The onset of the housing crisis in 2007 led to a decline in the share of new home sales due to conventional mortgage financing and increases in the shares due to mortgages backed by the FHA and the Department of Veteran’s Affairs (VA), as well as cash purchases.
Third quarter data from the Census Bureau’s Quarterly Sales by Price and Financing indicate that count of cash-based new single-family home sales stood at 8,000 for the quarter or about 7% of total sales. During the 2002-2003 period, cash sales made up only 4% of purchases. In contrast, cash purchases constitute a considerably larger share of the existing home market – 24% in September per National Association of Realtors estimates.
It is worth noting that another measure of cash sales for total new construction from CoreLogic shows a higher level of cash sales than the Census: 16% in July 2014.
New home sales due to FHA-backed loans were 12% of the market during the third quarter according to the Census estimates. This is down from 28% in the first quarter of 2010 and is closer to the 10% 2002-2003 average. As the conventional mortgage financing share has risen, the share of new single-family home sales due to FHA-backed mortgages has declined.
VA-backed loans were responsible for about 8% of new home sales during the third quarter of 2014.
These sources of financing serve distinct market segments, which is revealed in part by the median new home price allocable to each. For the third quarter, the median new home price due to FHA financing was $201,500. The median price for VA-backed loans rose to $258,900.
Conventional mortgage financing had a median price of $298,400.
Finally, the median price for cash purchases for the third quarter was $284,300.
Analysis of mortgage markets is important because it suggests the underlying strength of housing demand, particularly for younger buyers with less equity or savings who must use a mortgage to buy a home.
read more….
http://eyeonhousing.org/2014/10/sources-of-financing-for-new-home-sales-relatively-unchanged-for-third-quarter/