Sales and prices soften, but rates are falling too

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Total existing-home sales – including single-family, townhomes, condominiums and co-ops – dropped 4.1 percent since July 2005, and were 11.2 percent below the 7.13 million-unit level in July 2005 to 6.33 million units.

Not only are we seeing a softening in the prices of homes due to rising inventory, but the rates buyer will be paying on a home are also moving in the right direction. “Many potential home buyers have been on the sidelines, some ‘kicking the tires,’ but mostly waiting for sellers to compromise on prices and terms. Home sellers in many areas of the country are pricing to reflect current market realities. As a result, there could be some lift to home sales, but it’ll likely take some months for price appreciation to rise.” said David Lereah, NAR’s chief economist.

The 30-year, conventional, fixed-rate mortgage was 6.76 percent in July, up from 6.68 percent in May; the rate was 5.70 percent in June 2005. Last week, the 30-year rate declined to 6.52 percent. “An unexpected quarter-point drop in mortgage interest rates over the last month also could help to stimulate the housing market,” Lereah said.

So what does all of this mean? As a buyer or seller you must understand what is happening in the market from an economic perspective. Understanding how inventory and rates affect you when buying or selling can save or make you thousands of dollars.

Remember real estate is long term.

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The Moxley Team   | August 23, 2006

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