Home Prices Up 12% Over Last Year

From the Office of Federal Housing Enterprise Oversight 3rd Quarter House Price Index Report, released 12/01/2005-
"Average U.S. home prices increased 12.02 percent year over year
from the third quarter of 2004 through the third quarter of 2005."

November Forclosure Filings Down

This from the Colorado Springs Gazette (www.gazette.com)-
mortgage foreclosures filed for El Paso County, Colorado for November were down 3.1% from last year. Year-to-date filings were down 0.8% from the same period last year.

30 Year Fixed Rates Drop .02%

According to Freddie Mac (www.freddiemac.com),
30 Year Fixed Rate Mortgages dropped by .02% in their
weekly survey for the week ending December 1, 2005,
from 6.28% to 6.26%. Last year at this time, the
30-year FRM averaged 5.81 percent.

New Home Sales Jump

New home sales for October were up 13%.
Why are new home sales dramatically up while existing home sales are slightly down?

New homes generally take 4 to 6 month to build. So, most of those new homes had purhase contracts on them from April through June. During that time period, interest rates were about 1% better than now and builders were running their promotions for the big summer sales season.

New home starts have been declining the last couple of months. This decline appears to be slightly greater than the typical fall/winter construction slow down. Fewer starts mean fewer finished homes to sell in future months.
New home sales follow existing home sales but are delayed by a couple of months. When sales are up, buyers can't as easily find existing homes, so more sign contracts with builders, ending in a sale a couple of months later. When sales are down, there are more existing homes to choose from, less demand for new homes, and fewer new homes started, meaning fewer new homes to sell a few months later.

Existing Home Sales Down

Sales of previously owned U.S. homes fell 2.7% last month to a 7.09 million annual rate, the slowest since March, with the number of unsold homes the highest since April 1986. According to the National Association of Realtors there is now almost a 5 month supply of exisiting homes for sale, while housing affordibilty is at a 14 year low.

So, fewer people make enough money to afford the average home and there are more homes for sale that are taking longer to sell.

Sellers, expect to either sell for less to sell quickly or expect your home to take 5 to 6 months to sell.

Buyers, there aren't enough of you to go around. You are in charge! More lower offers are going to be accepted. Find a good real estate agent who can tell you how long a home has been on the market and how many times the price has been lowered.

Mortgage Applications Drop Again

This from www.mbaa.org-
"The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending November 25. The Market Composite Index — a measure of mortgage loan application volume – was 624.1 a decrease of 1.8 percent on a seasonally adjusted basis from 635.4, one week earlier. On an unadjusted basis, the Index decreased 33.2 percent compared with the previous week but was down 8.0 percent compared with the same week one year earlier. The seasonally-adjusted indexes include an additional adjustment to account for the Thanksgiving holiday."

Buyer's Market

From this article "Home sales shifting into buyer's market" on USAToday.com -

"A transition from a seller's to a buyer's market is underway, and agents say they are spending more time trying to get clients to understand the market has changed. They note homes are sitting on the market longer and price gains are slowing as higher interest rates make buyers balk..."

Avoid Borrowing Pitfalls

These tips sre courtesy of Freddie Mac

Tips For Avoiding Borrowing Pitfalls
Source: Freddie Mac

Say NO to "easy money." Borrowers should beware if someone claims "credit problems won't affect the interest rate." Avoid solicitations for loans that sound too good to be true. If it sounds too good to be true, it probably is. If a solicitation is really interesting, get it in writing!

1. Shop around.
2. Understand the loan terms.
3. Find out about prepayment penalties.
4. Make sure documents are correct.
5. Make sure documents are complete.
6. Ask about additional fees.
7. Understand the total package.
8. Work with credit counselors.
9. Protect home equity.
10. If you're not sure, don't sign!

Read the whole article here www.freddiemac.com

Rates First Fall in 13 Weeks

Freddie Mac Wednesday released the results of its Primary Mortgage Market Survey in which the 30-year fixed-rate mortgage averaged 6.28 percent, for the week ending November 24, 2005, down from last week’s average of 6.37 percent.
Last year at this time, the 30-year FRM averaged 5.72 percent.

This was the first fall for the 30 year fixed-rate mortgage in 13 weeks.

Check out the report at www.freddiemac.com.