Lower Rates Don't Help Falling New Home Sales

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Mortgage and Lending with The Federal Savings Bank/Lending in 50 states NMLS # 109616

Sales of new homes fell by nearly 8% in May from April by to an annual rate of 626,000 units, below the 683,000 expected, reports the Commerce Department. From May 2018 to May 2019, sales declined 3.7%. Inventories are now just above normal rates of 6 months, currently at 6.4 months. The median price of a new home sold in May was $308,000, 2.7% lower than a year ago. New home sales declined in the Northeast and West with gains seen in the Midwest and South.

Trade and tariff tensions sent the Consumer Confidence Index lower in June to 121.5, down from 131.3 in May. In addition, consumers' assessment of current business conditions and labor market conditions also decreased during the month. Lynn Franco, Senior Director of Economic Indicators at The Conference Board said, "Although the Index remains at a high level, continued uncertainty could result in further volatility in the Index and, at some point, could even begin to diminish consumers’ confidence in the expansion.”

The Federal Housing Finance Agency (FHFA) released its House Price Index for April showing that home prices rose 0.4% from March. From April 2018 to April 2019, prices rose 5.2%. The FHFA House Price Index (HPI) is a broad measure of the movement of single-family house prices. The HPI is a weighted, repeat-sales index, meaning that it measures average price changes in repeat sales or refinancings on the same properties.

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