Total existing-home sales, including single-family and condo, rose 2.4 percent to a seasonally adjusted annual rate of 5.06 million in the second quarter from 4.94 million in the first quarter, and were 12.3 percent above the 4.51 million level during the second quarter of 2012. Sales were at the highest pace since the second quarter of 2007, when they hit 5.23 million.
According to Freddie Mac, the national commitment rate on a 30-year conventional fixed-rate mortgage averaged 3.69 percent in the second quarter, up from 3.50 percent in the first quarter; it was 3.80 percent in the second quarter of 2012. Mortgage interest rates have trended higher in recent weeks.
NAR President Gary Thomas, broker-owner of Evergreen Realty in Villa Park, Calif., said higher interest rates ironically may end up helping some buyers by making it easier to qualify for a loan. “Refinancing activity has slowed dramatically, yet banks have a lot of money and staffing resources, many of whom have less work,” he says.
“Banks now have an incentive to increase loan origination, which means they may dial back overly restrictive mortgage lending standards that have been in place since the crash,” Thomas adds. “We are also optimistic that proposed federal regulations will ensure that creditworthy borrowers continue to have access to safe, affordable options for buying a home.”
A separate breakout of qualifying incomes to purchase a median-priced existing single-family home on a metropolitan area basis generally shows potential buyers were well positioned to purchase in the second quarter. Income requirements are determined using several scenarios on downpayment percentages, which assume 25 percent of gross income is devoted to mortgage principal and interest, with a mortgage interest rate of 3.7 percent.
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