Interest rates decreased slightly from last week and currently average 3.57 percent with .6 percent in fees and points. With that news, it should be no surprise that mortgage applications increased 5.2 percent from last week. Refinance activity has increased 10 percent from last week and is up 164 percent from this same time a year ago.
The national economic news reported weakening manufacturing and corporate investment, though, on the bright side, it did not affect the consumer side of the economy. Add this to the fifty-year low in the unemployment rate and near-record-low interest rates, it’s easy to understand why more buyers are entering the market. Freddie Mac reached a twenty-year high in the number of first-time homebuyer loans they’ve purchased this year at 46 percent. Typically, this buyer is at a more affordable price level in the market, thus adding to the strain of supply for entry-level homes.
NEW CONSTRUCTION NEWS
There’s some interesting data on new construction in Texas. The Real Estate Center at Texas A&M University summarized that current data suggests there will be higher levels of construction in the coming months. If that’s true, buyers may see a slight surplus in builder spec homes come spring. Single-family construction permits state-wide are up 6.3 percent year-over-year. According to the Dallas Morning News, DFW saw a 4.6 percent increase in housing starts from the third quarter of last year. Builders are scaling back their construction of homes over $500,000 and increasing inventory for homes in the $250,000 to $350,000 window.
THE DFW REAL ESTATE MARKET: NEW CONSTRUCTION HOMES
New construction homes selling in the $200,000 range are selling closer to list price with about 2.8 percent being negotiated off the list price for the sale. New homes over $500,000 are a different story with 5.1 percent coming off the list price for a sale. That’s about $25,000 off a $500,000 home. So keep that in mind if you’re in the market for new construction.
The months supply of inventory for new homes over $500,000 is six months. This is considered a balanced market. However, when you look at that next to new homes in the two hundred thousand dollar range where the months of inventory is only 3 months, it looks like a long time.
Based on all we know, it’s no surprise more homes sold in the $200,000 range than homes in the $500,000 plus range. How much more? About 62% more.
So to sum it up and answer the question, how’s the market? If you’re a buyer looking for a new home above $500,000, the numbers are in your favor and you can be a little more aggressive in your purchase negotiations. If you’re a buyer under $500,000, it’s still a seller’s market. You can still negotiate some but sellers still have a stronger hand.
Jennifer Shannon is a Texas real estate agent and broker, licensed since 2006.