Both HUD (the U.S. Department of Housing & Urban Development) as well as the U.S. Census Bureau reported that housing starts in July were at a very healthy 782,000 as compared to June’s 693,000. This is an increase of 12.8% and that is very good news for the housing industry and the economy in general.
Although this is great news for our industry as a whole, there is additional good news for mortgage brokers as well. The percentage of cash sales has gone down and more buyers are seeking the more traditional route of financing their new home via a mortgage. According to CoreLogic, cash sales in May (the latest statistics) comprised 31.9% of total home sales but May also marked the 29th consecutive month that cash sales were on the decline.
Prior to the “bubble burst” in 2008 cash sales accounted for only 25% of home sales but that figure peaked at 46.5% in January of 2011. Although cash sales are usually much faster and less complicated than financed purchases via a lender, it is important to note that lenders don’t do as well as the rest of the housing industry when cash sales are higher.
The 5 states with the highest percentage of cash sales in May were Florida at 47.8% followed by New York (45.8 percent), New Jersey (45.8 percent), Alabama (44.2 percent) and Michigan (38.4 percent). It’s easy to see that the housing market is improving steadily and this is good news for all of us!