New-home sales slide as home buyer demand remains slow in June. This is the fifth in six months.

According to the data released by the U.S. Commerce Department , sales of new single-family homes slipped 6.6% in June. This is due to a seasonally adjusted annual rate of 834,000 units as home buyer demand continued to weaken, The June sales pace was 22.3% slower than last year’s and down by 40% compared to the values in mid-2005 which is considered as the housing market was at its best.

“The ongoing contraction in home sales is consistent with NAHB’s surveys of single-family builders. Our Housing Market Index now is down to the lowest level since January 2001, when the national economy was in recession,” said Brian Catalde, president of the National Association of Home Builders (NAHB).

“A significant increase in prime mortgage interest rates, along with the tightening of mortgage standards in subprime and other components of housing finance, clearly weighed on home buying in June,” said NAHB Chief Economist David Seiders. “Home builders continue to trim prices and offer large nonprice sales incentives, but many prospective home buyers obviously are reluctant to sign on the bottom line.”

“We still expect to see signs of stabilization later this year, although downside risks appear to be mounting,” added Seiders.

The inventory of new homes for sale was 537,000 in June, equaling the May inventory figures. With the sales pace last June, the housing backlog was up to 7.8 months up from 7.4 months in May.

Units still under construction represented almost 51% of the inventory while completed homes for sale were 33% of the inventory. Units-for-sale that were not yet started but permitted represented 16% of the inventory level. No change was observed from last month. The average length of time that completed homes were on the market was 6.0 months in June. This is longer than what was observed in May which is 5.7 months.

Although new-home sales in June were up 7.6% in the South, sales were down by 27.1% in the Northeast, 17.1% in the Midwest and 22.5% in the West causing the national figures to decline.
 
 

Mortgage rates ease due to growing concern over the housing's troubles. Mortgage rates slightly dipped this week after rising substantially over the past two months, Freddie Mac reported Thursday.

In its release in July 26, 2007, Freddie Mac said that rates on a 30-year fixed-rate loan declined to 6.69 percent for the week ending July 26 from 6.73 percent last week.

Last year at this time, 30-year mortgage rates averaged 6.72 percent.

The average rate on 15-year fixed-rate loans averaged 6.37 percent in the latest week, down from 6.38 percent last week. A year ago, the 15-year rate averaged 6.34 percent.

Five-year adjustable-rate mortgages (ARMs) averaged 6.30 percent this week, down from 6.35 percent last week.

A year ago, the 5-year ARM averaged 6.35 percent.

One-year Treasury-indexed ARMs averaged 5.69 percent this week, down from 6.72 percent last week. A year ago the 1-year ARM averaged 5.78 percent.

"Mortgage rates eased this week on market concerns that a further weakening of housing demand this spring will delay any recovery in the sector," said Frank Nothaft, Freddie Mac chief economist and vice president, in a statement. "For example, building permits fell last month to the slowest pace in a decade, and more recent data on June sales of existing home showed a fourth consecutive monthly decline."

"Several factors contributed to the softening in housing markets this spring. In addition to the tightening of lending standards earlier this year, especially on subprime loans, the 40 basis point jump in rates on 30-year fixed-rate mortgages in June may have deterred potential buyers. For the year-to-date, sales of single-family homes were down about 9 percent from the first half of 2007."

Reference: FreddieMac, Primary Mortgage Market Survey® (PMMS®), www.freddiemac.com

Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS) in which the 30-year fixed-rate mortgage (FRM) averaged 6.73 percent with an average 0.4 point for the week ending July 19, 2007, unchanged from last week. Last year at this time, the 30-year FRM averaged 6.80 percent.

The 15-year FRM this week averaged 6.38 percent with an average 0.4 point, down from last week when it averaged 6.39 percent. A year ago, the 15-year FRM averaged 6.41 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 6.35 percent this week, with an average 0.5 point, unchanged from last week. A year ago, the 5-year ARM averaged 6.36 percent.
One-year Treasury-indexed ARMs averaged 5.72 percent this week with an average 0.5 point, up from last week when it averaged 5.71 percent.

At this time last year, the 1-year ARM averaged 5.80 percent.
(Average commitment rates should be reported along with average fees and points to reflect the total cost of obtaining the mortgage.)

"In a week marked by stock indexes reaching new highs on Wall Street, mortgage rates lingered near the previous week's level as the latest economic indicators did not affect inflation expectations significantly," said Frank Nothaft, Freddie Mac vice president and chief economist. "June's core producer price index inched up higher than market expectations, pushing the year-over-year growth rate to 1.8 percent, while the core consumer price index held steady at a 2.2 percent annual growth rate.

"The most recent statistics suggest that the housing market has yet to reach a trough. Although June's housing starts unexpectedly rose to 1.47 million units, construction of one-unit houses still saw a decline of 0.2 percent: At 1.15 million units, it was the slowest pace since January. Building permits fell by 7.5 percent last month to the lowest level since June 1997."

Source: FreddieMac, Primary Mortgage Market Survey® (PMMS®), www.freddiemac.com

1. Current balances on accounts - Accounts showing all payments were on time are positive.
2. Bank revolving accounts - Lack of accounts, or too many can be negative.
3. Reported delinquencies - Negative, especially if severe and recent.
4. Number of accounts with balances - Too many credit card accounts may have a negative effect on your score.
5. Number of finance company accounts - Loans from finance companies may negatively affect your credit score
6. Recent payment history - An insufficient credit history may have an effect on your score, but that can be offset by other factors, such as timely payments and low balances
7. Number of recent inquiries - Not all inquiries are counted. Inquiries by you or creditors who are monitoring your account or looking at credit reports to make "prescreened" credit offers are not counted.
8. Number of accounts opened within the last year - Adding too many new accounts can be negative.
9. Proportion of balance to your credit limit - If the amount you owe is close to your credit limit, that is likely to have a negative effect on your score
10. Length of time accounts established - Long-established accounts are positive
11. No recent (non-mortgage) account balance information - Can be negative when seeking mortgage loans
12. Legal item filed or collection item reported - Negative, effect decreases with time.
13. Accounts not paid as agreed and/or legal item filed - Your score will be affected negatively if you have paid bills late, had an account referred to collections, or declared bankruptcy.
14. Employment and residency - Longer time in your job and at your residence can help your score.

When applying for a real estate mortgage, there are four requirements that should be considered in the transaction:
(1) a mortgage or deed of trust must be created or retained;
(2) the property securing the loan must be a single-family dwelling;
(3) the single-family dwelling must be the primary residence of the borrower; and
(4) the purpose of the transaction must be to finance the acquisition, initial construction, or refinancing of that dwelling.

The amount of the loan will greatly depend on the credit score of the mortgagee. As a protection of the lenders against default, insurance must be applied for by the mortgagee. The Private Mortgage Insurance (PMI) is an extra insurance that lenders require from most homebuyers who obtain loans that are more than 80 percent of the value of their home. In other words, buyers with less than a 20 percent down payment are normally required to pay PMI.

Benefits of PMI

PMI plays an important role in the mortgage industry. It helps both lenders and borrowers.

It protects the lender against loss if a borrower defaults on a loan and by enabling borrowers with less cash to have greater access to homeownership.

For the borrowers, with this type of insurance, it is possible for the borrower to buy a home with as little as a 3 percent to 5 percent down payment. This means that you can buy a home sooner without waiting years to accumulate a large down payment.

You can learn more about PMI and take advantage of its benefits by contacting your friendly realtor.