CURRENT MORTGAGE RATES STOKING HOME SALES
Today's low mortgage rates are helping to boost U.S. home sales.
From San Jose, California; to Detroit, Michigan; to Miami, Florida, homes for sales are going into contract at a higher-than-average rate. Buyers outnumber sellers and home values have climbed, rising more than five percent from one year ago.
According to Freddie Mac, the average 30-year mortgage rate has dropped close to 100 basis basis points (1.00%) since the start of last year, down seven-eighths to 3.68 percent, on average, nationwide.
Lenders currently quote conforming mortgage rates and APR in the 3s. And, for borrowers in search of FHA loans and VA loans, you'll find your quotes are even lower.
Purchasing power is up 11% since last year. It's an excellent time to consider buying a house.
Click to see today's rates.
PENDING HOME SALES INDEX : A DIFFERENT INDICATOR TYPE
The Pending Home Sales Index is a monthly report, published by the National Association of REALTORS® (NAR). It measures homes under contract, and not yet closed.
The Pending Home Sales Index is a forward-looking housing market indicator. In this way, it is different from the major housing market metrics.
Most housing market metrics reveal how the housing market performed during some historical period -- whether one month or one year ago, as two examples. What makes the Pending Home Sales Index unique is that, in measuring the past, it attempts to predict how housing will perform in the future.
80% of homes under contract close within 60 days, and many of the rest close within 120 days so there is a high correlation between the monthly Pending Home Sales Index and the Existing Home Sales report, which is released two months later.
Based on recent Pending Home Sales Index data, we can expect to see strong Existing Home Sales data through May 2015, at least.
According to the National Association of REALTORS®, the March Pending Home Sales Index (PHSI) read 108.6 -- the best reading of the year and the highest since 21 months ago.
The Pending Home Sales Index is up 11 percent as compared to its year-ago level, and has remained above its benchmark value of 100 for ten straight months. This point suggests that the 2015 housing market is performing better than the housing market of 2001, the year in which the forward-looking index was launched.
2001 is generally considered to have been a good year for housing. 2015, therefore, can be considered to be even better.
Click to see today's rates.
HOME VALUES STILL RISING NATIONWIDE
With a reading of 108.6, the March Pending Home Sales Index posted above its benchmark value of 100 for the tenth consecutive month. This reading hints at strength through the rest of spring and into the summer housing market.
We should expect a strong Q2 2015 for Existing Home Sales, at minimum.
Based on the Pending Home Sales Index, Existing Home Sales projects as follows :
April 2015 : 5.44 million homes sold on seasonally-adjusted, annualized basis
May 2015 : 5.70 million homes sold on seasonally-adjusted, annualized basis
Home prices are expected to rise, too.
With mortgage rates low, demand for homes has been high and homes are selling quickly. In March, 40% of homes sold in 30 days or fewer; and, at the current pace of sales, the complete stock of homes for sale would be sold out in just 4.6 months.
Supply of less than 6.0 months suggests a "Seller's Market". It's been more than 2 years since the national home supply favored buyers over sellers.
The good news for today's home buyers is that there are a bevy of low- and no-downpayment mortgage programs to complement the 20% down programs made available via Fannie Mae and Freddie Mac.
The FHA offers a 3.5% downpayment program, for example, and the VA and the USDA both offer 100 percent financing for eligible U.S. home buyers. Plus, Fannie Mae has released a update its Conventional 97 program, which can be combined with a gift of downpayment to get to "no money down".
The program requires a downpayment of just 3% and its mortgage payments cancel as soon as the home equity reaches twenty percent.
Source: The Mortgage Report, Dan Green
http://themortgagereports.com/17518/pending-home-sales-index-mortgage-rates-contract-nar
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