So how do buyers pay for those new homes?
The first-quarter data are out from the U.S. Census Bureau for new home sales and financing, and the results are interesting.
Seventy percent of new home purchasers used a conventional mortgage product and the average sale price of those homes was $342,500. Thirteen percent used an FHA-backed loan and the average sale of those homes was $235,600. For veterans, 9 percent of buyers used a VA-backed loan for a $280,200 average sales price.
In contrast to these lower sales prices, those 8 percent of buyers paying cash for their new home (sounds great, doesn’t it?) paid an average of $415,700 in the first quarter. That’s the highest average in the last few years, according to the government reporting.
For FHA buyers in the midstate, the federally mandated loan limit is a little more than $271,000, which makes the actual sale price more sensible. The VA loan limit is higher at $417,000, explaining the higher average sale price.
What I find particularly interesting is the prominence of conventional financing. And I’d like to meet someone who could pay more than $400 large in cash for a house – to ask them why they’d want to tie up that kind of money in these days of cheap mortgage money…
In the Northeast, builders reported at least 7,000 sales in the first quarter of 2014. If you’re buying here in PA, you’ll likely be using a conventional mortgage, so be sure to talk to you lender representative about your financing options.