Update on Pending Home Sales in November

According to the National Association of Realtors, the month of November saw some stabilization where pending home sales are concerned. They received a slight gain. There were also some monthly increases in the South and the West that managed to make up for certain declines in the Northeast and the Midwest.

Have you ever heard of the Pending Home Sales Index? Well, if not, it is based on contract signings of existing homes on a large national sample that makes up about 20% of all transactions in the country.  According to that index, the number of signings increased by 0.2% to a score of 101.7 in November. Keep in mind that it does not account for closings, just contracts. This is good news for the economy.

NAR's chief economist, Lawrence Yun, had plenty to say about the market in a recent interview. He said, “We may have reached a cyclical low because the positive fundamentals of job creation and household formation are likely to foster a fairly stable level of contract activity in 2014. Although the final months of 2013 are finishing on a soft note, the year as a whole will end with the best sales total in seven years.”

As of now, mortgage interest rates are a bit higher but still relatively low when compared to years past. We have also seen strong gains in home prices that add to the overall market growth that we should expect to continue to see in 2014.

The market is still kind to buyers right now which means that we could see as much as $5.1 million in existing-home sales for 2013. That figure is nearly 10% more than 2012 experienced, and it is expected that 2014 should be similar.

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Tight Mortgage Requirements Rough on Singles and First-Time Buyers

According to a study by the National Association of Realtors (NAR), there are still some unnecessarily restrictive mortgage lending standards in place that are not allowing some singles and first-time buyers to financially qualify for a home. These tend to have to do with tight credit requirements. Since 1981, NAR has been evaluating the demographics, preferences, motivations and plans of those who have recently bought or sold a home. This data includes only owner-occupants, not investors or vacation homes.

“Single home buyers have been suppressed for the past three years by restrictive mortgage lending standards, which favor dual-income households who are more likely to have higher credit scores,” said Lawrence Yun, NAR chief economist. “Not seen in this survey is the elevated level of investors in recent years. The housing recovery would have been much weaker without investors, who often purchase with cash.”

According to the survey, 66% of buyers are married couples. In 2010 that number was 58%. The survey also saw that 16% of homebuyers are single women but only 9% are single men. Compared to 2010's 20% single women and 12% single men, the data shows that the overall market share of single buyers has declined from 32% in 2010 to 25% in both 2012 and 2013.

“Given that mortgage interest rates are expected to gradually rise, we need greater access to credit for a sounder housing recovery," said Yun. "Affordability conditions remain favorable in much of the country, but consumers need access to safe and sound financing, particularly the 30-year fixed-rate mortgage, and with low downpayment options for first-time buyers."

When looking at the averages that date back to 2981, it shows that 4 out of 10 purchases come from first-time buyers. In 2012, first-timers accounted for a 39% market share, but that number has slipped to 38% this year. This means that there are fewer first-time buyers in today's market than average. It is important to note that first-timers are very important for the housing market's recovery because they are the ones that help existing home owners to sell.

If you are in need of a home soon, we can help! If you are a single and/or first-time buyer, please don't hesitate to call us! We'd love to do everything we can to help you get into a home! Call Crosscountry Mortgage today at (877) 828-8851.

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The Importance of the FHA

Here at Quest Loans, we specialize in FHA Loans. Many people don't realize that the Federal Housing Administration (FHA) has a very important role in the mortgage industry. When the private mortgage market collapsed, the FHA stepped up to help make mortgage insurance available to millions of qualified home buyers across the nation. 80 years ago, Congress actually designed the mortgage insurance fund to do just that.

To prove how crucial the FHA is, the National Association of Realtors put together a testimony before the Senate Banking Committee praising the administration. According to NAR President Gary Thomas, without the FHA the housing downturn and economic recession would most likely have been far worse for the nation.

“FHA continues to play a significant role in the housing market and recovery. We applaud them for their leadership and strength during the housing crisis, and for continuing to serve the needs of hardworking American families who wish to purchase a home,” said Thomas, who is also the broker-owner of Evergreen Realty, in Villa Park, Calif.

He also noted that the FHA has always provided access to mortgage financing and it has never offered risky mortgage products, used predatory lending practices, or engaged in exotic underwriting. However, the FHA incurred great financial losses as a result of overall market conditions that led to increased foreclosures.

Despite this, Thomas said that the NAR is confident that the FHA is moving closer to helping to stabilize the mortgage insurance fund, and they've also made many administrative changes to minimize risk. Those changes include five increases to mortgage insurance premiums since 2009, implementing credit score floors, hiring a credit risk officer, requiring higher down-payments for those who have lower credit scores, and putting a series of measures in place to increase their lender responsibility and enforcement.

“FHA currently has one of the strongest books on record and the quality of borrowers has skyrocketed; continued market improvements and rising home prices will also help improve the fund’s future financial condition,” said Thomas. “Had FHA not stepped in to fill the market gap, many families would have been unable to purchase homes, current homeowners would have experienced far greater drops in equity and their home’s value, and our nation’s economy would be much further from a recovery.”

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