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Is it Time to Buy a New Home?
By Jonathan Haeber
CMR Columnist
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First, I'll give you the good news. Quarter three of 2006 ended on a happy note, particularly for sales of new homes. For three months in a row, sales of new homes climbed well above the predictions. Economists expected a 1.1-percent gain, and most were surprised by November's 3.4-percent spike in sales.
"It looks like sales activity has truly bottomed out," David Seiders, chief economist for the National Association of Home Builders told the Associated Press.
Still, the report only records new home sales (not previously owned homes), and the economy still seems to be trying to recover from the housing downturn of 2006; for example, the economy grew at a trickling rate of only 2 percent in the third quarter.
Home Inventory Down, Sales Up--Is It Time to Buy?
Even though inventory has dropped, and sales are up, certain regions are faring better than others. The South experienced a sales drop of 9.3 percent, most of which comes from Florida. The rest of the country rebounded; what happens in 2007 for mortgages and real estate is still uncertain. The third quarter sales could simply be a reflection of the fall in home loan rates again, which are now back on their way up to the 6-7 percent range for 30-year fixed loans.
Treasury Bonds Up and New Home Loan Rates May Rise
If Ten Year Treasury bonds continue to rise, then home loan interest rates will follow in 2007. This could spell more bad news for the home loan market. There is good news for prospective buyers, though. In response to the housing downturn, home builders are offering buyers incentives galore! Much of the recent rebound in sales can be attributed to a surge of buyers taking advantage of incentives. Keep a lookout for free landscaping, no closing costs, free cars, and more -- but don't accept above market home prices in exchange for the incentives!
About the Author
Jonathan Haeber is a marketing writer for Discovery Channel Stores. He recently purchased his first home and took a self-taught crash course in home mortgages.
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