Homes sold faster in October

November 14, 2013

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Homes are spending less time on the real estate market compared to a year ago, according to Zillow. For first-time homebuyers, this has created more competition. Zillow reported that homes were spending an average of 86 days on the market in October, compared to 119 a year ago. The October figure represents the quickest selling pace since Zillow began tracking in 2010.

"The declining inventory of for-sale homes over the past year naturally creates pressure for buyers to more quickly snap up the inventory that is on the market," said Stan Humphries, chief economist at Zillow. "This demand has been fueled by huge resets in home prices since market peak, historically low mortgage rates and a slowly improving broader economic climate."

Current market
Humphries attributed homes going off the market sooner to improved economic conditions such as low rate mortgages. Until the Federal Reserve decides to reduce stimulus spending that has helped keep mortgage rates low, homebuyers will be able to get a loan near historic low costs.

In fact, more Americans seem to be making the push to buy before the Fed makes its decision, as the Mortgage Bankers Association Builders Applications Survey revealed that new home purchase applications increased 11 percent in October, Mortgage News Daily reported. Compared to the previous month, more homeowners applied for a loan for new home construction.

In addition, the average size of a home loan increased from September's amount of $289,650 to $294,480 in October. This may be in response to higher home prices across the country. California seemed to be driving the housing market recovery compared to other states, with San Jose the leading metro area for the pace of home sales. According to Zillow, homes in San Jose stayed on the market for an average of 43 days in October. Of the top three states with more new home purchase applications, California was third, reporting an increase of 4.6 percent over September.

While both these reports reveal good signs for the housing market recovery, mortgage rates are expected to rise next year, which could slow the pace of sales. According to CNBC, interest rates for a 30-year fixed rate mortgage have already risen as rumors that the Federal Reserve may soon be tapering quantitative easing have surfaced.

Contact the Federal Savings Bank, a veteran owned bank, for first-time home buyer loans.