Home Sales are Down – How to get buyers off the fence….

Sales of new single-family houses in July 2010 were seasonally adjusted annual rate of 276,000, according to estimates released jointly today yesterday by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 12.4 percent below the revised June rate of 315,000 and is 32.4 percent below the July 2009 estimate of 408,000

The median sales price of homes sold in July 2010 was $204,000; the average sales price was $235,300. The seasonal adjusted estimate of new houses for sale at the end of July was 210,000.  This represents a current rate of 9.1 months at the current sales rate.

Source: www.census.gov

One might be wondering what in the world is going on? Well, there are a few big factors that are affecting our potential buyers currently. The first factor is uncertainty in the market place. When consumers are not sure whether their job will be around next month, this has a profound affect on buyers moving forward with home purchases.

The second factor is rate movement. I personally believe that some are on the fence waiting for rates to drop even more. Let’s face the facts here, if you are getting a rate of 4.25%, the last time you saw rates this low was 60 years ago. This was before I was even born…..

So what is next….? We have an election coming up which affects rates. Interest rates being this low are typically connected to the 10-year Treasury bond, also known as mortgage backed securities. This typical indicator for mortgage rates has really not been the best indicator for rates this year, especially currently.

With all the uncertainty, the outcome of this upcoming election will affect mortgage rates. Just keep in mind that rates typically drop before any big election and will rise after the election.

I would tell your potential buyers that the low interest rate party could be over. History will show rate trends, and we are seeing a little of bit of history repeating itself.

Get those buyers off the fence…….

Author: Mike Clover


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