We’re only a little more than halfway into the year, and already the housing market is flexing its muscles with a strong showing from new home sales. The U.S. Department of Housing and Urban Development has announced that there were 592,000 new home sales in June, a figure which outpaces original expectations and estimations by tens of thousands of units. The number of new home sales has increased about 4% in the last month, while current new home sales are roughly 25% higher than they were in June 2015. More to the point, June 2016 saw the highest new home sales since 2008. All in all, demand for new housing remains strong, and the housing market is not only continuing its robust, post-recession recovery, but also continues to be a primary contributor to the U.S. economic recovery.
The success of new home sales has relied in large part on currently low mortgage rates. For individuals and households with favorable credit history, the average 30-year, fixed rate mortgage is about 3.5%. Back in June 2015, the average 30-year rates were hovering around 4% (which, it’s worth mentioning, was an already low figure). With rates arriving at even lower levels, it’s no surprise that new home sales have rocketed, as locking down such a generous mortgage is a valuable and responsible financial investment that’s sure to save you money in the future.
That said, with such a high demand for new housing, it’s not surprising that competition has intensified, and supply can hardly keep up with homebuyers’ demand. At the current sales pace, experts estimate that the present supply of new homes should be gone in a little less than five months. That’s a pretty restricted and limited inventory, and it’s accompanied by rising home values. In fact, average home values have risen by more than a third since 2012. This news is great for current homeowners, as it solidifies the fact that home ownership is a valuable and reliable investment. For prospective buyers, however, a competitive market has the potential to be worrisome.
Luckily, any burden caused by this competition is dramatically lessened by the aforementioned low mortgage rates. While low inventory and high demand often cultivate a sellers market, the current low average mortgage rates ensure that buyers retain purchasing power. A 3.5% mortgage rate ensures a minimal financial burden, makes homes easier to purchase, and makes a homeowner’s life more affordable in the long run. Additionally, with the housing market expected to remain strong for the foreseeable future, the prospects for buyers remain promising. As such, even if homebuyers will need to navigate a potentially competitive market, capitalizing on the currently low mortgage rates is still a great financial decision that’s sure to pay dividends in the future.
In short, it’s an ideal time to buy a home, especially in a booming market like Seattle.
For advice on managing your mortgage, contact Cody Touchette:
MLO # 83216, Pickett Street’s preferred lender