As many of you may have read by now, sales of new homes rose in September and standing inventory shrank as builders dropped prices to their lowest level in four years. The annual sales pace was up 2.7% in September from the August figure. The median sales price of $218,400 was the lowest since the $211,600 level reached in September 2004 while inventories dropped to their lowest level since June of ‘04. The 7.3% decline in inventory from August was the sharpest month-over-month drop on record.  A positive note for us here in Northern Nevada, Reno area new home sales were up 22.7% in the West, while across the country sales were down 21.4% in the Northeast and 5.8% lower in the Mid-west.

As for the mortgage market, investors took a disinterested looked at the numbers since the tremendous amount of standing inventory yet to be worked off and current tight credit conditions suggest the bottom of the market in new home sales won’t likely manifest itself until mid-2009 at the earliest.

Credit markets are just treading water today as participants await what everyone expects to be a 50 basis-point rate cut from the Fed on Wednesday. Traders have priced in a 100% chance that Fed Chairman Bernanke will slash the benchmark fed fund rate to 1.0% in response to unprecedented turmoil in the financial markets. Normally, the idea of easier money would lift investor sentiment — but this time around 50 basis-points may not be enough as worries over the developing global recession temporarily trump otherwise “good” news from the Fed.   These days, the markets don’t seem to be satisfied with anything.

Sometime before the end of the first quarter of 2009, many investors believe the $10 trillion dollars global central bankers have injected into the world economy will clearly have its intended effect. Improved business conditions and the attendant surge in employment will begin slowly before becoming readily apparent to even the most pessimistic observer. At this point in the cycle (first-quarter 2009) mortgage interest rates will probably be moving higher as the demand for capital to fuel resurrected economic growth accelerates.

So spread the word, this is an incredible time to purchase a new home; prices are low and appear to be stabilizing and interest rates are still low.  By waiting until next year, home buyers will most likely face higher rates and perhaps higher prices.  I’ve got appraisers telling me there are pockets of areas of Reno Nv. homes and Northern Nevada that should no longer be deemed declining markets as the values have stabilized.

As always, I’m here to help you and your clients.  Let me know if you’ve got any questions about the market, interest rates or programs.

Make it a great week,

Stephanie

Stephanie Hanna

Home Loan Advisor

Platinum 1st Mortgage, LP

5525 Kietzke Lane, Suite 201

Reno, NV 89511

Filed under: LOAN INFORMATION