MARKET TRENDS: Existing Home Sales Report : Homes Selling 31% Faster
Home resales closed the third quarter with momentum.
According to the National Association of REALTORS®, the September Existing Home Sales showed 4.75 million units sold on a seasonally-adjusted, annualized basis.
The September 2012 reading marks an 11 percent increase from one year ago.
Existing Home Sales : Strongest Quarter Since 2010
NAR's Existing Home Sales report tallies home sales of previously-occupied homes and not since the tax-credit fueled Spring of 2010 have so many "used homes" been sold.
In addition, the trade association reports that just 2.32 million homes remain for sale nationwide -- the sparsest supply since March 2005. At the current sales pace, the entire U.S. stock of homes for sale would sell in just 5.9 months.
It's a stat today's home buyers would do well to watch.
Housing market analysts believe that a 6.0-month supply represents a market in balance between buyers and sellers; neither group benefiting from much
negotiation leverage. With supply below 6.0 months, then, leverage tends to shift toward sellers.
When home supply falls, more buyers compete for fewer homes, a situation which leads to "multiple offers" and competitive bidding. Homes sell more quickly, at at higher prices.
It's tough to get "great deals" in a seller's market -- just ask a buyer who's won a bidding war.
Home Prices Up, "For Sale" Days Down
The Existing Home Sales report revealed other relevant housing data for today's home buyers and sellers. Most notably, that the average home's Time on Market slipped to just 70 days nationwide.
This tells us that homes are selling 31% faster as compared to a year ago. Now, some might say that homes are selling more quickly because they're being priced more appropriately (i.e. "cheaper"). As it turns out, that's not the case. The median home sale price is up 11 percent from last year and prices appear headed higher still.
Rather, the reason why home prices are rising is because buyers outnumber sellers, and financing has gone cheap.
The average conforming mortgage rate in September was 3.47 percent for buyers willing to pay discount points. The average FHA mortgage rate was 3.64 percent for buyers making 3.5 percent downpayments. Even VA mortgage rates went cheap, hovering near 3.25 percent.
When mortgage rates get this low, buyers feel less sting from rising prices and are willing to "extend" a little bit. Purchasing power climbs 11% for every 1 percent drop in rates. That's a significant shift with mortgage rates at all-time lows.
Plus, with fewer foreclosures and short sales coming online, home supplies remain limited. Earlier this year, 1 in every 3 home sales was tied to distressed property. Today, it's 1 in 4.
Low Downpayment Mortgage Options
For today's home buyers, mortgage rates are cheap and low- and no-downpayment mortgages remain plentiful. The FHA requires just a 3.5% downpayment for its mortgage program, and the VA and USDA both offer 100% financing / no-money-down mortgages.
The VA doesn't even require mortgage insurance.
To see how today's mortgage rates fit into your budget, get started with a rate quote. They're free and require no credit check or social security number. The form is online and ready for use.