Getting a new home has been a little more difficult the last few months. More people are trying to buy in a market where less homes are available for sale.
Another large factor in the ability to buy a home is interest rates. Interest rates have been increasing incrementally over the last three months.
The relationship between inventory and interest rates has led to a 17 percent increase in home sales in July 2013 compared to July 2012. On top of that, inventory was down 5.2 percent for that same time period.
So the question is, is this going to continue? Most economist and experts agree that we’re beginning to see a curve for the better. In fact, even though inventory was down in July 2013 compared to July 2012, inventory was up 1.4 percent from June 2013.
Two factors are contributing to the improving home buyer market. First is that interest rates are going up which brings the demand down. The rate increase not only scares some would-be buyers out of the market, but it also disqualifies some of the buyers that were on the border line. The second thing is a steadily increasing inventory. Inventory increased because of more new home construction. It also increased because home values have gone up, which has brought current homeowners out from under their homes when they were underwater.
Experts believe that interest rates will continue to rise, especially with the anticipation of when the Federal Reserve will start slowing down the pace of its bond-buying program.
So while the inventory should continue to increase, interest rates will also do the same. This should start to level off the housing prices, but will continue to make homes a little less available for those who only barely qualify now.
Creekside Mortgage, Inc is your VA loan expert. We have a team of specialists waiting to answer your calls. They can be reached at 800.920.5420.