New builds hit 8-year high
Newly built single-family houses were in demand in 2015 with sales up 14.5 per cent year-over-year to 501,000. Data from the HUD and US Census Bureau show that the highest demand since 2007 was topped off by a 10.8 per cent gain in December to a seasonally adjusted annual rate of 544,000.
“The December sales report is a great end to a very strong year,” said Ed Brady, chairman of the National Association of Home Builders (NAHB) and home builder and developer from Bloomington, Ill. “As we move forward in 2016, we should see the housing market continue to make lasting gains.”
The low interest rates and improving economic outlook for the US have boosted buyers’ confidence with all four major regions showing gains; Midwest up 31.6 per cent; West up 21 per cent; Northwest 20.8 per cent; South up 0.4 per cent.
Northeast drives pending home sales
There was little change in the number of pending home sales in December but there have been gains year-over-year. The Pending Home Sales Index from the National Association of Realtors rose 0.1 per cent in the month from November but was 4.2 per cent higher than December 2014. The strongest gains were in the Northeast where the index was up 6.1 per cent month-over-month and 15.3 per cent year-over-year.
Existing home sales for 2016 are forecast to grow by 1.5 per cent to 5.34 million but there are some headwinds which could slow growth according to NAR chief economist Lawrence Yun who says the continued weakness in the energy sector could deter some buyers.
However, he says the pre-Spring period could tempt buyers: "The silver lining from the market turmoil in recent weeks is the fact that mortgage rates have slightly declined," says Yun. "Buyers looking to close on a home before the spring buying season begins may be rewarded with a mortgage rate at or below 4 percent."
Mortgage rates edge lower again
Mortgage rates fell again in the week ending Jan. 28 according to data from Freddie Mac. The average 30-year FRM was down to 3.79 per cent from 3.81 per cent a week earlier; 15-year FRM’s averaged 3.07 per cent, down from 3.10; and 5-year ARM’s averaged 2.90 per cent, down from 2.91 per cent. The Fed’s decision to hold interest rates and a stabilizing of government bonds helped to lower rates and Freddie’s chief economist Sean Becketti believes that sub-4 per cent mortgage rates should remain for a while longer.