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May, 2004 Newsletter

+++++++++++ May 1, 2004 +++++++++++++++++++

Introduction: Home Sales at or Near Records
Mortgage Rate Update: Rates Continue to Rise
This Month's Tip: Should We Build?

Introduction: Home Sales at or Near Records

Welcome to the May edition of the
Home Buyer's Newsletter, brought to you by the
Home Buyer's Information Center.

Existing single-family home sales rose strongly in March to
the second-highest level on record, according to the National
Association of Realtors®.

Existing-home sales increased 5.7 percent to a seasonally
adjusted annual rate of 6.48 million units in March from an
upwardly revised pace of 6.13 million units in February.
Last month's sales activity was 12.7 percent above the
5.75-million unit level in March 2003; the record is 6.68
million in September 2003.

David Lereah, NAR's chief economist, said low interest
rates get most of the credit for last month's performance,
but he noted interest rates are now rising modestly. "The
housing needs of a growing population timed nicely with
historically low mortgage interest rates and a rebounding
economy in March," Lereah said. "Although interest rates
are rising modestly, an improving job market is creating a
favorable backdrop for home sales, but at a somewhat
slower pace in the months ahead."

Sales of new one-family houses in March 2004 were at a seasonally
adjusted annual rate of 1,228,000, according to estimates released
jointly on April 26 by the U.S. Census Bureau and the U.S. Department
of Housing and Urban Development.

This is 8.9 percent (±12.0%) above the revised February rate of
1,128,000 and is 21.8 percent (±12.9%) above the March
2003 estimate of 1,008,000.

The median sales price of new houses sold in March 2004 was
$201,400; the average sales price was $260,800. The
seasonally adjusted estimate of new houses for sale at the end
of March was 378,000. This represents a supply of 3.7 months
at the current sales rate.


Mortgage Rate Update: Rates Continue to Rise

Due to a number of factors, the most important of which
is generally improving economic conditions in the United
States, mortgage rates continued to rise during the month
of April. As of the period that ended on April 29th, 30-year
fixed-rate mortgages averaged 6.01%, according to
mortgage company Freddie Mac. Rates ended the month
of March averaging 5.40%, an increase of .60% in one
month. 15-year fixed rate mortgages ended the month
averaging 5.35% after ending March at an average of
4.70%, an increase of .65%. These rates do not include
the cost of points, which is interest paid to the lender

The future trend? Much has to do with the strength of
the U.S. economic recovery. If the recovery has "legs"--
or if investors believe that the recovery is sustainable,
look for rates to generally remain on an upward trend
for the remainder of the year. Should the recovery
lose steam or reverse, then it is fairly certain that
rates would, at the least, remain in the current range,
still historically very low.

For current average mortgage rates, see:
Mortgage Rates

For more information on mortgages, visit the


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This Month's Tip: Should We Build?

For many home buyers, one of the first questions they should be
asking themselves is whether to purchase an existing home, a
new home or have a home built. This is an important consideration,
since the attributes and advantages or disadvantages of existing
versus new can be considerable. In addition, there can be a
fairly wide variance in the costs of these different types of

Although some comparisons are obvious--everything new
and up-to-date versus much that is older and perhaps a bit
dated--other parts of the comparison are frequently overlooked.
Both a new home and an existing home can have their own
distinct advantages and disadvantages, so it is important
to explore your choices thoroughly so you don't find some
rather unpleasant (and potentially expensive) surprises
the day after moving in.

Here are some specific tips to consider when making a
choice between a new home and a re-sale.


There definitely have been a number of changes in the
last few years in the interior architecture of homes
in the U.S. and Canada. New homes, for example, tend
to have larger kitchens and family gathering areas
than older homes, which are more likely to have
more--and smaller--rooms. Much of the new home
construction today features expansive kitchens flowing
into--or in close proximity to--a large Great Room or
Family Room. Homes built in the 1980s and earlier will
frequently have a smaller kitchen with a separate
family room, formal living room and formal dining room.
Depending on your preferences and lifestyle, one of
these layouts may be preferable to the other. Is the
kitchen the focus of your family gathering? Then
bigger, of course, is better. Do you prefer to have
a "retreat" area away from household activity? An
older design may be better suited to your preferences.


In general, new homes will be located further away
from populaton centers than will be older homes--
which may be an advantage or disadvantage to you,
depending on your point-of-view. If this is the
case in your local area, don't forget to factor in
longer commuting times to work, shopping and services
when you make your comparisons. Although shopping,
restaurants and services may eventually reach the new
area, it is possible that your job location will never
change. For this reason, in some areas of the
U.S. and Canada, housing trends are actually moving back
toward the city centers--and older homes--due to the
brutal commutes that often are involved from outlying areas.


In the majority of cases, new homes will have more
of the amenities that today's buyers have considered
to be important--whirlpool tubs, skylights,
"culinary grade" kitchen appliances and the like.
Although many of these amenities can be added to
existing homes, the cost can often be prohibitive.
If you are concerned with the "newest and the best,"
it almost always is less expensive to build these
amenities into a new home rather than try to
retrofit an older one.


Although a new home may cost you a bit more, your
expenditures for repairs and maintenance should be
far less for the first 5 or 10 years since many
components of a home (heating systems, appliances,
etc.) have life spans longer than that time frame.
When you are making your comparisons, however, do
not forget the often forgotten cost considerations
when purchasing a new home, including:

+ Landscaping. Although the builder may do some
"starter" landscaping, it rarely is enough and
often does not last. Lawns, shrubs, plantings and
labor can get very expensive. Depending on the lot
size and the level of landscaping detail, this can
often run $1000 to $7500 and more.

+ Decorating. When you buy an existing home, you
inherit the decorating--wallpaper, paint and the
like. If it is to your liking, you will have no
immediate expense. In addition, there may be
other items (for example, window treatments
such as blinds, draperies and curtains) that may
convey, saving you that cost. Unless you buy a
model home, the responsibility--and the cost--of
decorating will be yours. Again, depending on
your desires for decorating, this can add from
$2000 to "the moon" to your costs!

Want some additional hints on building a home
that is "user friendly?"
Better Houses, Better Living
by Myron Ferguson is a must-have if you are planning
to build a home. How to avoid the most common
(and costly) construction mistakes. An approach
that is both detailed and easy to understand.
Strongly recommended. Available

For more information on new homes and building,
please see the section devoted to that subject
on the site at:
Building a Home

Next Month's Topic: Credit Issues

The Home Buying Checklist

Many of our visitors have said that one of the most valuable
aspects of the Home Buyer's Information Center is the
Buying Checklist, where they can make sure that all
the bases have been touched. You can find the

As always, if you have suggestions for improving the
site, or topics you would like to see addressed in
this newsletter (or, if you have used the Home Buyer's
Information Center to successfully purchase a home),
drop us a quick line here:
Home Buyers Information Center Feedback

A special thanks to all those who have written to let us know
that they have found the Home Buyer's Information Center a
helpful resource in their buying process.
Have a great month and good luck in your home buying process!

The Team at the Home Buyer's Information Center

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