To untrained eyes the new home sales numbers released by the Greater Louisville Association of Realtors this week may look scary if not down right alarming. But the most important fact to take away from the data is that the number of homes going under contract in May 2014 was up 10.9 percent compared to May 2013. Even more impressive looking at all of 2014 the number of homes going under contract through May of this year compared to May of last year was actually up 2.2%. The fact that the number of closings in May 2014 was down 19.2 percent from May 2014 is of minimal concerned to a trained eye.The low number of closings in May 2014 is directly attributed to 3 things:
- Record low temperatures, snow and ice during the first quarter of 2014.
- Mortgage companies needing more time to process loan applications because of stricter guidelines.
- Homes that were damaged by the colder weather this year or were in need of repair even before the bad weather
Let’s face it no buyer wants to be out in freezing temperatures, ice and snow so the number of buyers looking for homes was down in January, February and March. That’s slow down homes going under contract during those months and has a direct impact on the number of homes closing in May. Mortgage companies are requiring more documentation and are taking longer to process the loans because that documentation needs to be verified. That’s a key reason why homes going under contract during the first quarter are taking longer to close, the guidelines and the added paperwork has had a major impact on the banks’ ability to close a loan.
Banks have also been told by our current administration in Washington they can’t require documentation or check credit history for a buyer’s loan until that buyer has...