As mortgage rates creep up and stringent lending standards continue to make it difficult for many home buyers to get loans, all-cash deals are accounting for more and more home sales completed in the U.S.
RealtyTrac data released recently shows that 40 percent of all home sales in July — including single-family homes, co-ops, condos and townhomes — were made without a loan being recorded, up from 35 percent in June and 31 percent in July 2012.
The growing ranks of repeat home buyers are helping to drive the housing recovery, making up for the dwindling numbers of first-time buyers.
Repeat home buyers accounted for 54 percent of existing-home sales in June, up from 49 percent just one year prior, according to the National Association of REALTORS®. Meanwhile, first-time buyers — who usually account for 40 percent of the market share — shrank to 29 percent in June. A lack of lower-priced homes and strict lending requirements are edging more first-time buyers out of the market.
“What we’re seeing are these buyers who’ve waited around and who have finally realized this is a good time to move,” says David Crowe, chief economist for the National Association of Home Builders. “They will feed the demand until our economy gets a little more solid.”
Rising interest rates, rising prices and rising consumer confidence are creating a “positive cyclone of home sales activity,” according to members of the Northwest Multiple Listing Service earlier this month. A robust job market around the Greater Seattle area is also spurring sales.
Member-brokers reported 9,565 pending sales during July for an increase of more than 13.6 percent from a year ago – the highest year-over-year gain since January. Last month’s mutually accepted offers across 21 counties also marked a slight improvement on June’s total of 9,484 pending sales.
Home prices in 20 major U.S. cities increased 12.2 percent in May compared to a year ago, according to the Standard & Poor’s/Case-Shiller home price index released on Tuesday.
And according to the Northwest Multiple Listing Service, prices locally continue to rise. The median price for last month’s closed sales area-wide was $279,950, which is about 9.8 percent higher than the year-ago.
The red hot housing market is prompting some realtors to get creative to satisfy eager home buyers that are tired of losing bids on their home of their choice.
New figures from the MLS also show pending sales during June jumped 10.6 percent from twelve months ago as buyers scrambled to lock in loan rates and bid on a limited supply of homes.
Mortgage rates have climbed by more than a percentage point since late April.
If history is any indication, the recent spike in mortgage rates is going to have little to no impact on home prices, according to a new report from Fannie Mae.
After looking at mortgage rates going back to 1990, Fannie Mae’s researchers came to the surprising conclusion that while rising rates were likely to hurt the number of home sales, they had virtually no impact on home prices.
NAR Chief Economist Lawrence Yun says mortgage rates will continue to rise.
Read his latest blog post to learn how that could impact home sales.
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