For July, 2013

Home sales take a breather, but prices hit five-year high


U.S. home resales unexpectedly fell in June after two straight months of hefty increases, but a surge in prices to a five-year high suggested the housing market recovery remained on course.

The National Association of Realtors said on Monday home sales fell 1.2% to an annual rate of 5.08 million units.

The median price for a previously owned home soared 13.5% from a year ago to $214,200, the highest since June 2008. The inventory of unsold homes on the market rose 1.9% from May, pushing the months’ supply to 5.2.

Distressed properties – which can depress prices because they typically sell at deep discounts – accounted for only 15% of sales last month.

Foreclosures and short sales, had made up 18%of sales in May.

In another sign of underlying strength, properties are selling more quickly. A home’s median time on the market in June was 37 days. That was down from 41 days in May and 70 days a year ago. Before the market collapsed in 2006, it usually took about 90 days to sell a home.

First-time buyers accounted for 29% of the transactions, far below the 40% to 45% economists and real estate professionals view as ideal.

Investors, who have been the main drivers of sales, bought 17% of the homes in June. That was down a touch from 18% in May and 19% a year ago.

Cash sales accounted for 31% of transactions in June, down from 33% in May.

Mortgage rates now a buyer stumbling block


Mortgage rates used to be the least of home buyers’ worries. But a recent interest-rate spike is turning the factor of rising home-loan rates into a widespread concern.

Rates on 30-year fixed-rate mortgages averaged 4.37% for the week ending July 18, according to Freddie Mac’s weekly survey of conforming mortgage rates. That’s down slightly from the average a week earlier, but up more than a percentage point from early May.

Of the respondents who plan to buy a home someday, 13% said a mortgage rate of 4% would be too high and 20% said a mortgage rate of 5% was their limit. Another 22% said rates would have to reach 6% to discourage them from buying a home

Many in the mortgage industry think the Federal Reserve may still be buying bonds, helping mortgage rates to stay low, for the next three years or so.

While fixed-rate loans have experienced large swings, adjustable-rate mortgages haven’t been quite as volatile. People planning to live in a home for no more than five to seven years might view an ARM as a good choice, since they will likely move before the rate resets.

Don’t panic if you’re home shopping right now. Rates might not be at the bottom, but they’re still very low.

Better yet, by getting preapproved before you’ve even started home shopping, you can get a sense for how the lender treats you and decide whether you want to stick with them until closing.

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