Home Mortgage Delinquencies Cause Home Sales to Soar
Existing houses are now at its highest in terms of sales, beating records from the last ten years. This comes after home mortgage delinquencies swept across the country, brought about by the economic crisis that has now injured the real estate market badly.
Last month, existing houses sales rose by 7.2 percent, a very significant jump that broke records in the last ten years. This data was tallied by the National Association of Realtors. This was the fourth consecutive increase in the sale of existing houses, and is also a record breaker in the last five years. The annual rate of units for sale also jumped by around 250,000, setting the number to 5.24 million units for sale.
According to Lawrence Yun, chief economist from NAR, the market is now turning out to be improving. With the mix of first time home buyers who are taking advantage of the government’s programs that aim to make it easier for them to purchase their first house, sales are also continuing to increase.
The average price for houses is $178,000, slightly lower than the past month’s base price. This data includes different kinds of houses, such as townhouses, single-family units, co-ops and condominiums.
On the other hand, there are still a lot of foreclosures and delinquencies being recorded. One in eight home mortgages is a delinquent payer. This was according to the Mortgage Bankers Association, in a report released recently.
4.3 percent of mortgage loans were already in foreclosure, translating to one in every 43 houses. This was an increase by 45 points. Also, there was a 9.24 percent delinquency that involved houses that were one month delayed in their mortgages.
This increase in foreclosures was caused by a rise in fixed rate mortgage foreclosures, accounting for one out three foreclosures. On the other hand, foreclosures on adjustable rates mortgages declined. This reflects that unemployment is the main cause for delinquencies, rather than mortgage resets. Almost half of all US foreclosures were in California, Arizona, Florida and Nevada.
As unemployment continues to increase all across the country, foreclosures continue to happen. This will in turn result to a surplus of available houses for sale. As a result, house prices will continue to fall, as competition increases.
