March sales of existing homes exceeded expectations at a seasonally adjusted annual rate of 4.59 million sales according to the NAR. Analysts projected that existing home sales would reach 4.55 million based on February’s reading of 4.50 million sales.
The pace of existing home sales declined by 0.20 percent as compared to February’s reading.
Headwinds Cause Slower Pace Of Home Sales
Analysts cited poor winter weather and rapidly rising home prices as factors that kept buyers away, although the Northeast and Midwest regions reported improvements in home sales in March. NAR said that the national average home price increased to $198,500, which was a year-over-year increase of 7.90 percent.
New mortgage regulations, which have caused mortgage lenders to take a conservative position with their lending policies, are also seen as a discouragement to buyers with less-than-perfect credit, first-time and moderate income home buyers.
Experts expressed concerns that current home prices and tight lending standards could create a shortage of first-time buyers.
Home sales to investors have fallen as higher home prices and fewer distressed (foreclosure and short sale) properties cause deals on cheap homes to dry up.
Fannie And Freddie Revise Construction, Housing Market Forecasts
Fannie Mae reduced its forecast for home construction started in 2014 from 1.55 million to 1.05 million. Doug Duncan, Fannie Mae’s chief economist, said that constraints on credit and labor contributed to the revised forecast.
Freddie Mac reduced its forecast of homes sold in 2014 from 5.60 million to 5.50 million. Frank Nothaft, Freddie Mac’s chief economist, said that tight inventories of homes in some areas could cause significant challenges for home buyers.
FHFA Home Price Index Posts March Gain
FHFA, the agency that oversees Fannie Mae and Freddie Mac, reported that February home prices related to mortgages that Fannie and Freddie own or guarantee, gained 0.60 percent as compared to a revised January reading of a 0.40 percent gain.
Year-over-year, home prices rose by 6.90 percent as compared to January’s year over year reading of 7.20 percent.
Analysts said that smaller month-to-month dips in home prices could indicate a turnaround for lagging housing markets and also noted that sales lost during severe winter weather may be recouped as the spring buying season gains momentum.
To refinance a mortgage means to pay off your existing loan and replace it with a new one.
There are many reasons why homeowners opt to refinance, from obtaining a lower interest rate, to shortening the term of the loan, to switching mortgage loan types, to tapping into home equity.
Each has its considerations.
Lower Your Mortgage Rate
Among the best reasons to refinance is to get access to lower mortgage rates. There is no “rule of thumb” that says how far rates should drop for a refinance to be sensible. Compare your closing costs to your monthly savings, and determine whether the math makes sense for your situation.
Shorten Your Loan Term
Refinancing your 30-year fixed rate mortgage to a 20-year fixed rate or a 15-year fixed rate is a sensible way to reduce your long-term mortgage costs, and to own your home sooner. As a bonus, with mortgage rates currently near all-time lows, an increase to your monthly payment from a shorter loan term may be negligible.
Convert ARM To Fixed Rate Mortgage
Homeowners with adjustable-rate mortgages may want the comfort of a fixed-rate payment. Mortgage rates for fixed-rate mortgages are often higher than for comparable ARMs so be prepared to pay more to your lender each month.
Access Equity For Projects, Debts, Or Other Reasons
Called a “cash out” refinance, homeowners can sometimes use home equity to retire debts, pay for renovations, or use for other purposes including education costs and retirement. Lenders place restrictions on loans of this type. A refinanced home loan can help you reach specific financial goals or just put extra cash in your pocket each month – just make sure that there’s a clear benefit to you.
Paying large closing costs for small monthly savings or negligible long-term benefit should be avoided. Many lenders offer low- or no-closing costs options for refinancing. Be sure to ask about it.