With the regular reports from the Census Bureau and the Department of Housing and Urban Development, among other agencies, anyone working in the sector should be following market trends. Most currently experts have noticed a trend in new home sales taking month up and downturns as well as a decline in cash sales altogether. Combining the results of these reports can help us to understand the sector more deeply and begin to predict which direction the industry may be going while responding to specific changes.
New Home Sales Waiver
New home sales have begun to show a pattern of advancing and then retreating, leaving mortgage and finance professionals questioning the current climate of the sector. The Department of Housing and Urban Development alongside the Census Bureau reported a 5.2% rise in new home sales in November following a 1.9% loss in October. Despite this rise and fall sales continue to top out far over those made one year prior, in 2015. Though analysts had proposed that November sales would improve upon October’s meager downfall they overshot their predictions by about 10,000 homes. At the end of this reporting period there were still 253,000 homes for sale with unadjusted prices, with the estimated supply at this rate there should be about 5.1 months of sales remaining. With construction spending on the rise alongside these positive readings we can only guess that the mortgage and finance sector won’t take many immense hits in the changing times of 2017.
Cash Sales Decline
Investors have been pulling off from the residential market but the share of cash sales still appears to be holding fairly steady for now. This is yet another sign that all is not lost in the sector despite the buzz around what will happen once Trump is inaugurated. CoreLogic reported that the share of home sale transactions in all cash were ate 31.7% in September, a decrease from the previous year. Cash sales peaked in 2011 at 46.6% but the pre-crash cash sale average was around 25%, an average that expert analysts expect to resurface around mid-2019. Of this data 4.7% of home sales in September were from REO inventories, 59.4% of which were purchased in all cash. When it came to resales, or sales of existing homes, 31.2% were cash sales, newly constructed homes were purchased with cash about 15.5% of the time.
What This Means For The Sector
When REO sales dwindle all-cash transactions become even more important than ever but mortgage brokers should know how to deal with cash sales before venturing blindly into that arena of finance. Before accepting an all-cash sale and waiving the mortgage fee remember to acquire proof of equity. Having proof of this cash will protect us from brokering this deal and waiving fees unnecessarily. Also, keeping track of new home sales will help a mortgage office keep up with current trends, in turn preparing them for any up or downturn in the sector.