Existing-home sales kept up their recovery in July, rising 2.3% as prices jumped 9.4% from a year ago, according to the Charleston Trident Association of Realtors, but the market’s progress disappointed analysts who expected more.
Smaller inventories of homes for sale let sellers push prices higher, the association said. The average price of a new home rose 9.4% to $187,300, aided by a shift in the mix of homes sold, with fewer low-end units included. “I am seeing multiple offers within in first week a nice home comes on market,” Isle of Palms Realtor, James Schiller.
Nationally, the number of homes sold rose to a seasonally adjusted annual rate of 4.47 million. The numbers missed economists’ expectations of about 4.52 million home sales, according to Drew Matus, an economist at investment bank UBS.
“Mortgage interest rates have been at record lows this year while rents have been rising at faster rates,” NAR Chief Economist Lawrence Yun said in a statement. “Combined, these factors are helping to unleash a pent-up demand. However, the market is constrained by unnecessarily tight lending standards and shrinking inventory supplies, so housing could easily be much stronger without these abnormal frictions.”
Independent economists are looking for the housing market to begin slowly reversing its more than 30% slide in prices, though most do not expect substantive price gains until at least 2013 or 2014.
“It was a little below expectations but still good,” said Mike Zoller, an economist at Moody’s Analytics. He said the sharp gains in prices reflect the smaller percentage of foreclosure-related distress sales included in the numbers, as well as the shift to more higher-end home sales.
Tight credit or worries about jobs may be prompting buyers to stay on the sidelines, said Patrick Newport, an economist at IHS Global Insight. The gain in home sales was the second-smallest reported this year, he added. As long as the buyer has good credit, money to put down, and good job security getting a loan is still easy by most standards.
“These are not great numbers,” Newport said. “We have record-low mortgage rates. Something is going on.”
The economists also disputed the Realtor association’s argument that sales might be stronger if more homes were available.
Nationally, inventories of available homes work out to about six months’ worth of expected sales, Zoller said, a level he called “reasonable.” The proportion of homes that are vacant is still above 2%, Newport said, citing Census data. That’s higher than a historical norm of about 1.7%, he said. Locally, Charleston, SC homes sales appears to be improving as inventory stays lower than normal.
The bright side is that the overhang of foreclosures are finally seeing a decline, relieving an overflow that pushed prices lower, Barclays economist Michael Gapen wrote in a note to clients. About 24% of sales were foreclosure-related, down from 29% last July, he said.
Most Content Courtesy of USA Today
More than 9% of 45 million U.S. mortgages, or about four million loans, were delinquent in the first quarter of 2009, according to the Mortgage Bankers Association. That is the highest level since the group started tracking such data in 1972. As of the end of April, though, just 518,155 home loans had been modified, says Hope Now, a coalition of mortgage companies, investors and housing counselors.
Getting a mortgage modified can take months, slowed by thin staffing and mountains of paperwork. With so many loans bundled and sold to investors, it’s sometimes hard to figure out who even owns them. The new federal program requires borrowers to meet slightly different requirements than bank programs do, meaning banks need to navigate two procedures.
Chase’s mortgage business collects monthly payments and handles other chores on $1.5 trillion of mortgages. It owns about a fifth of those loans, having sold the rest to investors. Since October, the bank says it has prevented about 180,000 foreclosures, mostly through mortgage modifications. An additional 15,000 loans modified by the bank follow the guidelines set by the White House plan.
Roughly 3,500 Chase employees are trying to restructure troubled mortgages, and 1,000 counselors have been added this year to cope with demand. Chase has opened 24 walk-in offices around the U.S. where borrowers can seek face-to-face assistance.
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It’s virtually impossible to change your score in the time between when most people decide to buy a home or refinance their mortgage and when they apply. So the short answer is, you really can’t “on the spot.” But there are strategies you can live with to make sure when you apply for a loan your score is as high as possible.
Make sure that the information each of the three credit reporting bureaus has on you is consistent and up to date. Order a copy of your credit report about once a year, and dispute any inaccuracies.
Note: Theoretically, if a series of credit reports is requested on your behalf during a limited amount of time, your score goes down until time passes without any inquiries. Changes in the law though have made “consumer-originating” credit report requests not count so much. Also, a series of requests in relation to getting a mortgage or car loan is not treated the same as a number of credit card requests in a limited time. This is because the credit bureaus, and lenders, realize that people request their own credit reports to keep up with what’s on them, and smart consumers shop around for the best mortgage and car loans.
Unsolicited credit card solicitations in the mail don’t count against your credit report, so don’t worry.
The two main components of your credit score are your payment history and the amounts you owe. Bankruptcy filings and foreclosures, which can stay on your credit report for as long as 10 years, can significantly lower your score. It’s never a good idea to take on more credit than you can handle.
Late payments work against you. It’s extremely important to pay bills on time, even if it’s only the monthly payment.
Don’t “max out” your credit lines. Since the size of the balance on your open accounts is a factor, lower balances are better.
It’s said that by carefully managing your credit, it’s possible to add as much as 50 points per year to your score.