In the final full month of summer, new-home sales rose at a swift pace, faster than what many economists had forecast. Yet despite the favorable trend, industry experts say 2014 will likely finish as an underwhelming year in the home buying department.
Sales of newly built homes jumped 18 percent in August compared to July, the Wall Street Journal reported based on numbers from the Commerce Department. That's the largest uptick from the previous month in the past 22 years. However, the notable rise in this particular month doesn't make up for how new-home sales have fared in year-to-date estimates. Two-thirds of the way through the year, there have been 307,000 previously unoccupied homes bought, up slightly from 2013, but down from 577,000 in 2007 and 365,000 in 2008.
Terry Russell, CEO of a home building enterprise in Atlanta, Georgia, told the newspaper that real estate experts are less than bullish about how new-home sales will finish, but are nonetheless optimistic about the future.
"Most people who I talk to think that 2014 is going to be pretty much flat with 2013, with an eye on 2015 having some nice escalation with availability of inventory and a little more demand," said Russell.
Economic factors affecting purchase decisions
A potential influence that's causing some prospective buyers to put off their purchase may be rigorous lending standards. Brian Johnston, COO of a real estate organization that has offices in five states, told the business news source that the qualification process has eased somewhat, but it can still be difficult for those who have never bought a home before to get a prime lending rate. Additionally, prices are fairly expensive, with the median for a new home being $275,600 nationwide in August, just 3.5 percent below the all-time high that was hit three months prior.
According to Freddie Mac' latest Primary Mortgage Market Survey, 30-year fixed-rate mortgages averaged 4.2 percent for the week ending Sept. 25, down slightly from the previous seven-day period. That's roughly in line with where FRMs were at this time last year, at 4.3 percent.
In order to be approved for a mortgage, lenders usually require that borrowers have stellar credit and a reliable source of income. Additionally, home insurance is typically necessary should there ever be an incident that leaves a residence damaged.