Home Sales Fall Again

Though the mortgage market appears to be stabilizing and applications are up, it would seem that refinances are the key. Applications for new home loans fell for the fifth straight month in August.

Dropping mortgage rates are starting to revitalize the mortgage market, but the real estate market is still in trouble. For the fifth month, existing home sales have fallen in August though mortgage applications as a whole have increased. For the first time in 11 years, the median home price in America dropped; the average home now costs $225,000 as opposed to the prior $229,000. Existing home sales dropped by 0.5%, and median home pricing dropped by 1.7% compared to August of last year.

Building of new homes and condos dropped as well, showing a 6% decrease from last year. Rising rates and a slowing economy, as well as increases in fuel and insurance prices, caused the real estate and mortgage market to lag in the beginning of 2006. The Federal Reserve has taken notice and has not raised their rate in the last two sessions. This has led to a decrease in mortgage rates, encouraging many current homeowners to refinance their exotic mortgages. Preliminary numbers forecast that September will see a moderate increase in home purchases due to lower rates.\r\n