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Summary: Housing markets show continued signs of strengthening according to recently released reports. The National Association of Realtors® reported that sales of pre-owned homes rose 20.7% from May to an annual rate of 4.72 million in June.
Existing home sales rebounded in June from the month before at a record pace, pointing to signs of a turnaround in the housing market after three consecutive months of sales decreases as a result of the coronavirus pandemic, according to the National Association of Realtors (NAR). All four major regions reported month-over-month growth, with the West showing the strongest sales recovery.
However, overall sales declined year-over-year, down 11.3% from the same time in June 2019.
Buyers Gain Confidence in Labor Markets, Rush to Take Advantage of Low Rates
Sales recovery is strong as buyers who were waiting throughout the pandemic to buy finally come out of the woodworks to make a purchase. This increase in buyer confidence appears to be sustainable for the forseeable future as long as mortgage interest rates stay very low and employment gains carry on.
Buyers are likely influenced by declining mortgage rates and encouraged by improving job markets. Analysts expect that rates will remain very low throughout 2020, giving buyers incentive to get into the market over the coming months.
The national median home price rose by 3.50 percent annually to $295,300.
While this news paints a rosy picture for housing markets, challenges remain. Strict mortgage standards are an obstacle for the first time and moderate-income buyers as well as for buyers with less than stellar credit scores.
While construction of new homes is increasing, it still may not be enough to meet demand. By the end of June, total housing inventory totaled 1.57 million units, a 1.3% increase from May, but a decrease of 18.2% from the same time in 2019. Unsold inventory currently sits at a 4-month supply at today’s average sales pace, down from 4.8 months in May and from 4.3 months in June 2019.
FHFA House Prices Rise in May
The Federal Housing Finance Agency (FHFA) reported that home prices associated with mortgage loans owned or backed by Fannie Mae and Freddie Mac were up 0.2% in May from April’s reading and up 5.50% year-over-year.
FHFA reported that year-over-year home price growth was positive in all nine census divisions, with the lowest growth rate of 0.50 percent in the Mid Atlantic division and the highest growth rate of 6.80 percent in the Mountain division.
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