Home homebuyer august06

homebuyer august06

August, 2006 Newsletter

Introduction: Both Existing and New Home Sales Fall
Mortgage Rate Update: Rates Decline
This Month’s Tip: Choosing A Neighborhood

Introduction: Both Existing and New Home Sales Fall

Existing-home sales were down modestly in June, and home prices were up slightly from a year ago, according to the National Association of Realtors®.

Total existing-home sales – including single-family, townhomes, condominiums and co-ops – declined 1.3 percent to a seasonally adjusted annual rate of 6.62 million units in June from an upwardly revised level of 6.71 million May. Last month’s sales were 8.9 percent below the 7.27 million-unit pace in June 2005.

David Lereah, NAR’s chief economist, said the housing market is flattening-out. “Over the last three months home sales have held in a narrow range, easing to a level that is near our annual projection, which tells us the market is stabilizing,” he said. “At the same time, sellers have recognized that they need to be more competitive in their pricing given the rise in housing inventories. Home prices are only a little higher than a year ago.”

The national median existing-home price for all housing types was $231,000 in June, up 0.9 percent from June 2005 when the median was $229,000. The median is a typical market price where half of the homes sold for more and half sold for less.

“The change in price performance is directly tied to housing inventories – a year ago we had a lean supply of homes and a sellers’ market, with monthly home sales at an all-time record high,” Lereah said.

Total housing inventory levels rose 3.8 percent at the end of June to 3.73 million existing homes available for sale, which represents a 6.8-month supply at the current sales pace. By contrast, in June 2005, there was a tight 4.4-month supply on the market.

In new home sales, sales of new one-family houses in June 2006 were at a seasonally adjusted annual rate of 1,131,000, according to estimates released jointly on July 27th by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 3.0 percent (±12.0%) below the revised May rate of 1,166,000 and is 11.1 percent (±9.8%) below the June 2005 estimate of 1,272,000.

The median sales price of new houses sold in June 2006 was $231,300; the average sales price was $290,600. The seasonally adjusted estimate of new houses for sale at the end of June was 566,000. This represents a supply of 6.1 months at the current sales rate.

It appears that things are definitely slowing a bit and prices seem to be stabilizing. It bears watching to see if this trend picks up steam as we go through the summer and into the fall.

Mortgage Rate Update: Rates Decline

During the month of July, most mortgage rates declined for the period. 30-year fixed-rate mortgages averaged 6.72% in the period that ended January 27th, according to mortgage company Freddie Mac. 30-year rates began the month of July with an average of 6.79%. 15-year fixed-rate mortgages began the month at an average of 6.44% and ended the month at an average of 6.34%. Although we have seen a fairly large increase in rates during calendar year 2006 (from a low of 6.10% on the 30-year side in January), rates are still relatively low in the longer term historic picture.

Looking at the past is easy. Trying to look into the future is a good deal more difficult. Economic activity does appear to be slowing somewhat, though, and generally this equates to rising bond prices (and lower yields) which may mean mortgage rates stabilize or fall a bit in the coming months. It probably would be a good idea to keep a little closer watch on rates than you might in a more stable environment.

For current average mortgage rates, see the rates page.

For more information on mortgages, visit the Mortgage Section

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This Month’s Tip: Choosing A Neighborhood

Before you can think about decorating or landscaping, before you even think about a specific house, you will probably need to consider, compare and choose a neighborhood. Since so much is dependent on the choice of where you want to live–not the least of which is future resale value– it is a decision you’ll not want to take lightly.

Choosing a neighborhood means determining and comparing a number of factors and amenities, including:

+ Schools
+ Proximity to shopping and services
+ Available recreation
+ Traffic patterns
+ Health care
+ Future development

Some of these factors will have more emphasis than others, depending on your personal situation. Parents, for example, will most likely be most concerned with the issue of schools. An active couple may put emphasis on the types and extent of recreation that is available. Older buyers may have concerns regarding access to hospitals and health care. Your first step in choosing a neighborhood should be an assessment of which of these factors–or others– are the most important to you.


Due to a number of factors including tax rates, expenditures, physical school facilities and more, the quality of school districts can vary greatly. Even within a particular school district, there can be considerable difference between the highest rated school and the lowest. All things being equal, most parents will want to gravitate to neighborhoods that offer the best schools but are within their price range.

Proximity to shopping and services

This is not automatically a positive. Although many home buyers will prefer to be close to a wide variety of shopping availability, others will prefer to be further away from extensive shopping areas, largely due to the next variable.

Traffic patterns

Some of us are not that bothered by traffic (otherwise 90 minute commutes would not exist). For others, though, traffic simply drives them bonkers. Obviously, if you are one of the traffic-adverse, this factor will have a pretty big impact on your selection of a neighborhood.

Health Care

Although all of us, given our druthers, would probably prefer easy access to health care facilities, as we age this factor increases in importance. Not only for the convenience of, for example, doctor’s offices and clinics, but also for the proximity of emergency health care.

Future development

If a neighborhood is an area that is near future development, this is a factor that can be perceived either as a positive or a negative, depending on your outlook. Positive if the future development trends bring added services or add to your resale. Negative if the future development causes congestion, overtaxes existing services or lowers resale values.

Summing Up

To make the most of your neighborhood decision, determine the factor or factors that are of the most importance to you, then make the comparisons you need to make an informed decision. Your Real Estate Agent, with data and information at their disposal, should be able to assist you with these comparisons. It is a good idea to make your comparisons before you begin to look at individual homes. This will save you from “falling in love” with a house that is in the wrong neighborhood for your needs.

Next Month’s Tip: Developing a Mortgage Strategy

The Home Buying Checklist

Many of our visitors have said that one of the most valuable aspects of the Home Buyer’s Information Center is the Buying Checklist, where they can make sure that all the bases have been touched. You can find the checklist here.

As always, if you have suggestions for improving the site, or topics you would like to see addressed in this newsletter (or, if you have used the Home Buyer’s Information Center to successfully purchase a home), drop us a quick line here.

A special thanks to all those who have written to let us know that they have found the Home Buyer’s Information Center a helpful resource in their buying process.

Have a great month and good luck in all your endeavors!

The Team at the Home Buyer’s Information Center