The pace of nation-wide existing home sales dipped by 1.8% month-over-month and 5.3% year-over-year in August. By region, the West’s -6.0% drop was the largest decline.
Home sales have been slowed by low supply and rising prices. The rate environment remains favorable, but without homes to buy, many first-timers remain on the sidelines. The supply of “distressed” properties (foreclosures and short sales) has dried up, which has eliminated a source of affordable housing and contributed to the current supply crunch.
New home development has stepped into the vacuum. Sales of new homes jumped 18% percent in August. The Western region (which had the largest existing sales dip), saw new sales jump by 50%. Here in San Luis Obispo County, stakeholders have come together to plan for more “workforce housing” developments and alleviate the supply crunch. Click here for the full story.
In other economic news, jobless claims increased slightly, but keep in mind that the rise came after the lowest recorded volume of new claims in 14 years. The increase was small (281,000 two weeks ago to 293,000 last week), which suggests that the nationally jobs situation is making solid improvements.
Second quarter GDP was revised up to a 4.6% growth rate. The first quarter churned out an alarming 2.1% drop in GDP, so the strong Q2 recovery has provided a nice salve for markets.
Mortgage Rate Movement
Mortgage rates have dipped back to early-September lows. After a mid-month spike, the Central Coast Lending 30-year fixed dropped 3/8 of a point week-over-week. For 3/8 of a point in cost, we are now advertising the 30-year fixed at 4.125% (4.171% APR).
The Freddie Mac national mortgage rate tracker reflects this decline. Last week, the 30-year fixed national average fell back to 4.20%, which is only slightly higher than the 18-month low of 4.10% set in late-August.
Loans Program Updates
Remember: monthly USDA mortgage insurance fees are set to increase from 0.4% of the loan to 0.5% on October 1, 2014. For a loan of $400,000, this would increase the monthly mortgage payment by about $33. Read more here.
Central Coast Lending is a California mortgage broker and direct lender based on the Central Coast of California in San Luis Obispo County. Call us today at 805.543.LOAN or email us here to set up a free pre qualification. We are The Mortgage Experts: ask us anything!