New Real Estate Report = Good News?

According to an article at Quicken Loans © the “Sales of new, single-family homes bounced back in September after hitting a seven-year low in August, as reported by the U.S. Census Bureau and the Department of Housing and Urban Development.”

Unfortunately the excess inventory is still a huge problem for both new construction and resale homes. Sellers can’t necessarily compete with builder incentives and are nearly forced to sell their home for thousands less than they would like…

However, if you’re looking to buy – the options are plenty: Buyers are being courted by builders offering significant incentives, unheard-of upgrade packages, and homes at “below cost” pricing.
Helping to keep the industry chugging along: long-term interest rates are still relatively low; the availability of FHA loans which require a smaller down payment, and the relative ease for qualified buyers to still get a home loan – we’re not talking 2004 here, but the options are definitely there.

The U.S, Census Bureau’s “good news” is indeed tempered by overproduction and a selling surplus: homeowners looking for relief from their adjusted ARM’s, investors trying to salvage a buck from a poor investment decision, and builders hoping to just break even.

Many Realtors had hoped that the recent Federal Reserve cut would spur real estate activity in the local markets, bringing more buyers to the table – especially in areas like California and Florida. However, yesterday's monthly Existing Home Sales report, issued by the National Association of Realtors, showed that September sales of previously owned homes fell 8 percent as compared to August.

Can we really blame everything on a lackluster market and the approaching holiday season? With tax time around the corner, one might argue that NOW is the best time to buy! But, consumers have Christmas presents, not condos, on their mind – so we wait to see what 2008 will bring.

With the Federal Reserve closely watching housing's affect on the economy, the real question is: how will the Fed interpret the all of this conflicting information?



By: Stephanie Stanina