New-home sales surge despite drop in consumer confidence
Posted on Thursday, December 27, 2012 at 4:36:07 PM
Property values appreciated significantly so far this year and have led many consumers to make the transition to homeownership in November.
During the month, new single-family home sales spiked 4.4 percent from October to an annual sales pace of 377,000 units, according to data from the Department of Housing and Urban Development. Meanwhile, on a year-over-year basis, the sales rate was 15.7 percent above where it was in November 2011.
"The new-home market is a positive for the economic outlook, especially given that scarcity of supply points to new construction ahead," analysts from Econoday said, regarding the findings. "But fundamental economic issues right now are being clouded by the approach of the fiscal cliff and the risk that higher taxes will hurt consumers and home buyers."
The increase in new home sales occurred despite a sharp drop in consumer confidence this month. The latest Consumer Confidence Index from the Conference Board indicates the confidence level plummeted to 65.1 in December, from a mark of 71.5 in November.
Mortgage rates provide affordable options
Although some consumers are uncertain about the future of the housing market and economy, fixed mortgage rates hovering near all-time lows could give many of them the incentive to make the transition to homeownership in the near future.
Most recently, during the week ending December 27, the average rate for a 30-year FRM fell to 3.35 percent, from 3.37 percent, according to a report from Freddie Mac. Meanwhile, 15-year fixed-rate mortgage hit 2.65 percent, which was unchanged from the previous week.
"Rates on 30-year fixed mortgages were nearly 0.6 percentage points below that of the beginning of the year, which translates into an interest payment savings of nearly $98,600 over the life of a $200,000 loan," said Freddie Mac vice president and chief economist Frank Nothaft.
Additionally, five- and one-year Treasury indexed hybrid adjustable-rate mortgages averaged 2.7 and 2.56 percent, respectively, the report said.
Mortgage rates are expected to remain near current levels for the time being. However, prospective borrowers should remember the exact rate they receive will depend on their personal financial standing. Utilizing a mortgage comparison chart from Home Loan Investment Bank could provide an outline of attainable financing.