. The Realtors report that not being able to obtain credit is a large reason for sales not closing. Pending homes sales in the Northeast went up 1.2% in September, and are now 2.9% above this time last year. In the Midwest they went down 1.2% from month to month and are now 4% below last September. In the South, anticipated sales increased 1.4% monthly and 1.7% from last September. Sales in the West went down 0.8 % monthly but are still 3.6% above a year ago.
Contracts to buy newly built homes were also stagnant in September. Sales that closed of existing homes, which are based on the mortgage contracts signed in July and August, were higher than anticipated, although they were still below where they were one year ago.
Since all cash investors are buying fewer homes, leaving the market to owners that need mortgages, the price of the homes are becoming a larger influence in the housing market. Younger buyers are still having a tough time with credit and still owing on student loans. Home price increases in the past few years were much more than the increase in people's income, and while there are gains this year, today's higher prices are still quite shocking.
Real estate agents in several of the nation's larger cities say homes have now been in the market a lot longer, and sellers are starting become more realistic. The number of listings usually goes down this time of year, inventories are higher than they were last year. This has definitely put buyers in a better position to find their perfect home that they can afford. Mortgage rates went down even lower in October, before they slightly increased again. Unfortunately, the mortgage applications did not increase even with the lower rates.
"The bleeding has stopped from the rate increases from a year ago which is reflected in the stable picture at the national level," said Frank Nothaft, chief economist at Freddie Mac in a monthly report. "We've seen a pick-up in the number of states and metros improving at the local levels based on their three month trend, pointing once again to more housing markets working their way back to the fundamentals."
Lang Premier Properties are Birmingham Realtors specializing in Oakland County Real Estate. Stephanie is an agent with Lang Premier Properties. See what past clients have to say about Stephanie Lang. Lang Premier Properties looks out for your best interests when you purchase a new custom luxury home. We always recommend working with an experienced luxury real estate agent when buying a new luxury estate.