WASHINGTON — NAFCU released its Macro Data Flash on new and existing home sales last week, and the data underscored what credit union mortgage lenders already knew about the state of the U.S. real estate market.
New home sales in September increased 5.3% to 1.08 million units, and new home inventory also improved. However, compared to one year ago, the median new home price declined 9.6% from $240,000 to $217,000. This was the largest year-over-year decrease since an 11.2% decrease in 1970 and is the lowest median new home price since Sept. 2004.
But NAFCU cautions that despite the unexpected increase in new home sales during September and the improvement in the inventory situation, it is still uncertain whether the three-month upward sales trend will continue.
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Despite the increasingly benign fixed-rate mortgage rates, housing affordability is kept low due to the dramatic increase in home prices over the past few years, NAFCU's Macro Data Flash for new home sales states. This will continue to remain a constraint on real estate secured loan demand for credit unions well into 2007.
While new home sales increased in September, the opposite was true for existing home sales–they declined by 1.9%, the lowest level since Jan. 2004. September's existing home sales decline continues a pattern that's happened every month since March.
Existing home sales have dropped in 10 out of the past 12 months, and sales are down by more than 14% from a year ago.
Similarly, the median price of an existing single-family home fell 2.5% from 12 months ago, the largest year-over-year decline since record keeping began in 1969.
Given the continued softening of the housing market coupled with the decline in energy prices, the Fed decided to leave the Fed Funds rate unchanged at 5.25%. The Fed expects the slowdown in growth will cause core inflation to moderate over the next few months.
However NAFCU still opines that the Fed will increase the Fed Funds rate by 25 basis points to 5.5% as early as December. Consequently, credit unions should expect short-term interest rates to be pressured higher over the near-term. –[email protected]
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