New Home Sales Beat Expectations

Rise 10.7%


Sales of new single-family houses in October 2015 beat expectations and came in at a seasonally adjusted annual rate of 495,000, according to estimates released jointly Wednesday by the U.S. Census Bureau and theDepartment of Housing and Urban Development.

This is 10.7% above the revised September rate of 447,000 and is 4.9% above the October 2014 estimate of 472,000.

Click to enlarge


(Source: Stifel)

Lindsey Piegza, chief economist for Stifel Fixed Income, noted that this month’s rise helped offset a 12.9% decline the month prior.

The median sales price of new houses sold in October 2015 was $281,500, while the average sales price was $366,000.

The seasonally adjusted estimate of new houses for sale at the end of October was 226,000. This represents a supply of 5.5 months at the current sales rate.

“New home sales remain volatile month-to-month, but with a positive upward trajectory, albeit slightly less positive than that seen in existing home sales activity.  Consumers continue to purchase new homes, however, with muted income growth and still lingering uncertainty, the pace of home purchases remains positive but subdued,” said Piegza.

“Going forward, housing is likely to continue to be a positive contribution to headline activity although limited.  Housing is no longer the driver of the economy as it once was although it is also no longer the large net drag on headline activity that it once was,” continued Piegza.

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Distressed Property Sales Hit New Low


Posted: 25 Nov 2015 KCM CrewDistressed Property Sales Hit New Low | Keeping Current MattersThe National Association of Realtors (NAR) just released their Existing Home Sales Reportrevealing that distressed property sales accounted for 6% of sales in October. This is down from 9% in 2014 and the lowest figure since NAR began tracking distressed sales in October 2008. Below is a graph that shows just how far the market has come since January 2012 when distressed sales accounted for 35% of all sales.Percentage of Distressed Property Sales | Keeping Current Matters

Existing Home Sales Up Year-Over-Year

Mortgage interest rates remained below 4% in October prompting existing home sales to stay at a healthy annual pace of 5.36 million. Year-over-year sales were up 3.9%. Inventory of homes for sale remain below the 6-month supply that is necessary for a normal market, as they fell 2.3% to a 4.8-months supply. The shortage in inventory has contributed to the median home price rising an additional 5.8% to $219,600. NAR’s Chief Economist, Lawrence Yun had this to say about the lack of inventory:

“New and existing-home supply has struggled to improve so far this Fall, leading to few choices for buyers and no easement of the ongoing affordability concerns still prevalent in some markets.”

There is good news though, as Yun went on to say:

“As long as solid job creation continues, a gradual easing of credit standards even with moderately higher mortgage rates should support steady demand and sales continuing to rise above a year ago.”

Bottom Line

If you are debating putting your home on the market this year, now may be the time. Buyers are still out there looking for their dream home. Meet with a local real estate professional who can help you determine your best plan.

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These 6 Steps Can Help Build Your Credit for your First Home

Spring homebuying season is coming

visa cards

While the spring homebuying season is still far away, if you’re trying to improve your credit score, now is the time to start. Starting in the spring would be way too late.

Danny Gardner, Freddie Mac vice president of single-family affordable lending and access to credit, published a blog on six easy steps to build credit.

“Whether you’re hoping to buy a home in spring 2016 or looking further out, here are six steps you can take between now and then to help build and maintain good credit,” said Gardner.

Here’s a preview:

1. Use credit cards carefully

Credit cards are convenient and easy to use, but using them recklessly can hurt your credit. If you allow your credit cards to reach high, unpaid balances, they can cost you hundreds or thousands of dollars in interest alone. On the other hand, if you pay them in full and on time each month, credit cards can help you build excellent credit and reap the benefits that follow.

Take this quick quiz on HousingWire to see how well you understand your credit score.

As it stands, a significant number of Americans are confused when it comes to what does and does not get reported to national credit bureaus. According to a survey from TransUnion, for example, 48% of respondents assumed their rental payments are regularly reported to credit bureaus yet many landlords don’t.

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Gift-Giving Help for the Holidays

Bill Asta, Senior Loan Officer, Radius Financial

Home is where the heart is, which makes it a great theme for a holiday gift. When you’re looking for a present for a friend, acquaintance or loved one this holiday season, keep these creative ideas in mind.

For the Party Host — Don’t default to the standard bottle of wine. Buy a counter-worthy recipe box that you seed with a few family favorites. Mix up and beautifully bottle a batch of vanilla extract. (It’s just vanilla beans and alcohol.) Or try a potted rosemary plant that you wrap and present as a fragrant gift.

For Teachers and Coworkers — What’s the perfect present for someone who puts in long hours at school or work? Something they’ll look forward to coming home to! That may be a beautiful glass teapot with loose-leaf tea, a gorgeous coffee table book on a favorite topic or a cozy monogrammed throw.

For Friends and Family — A close friend or family member may love a gadget that adds some smarts to the way they run their home. Try a Wi-Fi doorbell that delivers motion-triggered video to a cell phone when someone’s at the door, or a thermostat that learns preferences and then programs itself accordingly. Or go all in with a smart home starter kit that lets them control lighting, security cameras and other devices from a single app.

For Someone Special — When you’re shopping for that special someone, it doesn’t hurt to buy a gift that you’ll also enjoy. Cultivate a cozy refuge outdoors with a patio heater or a copperfire pit. Or set yourself up for a relaxed outdoor dining experience with a luxury grill.

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Millennials: What FICO Score is Needed to Buy a Home?

Posted: 24 Nov 2015 KCM CrewMillennials: What FICO Score is Needed to Buy a Home? | Keeping Current MattersIn a recent article by the Wharton School of Business at the University of Pennsylvania, it was revealed that some Millennials are not looking to purchase a home simply because they don’t believe they can qualify for a mortgage. The article quoted Jessica Lautz, the National Association of RealtorsManaging Director of Survey Research, as saying that there is a significant population that does not think they will be approved for a mortgage and doesn’t even try. The article also quoted Fannie Mae CEO Tim Mayopoulos :

“I do think that there’s a sense out there in the marketplace among borrowers that credit may not be available, especially for people with lower credit scores.”

So what credit score is necessary?

A recent survey reported that two-thirds of the respondents believe they need a very good credit score to buy a home, with 45 percent thinking a “good credit score” is over 780. In actually, the FICO score on closed loans (as reported by Ellie Mae) is much lower and has been dropping over the last several months.FICO Score Requirements | Keeping Current Matters

Bottom Line

Millennials who are considering a home purchase should get advice from a local real estate or mortgage professional now. They may be surprised how much the requirements for a mortgage have eased.

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Despite Decrease, Existing-Home Sales Maintain Healthy Pace

NAR: “Cooldown in October was likely given”

neighborhood houses1

Total existing-home sales are completed transactions that include single-family homes, townhomes, condominiums and co-ops.

However, despite the decrease, NAR said that existing-home sales in October were at a healthy pace but failed to keep up with September’s jump. And despite last month’s decline, sales are still 3.9% above a year ago (5.16 million).

In September, total existing-home sales increased 4.7% to a seasonally adjusted annual rate of 5.55 million in September from a slightly downwardly revised 5.30 million in August, and are now 8.8% above a year ago.

Lawrence Yun, NAR chief economist, said a sales cooldown in October was likely given the pullback in contract signings the last couple of months.

“New and existing-home supply has struggled to improve so far this fall, leading to few choices for buyers and no easement of the ongoing affordability concerns still prevalent in some markets,” he said.

“Furthermore, the mixed signals of slowing economic growth and volatility in the financial markets slightly tempered demand and contributed to the decreasing pace of sales,” Yun said.

The median existing-home price for all housing types in October jumped to $219,600, increasing 5.8% above October 2014 ($207,500). This marked the 44th consecutive month of year-over-year gains.

Total housing inventory at the end of October marginally decreased, falling 2.3% to 2.14 million existing homes available for sale. This is 4.5% lower than a year ago (2.24 million). Unsold inventory is at a 4.8-month supply at the current sales pace, up from 4.7 months in September.

Additionally, the percent share of first-time buyers slightly increased to 31% in October, up from 29% both in September and a year ago.

On the cash sales side, Yun said, “All-cash and investor sales are still somewhat elevated historically despite the diminishing number of distressed properties. With supply already meager at the lower-end of the price range, competition from these buyers only adds to the list of obstacles in the path for first-time buyers trying to reach the market.”

All-cash sales were 24% of transactions in October (unchanged from September) and are down from 27% a year ago.

Distressed sales – foreclosures and short sales – dipped to 6% in October: the lowest since NAR began tracking in October 2008.

Broken up across the country, existing-home sales in the Northeast were at an annual rate of 760,000, unchanged from September and 8.6% above a year ago. The median price in the Northeast increased slight from a year ago, rising 1.3% from 2014 to $248,900.

In the Midwest, existing-home sales declined 0.8% to an annual rate of 1.30 million in October, but are 8.3% above October 2014. The median price in the Midwest jumped 5.7% from a year ago to $172,300.

Existing-home sales in the South decreased 3.2% to an annual rate of 2.14 million in October, but are still 0.5% above October 2014. The median price in the South was $188,800, up 6.2% from a year ago.

Existing-home sales in the West fell 8.7% to an annual rate of 1.16 million in October, but are still 2.7% above a year ago. The median price in the West was $319,000, which is 8.0% above October 2014.


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Equity Matters a LOT ….. Just ask Freddie Mac


Posted: 23 Nov 2015 KCM CrewEquity Matters A Lot... Just Ask Freddie Mac | Keeping Current MattersThere are many reasons, both financial and non-financial, that homeownership remains an important part of the American Dream. One of the biggest reasons is the fact that it helps build family wealth. Recently, Freddie Mac wrote about the power of home equity. They explained:

“In the simplest terms, equity is the difference between how much your home is worth and how much you owe on your mortgage. You build equity by paying down your mortgage over time and through your home’s appreciation. In a nutshell, your money is working for you and contributing toward your financial future.”

They went on to show an example where a person bought a home for $150,000 with a down payment of 10% ($15K), resulting in a loan amount of $135,000. The buyer secured a 30-year fixed-rate mortgage at 4.5% with a monthly mortgage payment of $684.03 (not including taxes and insurance). The chart below demonstrates the home equity built after 7 years of making mortgage payments and assuming the historic national average of 3% per year home appreciation:Home Equity Earned | Keeping Current Matters

And that number continues to build as you continue to own the home.

Merrill Lynch published a report earlier this year that showed the average equity homeowners have acquired by certain ages.Average Home Equity | Keeping Current Matters

Bottom Line

Home equity is important to building wealth as a family. Referring to the first scenario above, Freddie Mac explained:

“Now, if you continued to rent, and made the same payment of $684.03 per month, you’d have zero equity and no means to build it. Building equity is a critical part of homeownership and can help you create financial stability.”

Put your housing cost to work for you and your family. Meet with a real estate professional today to explore your options.

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