Posted by: realtormarkpalace | December 20, 2010

Real Estate Outlook: Existing Pending Sales Rise

by Carla Hill

Existing pending sales may have jumped a staggering 10.4 percent in October, the strongest pace since April of this year, but interest rates are on the rise. According to Frank Notehaft, chief economist for Freddie Mac, investors moved from U.S. Treasury debt to European markets — where improvements are being made to the debt crisis. This in turn caused “bond yields to rise and mortgage rates along with them,” he says.

What does this mean for the consumer? For sellers, it could mean buyers will be more hesitant to enter the market. For buyers its means more expensive monthly payments. Notehaft relates that “interest rates for 30-year fixed mortgages are now almost a half percentage point higher than the record low set in mid-October, which for a $200,000 conventional loan amounts to $50 more in monthly payments.”

This isn’t good news for a market where builders are already preparing themselves for a slow season.

The National Association of Home Builders reports in their latest index that “builders are bracing themselves for a slow holiday season as a number of factors continue to cause uncertainty among consumers and builders alike. … The typical cold-weather slowdown in sales activity is being accentuated by ongoing weakness in the job market, the rising number of foreclosures and short-sales, and very challenging credit conditions for both builders and buyers.”

On a more positive note, however, the NAHB expects that with an improving job market in the coming year, buyers and thus builders will regain some confidence in the market. And confidence in the market can translate into sales.

Mortgage applications are up as well. They are 17.7 percent above last month and are now at the strongest pace since May.

And to round up this week’s positive news, Freddie Mac announced earlier this month that they will be suspending all evictions from December 20th until January 3rd. Anthony Renzi, Executive Vice President of Single Family Portfolio Management at Freddie Mac, stated that “if the property is occupied, our foreclosure attorneys will suspend the eviction to provide a greater measure of certainty to families during the holidays.”

This will surely give many families reason to rest easier this holiday season.

Published: December 20, 2010

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