Date June 25, 2004
Time 06:00 AM - 07:00 AM
Station Business Talk Radio
Location Network
Program Business Talk Radio

DAVID WEISS, co-anchor:

Joining us right now on a Friday morning as we had our new home sales figures that were released by the Commerce Department yesterday, good friend Bob Moulton, founder and the man who heads up Americana Mortgage in the New York area, but man with his finger on the pulse of the entire housing industry.

Bob Moulton, welcome back, good morning.

Mr. BOB MOULTON (Americana Mortgage): Good morning, David. How are you today?

WEISS: Doing fine. Great to have you back. Well, listen we could start specifically in the northeast first, I took a look at these eye-popping numbers. Sales of new homes in the northeast rose by 53 percent in May from April. That's unbelievable.

Mr. MOULTON: That's a very, very strong number, a lot higher than the economists had predicted. We were up 15 percent throughout the country, but extremely strong in the northeast, up 53 percent.

WEISS: Right. Fifteen percent gain in the month of May to a seasonally adjusted annual rate of 1.37 million. That's a monthly record and this is after new home sales sagged in April. To what do you attribute this?

Mr. MOULTON: Well, the mortgage rates crept up in the March, April time frame, David, and they've been pretty steady over the last 30 to 60 days. We've had some very good jobs numbers, we've had strong income numbers. We've got low inventories, I think people are accepting the average mortgage rates are around six, six and a quarter percent.

We might see a hike next week, maybe about a quarter percent by the Fed. And I think people want to jump in on the bandwagon while rates are still relatively low.

WEISS: Yeah, we've talked about the sense of urgency to get the deal done. You're still seeing that, right?

Mr. MOULTON: We're still seeing that very much so, a lot of clients looking for that perfect home are settling for a home that might be as perfect that they were originally expecting. But with money as inexpensive as it is today, a lot of clients do want to get in before the rates do go higher.

WEISS: Not everybody is hopping aboard here in this bandwagon, the Midwest sales were flat in May, a rate of 206,000. But again, higher in the east, but not by the degree they are in the northeast. And in the northeast, generally in the New York City area and elsewhere, you have the appreciated values of homes, which put it out of reach of a first time home buyer. Nonetheless, these new homes are still being snapped up.

Mr. MOULTON: Yeah. Prices have come down slightly nationwide, but we're up about 30 percent over the last two to three years in the northeast. In order to make the houses more affordable, we're seeing clients look at adjustable rate mortgages versus fixed rate mortgages right now. About four out of 10 people take adjustable rate mortgages today.

WEISS: Have you seen any changes in the types of new homes that are being built? Are they smaller? Are they more lavish? You know, affordable housing is such an important buzz term, if you will, not only in the northeast but nationwide. Have you seen any change in the types houses that are being built?

Mr. MOULTON: Everything seems to be getting just a little nicer, a little bigger, and a little better. And I think builders that are building these new homes are becoming a lot more creative and are accommodating all these first time home buyers. But we are seeing them come in a little larger than they were say a few years ago.

WEISS: And year to date, and to look at the months ahead for the conclusion of 2004, now we have less than six months to go, the National Association of Homebuilders--the chief economist there is predicting a new home sales record for 2004. Do you see that too?

Mr. MOULTON: Well, we're outpacing last year. Last year was a record, Dave. This year, we're seeing the new home sales up slightly higher from last year, and I think the trend will continue as long as rates stay where they are or even if they go slightly higher. I don't think you're going to see much pullback unless rates get to the seven to eight percent range.

WEISS: The one thing we have seen though, Bob, we talked about this previously, is a slow down in the refinance, the home equity line, I think.

Mr. MOULTON: The refinance market is down about 60 percent nationwide, the purchase market is still very strong. We have low inventories and a lot of people do want to get into homes before the rates go up.

WEISS: Well, our own Amanda Clark is still saving for that first house, so I guess she has to just keep saving.

Mr. MOULTON: Well, if she's invested that tax refund, it's probably doubled since she's invested it.

AMANDA CLARK, co-anchor:

That's right. That's what I did.

WEISS: She's giving me a big thumbs up on that.

Bob Moulton, founder and the man who heads up Americana Mortgage in the New York area, but he looks at the entire housing industry nationwide. It was a very good month in May for new home sales. Thanks, we'll talk again, Bob. Be well.

Mr. MOULTON: Thank you very much, you too.

WEISS: Take care.