January 2014 Housing Market Update

Total existing home sales were down in November when compared to the previous month and were also down from November of last year.  However, distressed sales made up a much smaller portion of the total in November than they did the previous year and by comparison conventional sales appear to have increased.  Less-distressed sales are a positive sign for the market and should help potential sellers who no longer have to compete with as many discounted homes as they would have in recent years. Prices continued their modest seasonal decline in November, while still increasing compared to the same month of the previous year. Recent Federal Reserve policy changes will likely mean slightly higher interest rates moving into the New Year, however, market reactions so far have been positive and rates have edged up very slowly. Those considering purchasing a home may wish to take advantage of the current break in price gains and lock in mortgage rates as they continue to trend upward.

INTEREST RATES

In December, the DFederal Reserve announced it would begin to curtail its purchase of non-traditional assets also known as quantitative easing. As the Fed tentatively draws back its level  of asset purchases, mortgage rates will likely continue to slowly increase. Currently, Freddie Mac reports the following figures: 30-year fixed rate at 4.48%; 15-year fixed rate at 3.52%; 5/1adjustable rate at 3.0%.

HOME SALES

According to the National Association of Realtors, the seasonally adjusted rate of home sales declined 4.3% from last year to an annual rate of 4.9 million homes. The rate reported in November of last year, however, the decline in the portion of sales made up of distressed properties, from 22% last year to 14% this year, means we likely are still seeing positive year-over-year gains in conventional home sales.  As banks begin to implement new lending regulations, credit tightness is likely hampering home sales and may continue to do so in the beginning of the New Year.

HOME PRICE

Median home prices dipped slightly from October to November, dropping 0.6% from $197,500 to $196,300 according to NAR. Year –over-year home prices continue to post significant gains with prices up 9.4% from last November.  However, November is the first month since the same month of the previous year to have a year-over-year gain of less than 10%.

INVENTORY

The level of total housing inventory in the country dropped in November to 2.09 million homes, down 1.9% from the previous month.  Months of supply of inventory, however, ticked up slightly due to the lower pace of sales this month.  The number of months of supply represents how many months it would take the current level of inventory to sell given the current sales paces if no other homes were added to the market.  Supply in October represented 5.1 months, up 4.1% from the previous month, and up 6.3% from November of the previous year.

Information and service provided by Katie Oakes with The Champagne Realty Group at Keller Williams Premiere Properties in Glen Ellyn, IL. Contact Katie Oakes for more information about buying or selling your home in the Wheaton, Winfield and Warrenville area or simply visit Wheaton Homes For Sale online to start your search now!