HOME SALES INCREASE:Home Shoppers Are Buying

In our most recent posting we discussed the opportunities presented to those shopping for a new home, as against those homeowners wanting to take advantage of lower mortgage rates and refinance their mortgages. We saw that due to the abundance of homes, the low value of the homes and low interest rates, that those in the market for a home was presented with a better opportunity to own a home, than those needing to refinance a home which was loosing value.

According to reports out today, sales of existing homes for last month,February, rose by 5.1%, the largest, according to these reports, in 6 years. Sales grew to an annual rate of 4.72 million last month, according to the National Association of Realtors, from 4.49 million for the month of January.

Even though the sales figures do not yet reflect the $8,000 tax credit, put in place to attract first-time home buyers, it is noted that first-time home buyers comprised more than half of all purchases. This is seen to be a good thing and a positive for the future of the economy which is still the primary concern of the new administration in Washington, and of all Americans - and the world, for that matter.

In the shadows, however, remains the homeowner who is having a difficult time taking advantage of the new lower mortgage interest rates, as their homes continue to decline in value; and as unsold homes in the market, themselves, rose some 5.2% for the same period. This means that inventories of unsold homes continue to be high.

Not before or until these unsold homes begin to decrease, will prices begin to stabilize. Not before a stabilization and an eventual upward movement in prices, will value begin to stabilize and move upward. Those home owners unable to modify or restructure their mortgages during this time will continue to hurt.

The hope for them is that the$1.2 trillion that the Federal Reserve has injected into the economy purchasing mortgage-backed securities and Treasury debt, along with the Central Bank's doubling its purchases of debt issued by Fannie and Freddie to $200 million , could expedite the process of slowing the increase of foreclosed homes coming onto the market, curbing the loss of home values, facilitating credit opportunities and developing once again a dynamic housing industry. This then, will create the environment homeowners will need to refinance their mortgages.