Dennis' Mortgage Blog

Earlier this week the National Association of Realtors announced that sales of existing homes in February 2011 had declined 9.6% from January 2011 volume and that the median sales price of an existing home had declined to $156,100, the lowest since February 2002.

Today more housing news hit the wires with the Commerce Department reporting sales of new homes ("existing homes" are defined as "previously occupied," "new homes" are newly constructed and newly occupied) plummeted in February to the lowest level since records have been kept on new home sales.  New homes sales dropped 16.9% from January to February 2011 to a seasonally adjusted annualized rate of 250,000 homes.  Coming off the worse year for new home sales on record in 2010, the poor start to 2011 does not bode well for home builders

The past two years saw significant increases in purchase activity with the IRS home buyer tax credits of up to $8000 offered to consumers.  When the tax credits expired home sales dropped.  With no tax credit available is there incentive for consumers to purchase existing or new homes?

For new homes is a $32,000 drop in price enough to get someone off the fence and into a new home?  That is how much the median sales price of a new home fell from January ($234,800) to February ($202,100), a whopping 13.9% in one month. 

Potential home buyers are faced with difficult calculus decisions of weighing potentially lower home prices versus higher mortgage rates by waiting to purchase a home.  Will higher rates making it harder to qualify be mitigated by lower sales prices that would require less cash to close and a smaller loan?

Call me to figure out your mortgage to purchase price equation.

Mortgage rates continue to remain low for the time being.  Call or email Dennis today to determine your purchasing power for a new home loan or monthly savings from a refinance.  Direct dial 562-472-1118