November 2, 2012 6:38 am
And, don't worry, this isn't one of those fraction-of-a-percent increases that doesn't seem like a whole lot to get excited about. Instead, the number of brand new homes sold around the country went up 5.7 percent when compared to August. Even better, they went up a whopping 27 percent since September 2011.
Want some more good news? The median price of those homes went up, too – all the way to $242,400. That's almost 12 percent higher than it was this time last year. In fact, the sales numbers are the highest they have been since April 2010. And back then, sales were up because people were taking advantage of the homebuyer tax credits that were about to expire.
This time around, though, there's no tax break to spring people into action. So, what's behind the increase?
Low interest rates
This reason shouldn't come as much of a surprise though, as mortgage rates have been hovering at or right above record lows all year long. As was expected, mortgage rates continued to drop in September. In fact, before the end of the month, the average rate on a fixed 30-year mortgage was 3.49 percent (a record low), and the average rate on a fixed 15-year mortgage was all the way down to 2.77 percent (another record low). When you combine that with the appeal of a shiny, brand new house, it was simply too much for some buyers to turn down.
In the months leading up to September's better numbers, a majority of the country saw fewer foreclosures. Specifically, during the third quarter (which runs from July 1st to September 30th), foreclosure activity was down in 62 percent of U.S. cities. In fact, in some of America's biggest cities – including Los Angeles, Detroit, San Francisco, Phoenix, and San Diego – foreclosures have dropped more than 25 percent over the past year. With fewer bargain-basement foreclosure homes to choose from, buyers had to look at more traditional options. In the end, they wound up buying new homes.
Published with permission from RISMedia.