US Housing Market Update

Place Prevot Townhomes Uptown DallasNew home sales increased for the fifth straight month in August fueled by builder incentives, low mortgage rates, attractive prices and the homebuyer tax credit.  New home sales increased 0.7% from the previous month to an annual rate of 429,000 units.  New home sales for the previous three months were also revised higher by 9,000 units.  The annual pace of new home sales is now at the highest level since September 2008.

Median new home prices in August declined to $195,200 from an upwardly revised $215,600 in July.  Median new home prices are now 11.7% lower than the same year-ago period hitting their lowest level since October 2003.  The median new home price has now recorded eight straight months of year-over-year declines.  For those of you keeping score, that means that new home prices have retreated to the lowest level in six years.  For those who are still sitting on the fence, thinking about buying a home, but too cautious to commit, remember that fortune favors the bold, and a year from now you’ll wish you had pulled the trigger on your purchase in October 2009.  We have hit bottom.

New  home inventories declined to 261,000 from July’s figure of 271,000 as the decline in the number of new homes for sale has now continued unabated, failing to record a monthly increase since May 2007.  Seasonally-adjusted inventory of unsold homes have now declined for 28 straight months to 262,000 units.  Declining inventory levels and increased demand for new homes in August helped inventory (when viewed as the number of months of supply at the present rate of sales) improve to its lowest level since January 2007, declining from 7.6 months supply in July to 7.3 months in August.  With inventory on the decline and demand remaining steady, inventory is falling back towards the 6 months of supply that is considered normal in a healthy housing market.

Existing home sales in August fell for the first time in five months despite favorable mortgage rates and lower prices.  Annualized sales of existing homes declined 2.7% from July levels to 5.10 million units.  Existing single-family home sales declined 2.8% from last month to 4,480,000 units while condo and co-op sales were down 1.6% from July to 620,000 units.  However, sales of existing homes are still up 3.4% from their same year-ago levels of 4.93 million units.  This is the second straight month that existing home sales have recorded year-over-year increases.

Existing home inventory dropped to its lowest level since January last month.  Inventory of existing homes dropped almost 11% to 3,622,000 units from 4,062,000 units in July.  Months of existing inventory dropped last month to 8.5 months of supply on the market, reaching the lowest level since April 2007.

Mortgage rates declined last week to 4.94% in the latest Primary Mortgage Market Survey released October 1st.  Rates have not increased since the end of August and are now at their lowest levels since the end of May.  For more detailed information on the indicators discussed in this article, please visit the following links:

Employment Growth Existing Home Sales
Unemployment Rate Existing Home Inventory
Real GDP Growth Existing Home Affordability
Consumer Confidence Median Price New Home
Purchase Mortgage Applications New Home Sales
Mortgage Rates New Home Inventory
Median Price Existing Home New Home Affordability Ratio
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