By Mark Huffman
ConsumerAffairs.com
November 27, 2009
On the heels of a report showing a significant rise in October's existing home sales, the U.S. Commerce Department reports sales of new home rose 6.2 percent. It's the highest level since 12 months earlier.
In a year-over-year comparison, October new home sales rose 5.1 percent from October 2008, the first time that's happened since November 2005.
Sales rose at an annual pace of 430,000 and the number of unsold homes reached a four-decade low. ,At the same time, the median sales price fell 0.5 percent, in part because new home sales had to compete with so many foreclosures.
A closer look at the report shows one region of the country is doing better than all others. The entire increase in new home sales was centered in the south region, which accounts for over 50 percent of sales.
Analysts attributed much of the gain in new home sales, as well as existing homes, to the anticipated expiration of the first time homebuyers credit. The credit has since been expanded and extended but its not clear what impact it will have going forward.
Interest rates were also very low in October, making homes even more affordable. And rates are even lower now.
Rates Tie Record Low
Freddie Mac reports mortgage rates fell to match the record low achieved back in April last week while the 15 year rate reached a new record low.
The average 30-year rate dropped 0.05 percentage point to 4.78 percent in the week ended Nov. 25, equaling the lowest rate since Freddie Mac started keeping weekly records back in 1971.
Fifteen-year mortgage rates dipped 0.03 percentage point in the week to 4.29 percent, the lowest since Freddie Mac began tracking them weekly in 1991.
Frank Nothaft, Freddie Mac chief economist, says the drop in interest rates could easily make the difference between a consumer qualifying for a loan or being turned down.
"Interest rates for 30-year fixed-rate loans are currently 0.8 percentage points below this year's peak set in mid-June, which shaves roughly $100 off the monthly payments on a $200,000 mortgage," he said.
