Existing home sales decreased 0.9 percent during August, according to a recent report from the National Association of Realtors.
Even though mortgage rates were at historical lows and more jobs were added during August, other factors held back home sales, NAR Chief Economist Lawrence Yun explained.
“Healthy labor markets in most the country should be creating a sustained demand for home purchases,” he said in a news release. “However, there’s no question that after peaking in June, sales in a majority of the country have inched backwards because inventory isn’t picking up to tame price growth and replace what’s being quickly sold.”
“The Jumbo Mortgage Credit Availability Index showed improvement in August.”
Yun expressed concerns about the coming months, as inventory remains low and even though the average household income is increasing, home prices remain relatively high.
The Mortgage Bankers Association found that mortgage credit availability decreased 0.4 percent in August, indicating that lending standards became tighter last month. However, the Jumbo Mortgage Credit Availability Index showed improvement, demonstrating loosening standards for nonconforming loans. These mortgages are for amounts greater than $417,000 and have been experiencing relatively low interest rates, making them a viable option for many higher-earning borrowers.
New home sales and starts
While existing homes fell behind, new home sales reached record highs, according to the MBA. Mortgage applications for new homes increased 5 percent in August compared to July.
“Applications for new home purchase mortgages were up in August on an unadjusted basis following a sluggish July,” Lynn Fisher, MBA’s vice president of research and economics, said in a statement. ” … Based on the applications data, our estimate of seasonally adjusted new home sales for August reached 601,000 sales, the highest level observed in our survey since it began in 2012.”
Though new home sales were up last month, new housing starts were down, according to the National Association of Home Builders. Starts fell 5.8 percent to 1.14 million units, but that doesn’t mean there is reason to worry, explained Robert Dietz, NAHB’s chief economist, in a press release.
“The August reading represents a one-month blip in what has been a long-term, gradual recovery,” he said. “On a year-over-year basis, single-family starts are up 9 percent while multifamily construction continues to level off at a solid level as that sector seeks to find a balance between supply and demand.”
September is expected to show some positive momentum, the NAHB reported. The NAHB/Wells Fargo Housing Market Index, a measure of builder confidence, showed a six-point increase from August to September, pushing the HMI to 65, the highest index since October 2015.
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