Archive for April 2014

Housing Market’s Gradual Recovery Continues

Trulia’s Housing Barometer tracks how quickly the market is returning to normal based on five measures, including delinquency and foreclosure rates, new construction, existing home sales, home prices, and the employment rate for 25-34 year olds. According to the most recent release, four of the five indicators have improved over the last year. In fact, only construction starts fell behind over the past 12 months, dropping to 44 percent back to normal from 45 percent the year before. But, though real estate has been rebounding, the recovery has been slow and, at times, volatile. Housing affordability has been a part of the reason for this, as has the declining presence of real-estate investors in the market. Last year, when there were more distressed properties available for sale, investors were more active, buying homes to eventually put up for rent. This activity was, in large part, responsible for last year’s home price increases and also a percentage of the accelerated sales pace. This year, however, investors are less active in the market, which means prices likely won’t rise as quickly and home sales may appear slower than last year’s pace. More here.

New Home Construction Up In March

New estimates released by the U.S. Census Bureau and the Department of Housing and Urban Development show new residential construction increased in March. Privately owned housing starts rose 2.8 percent overall and construction of new single-family homes was up 6 percent from the month before. After a rocky winter, the improvement is a welcome sign but the gains were still less than economists had forecast for the month. Also in the report, permits to build new homes fell, though the decline was mostly due to a drop in authorizations to build multi-family housing. Single-family authorizations – which are a good indicator of future home building activity – were up 0.5 percent. Overall, new residential construction was at its fastest pace of the year in March. March also marked the second consecutive month in which construction of single-family homes increased, after falling in both December and January. More here.

Loan Demand Rises As Mortgage Rates Fall

According to the Mortgage Bankers Association’s Weekly Applications Survey, demand for loan applications was up 4.3 percent last week from the week before. The improvement was due to a 7 percent surge in refinance activity, which has been down in recent weeks. The Purchase Index was up 1 percent from the previous week. The spike in refinance activity was likely due to a decline in interest rates, which was seen across all loan categories, including 30-year fixed rate mortgages with both conforming and jumbo balances, FHA-backed loans, and 15-year fixed rate loans. The refinance share of total mortgage activity climbed to 52 percent, 1 percent higher than the previous week. The MBA’s survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

Home Builders Expect Spring Sales Bump

Builders have an unique perspective on the housing market, demand, and where home sales are headed. And, according to the National Association of Home Builders Housing Market Index, builders’ confidence in the market for newly built, single-family homes is rising. In fact, the most recent reading shows the index up one point to 47 in April from March. The index – which measures confidence on a scale where any number above 50 indicates more builders view conditions as good than poor – found that, though builders’ perception of current conditions and buyer traffic was unchanged from the month before, their expectations for future sales rose four points to 57. Kevin Kelly, NAHB’s chairman, said builder confidence has been in a holding pattern the past three months but, as the spring home buying season gets into full swing and demand increases, builders are expecting sales prospects to improve. Also, all four regions of the country are down, according to the index’s three month moving averages. The West and Midwest show the largest decreases, though both remain near 50. The South and Northeast, on the other hand, both slipped two points, falling to 33 and 47, respectively. More here.

The Benefits Of A Bigger Down Payment

Data from the National Association of Realtors’ Confidence Index Survey finds fewer first-time home buyers obtaining mortgages with a down payment of 6 percent or less. In fact, the number of first-time buyers who put down 6 percent or less had dropped to 61 percent by February, down from 74 percent in 2009. Though there are a number of factors causing buyers to put down more money when buying their home, the benefits of a higher down payment remain the same. The more money you put down when purchasing a house, the lower your monthly mortgage payment will be. According to the NAR, saving for a higher down payment also betters the odds that a prospective buyer can obtain a loan from their bank, in addition to increasing the likelihood of winning a bid for a particular property should there be multiple offers on a home. In short, the more money you’re able to put forth as a down payment, the more attractive you’ll be to mortgage lenders and home sellers. In a competitive market, where demand is still higher than supply, a higher down payment can help provide an edge over other potential buyers in your area. More here.

City Vs. Suburb: Where Prices Are Rising Fastest

Despite more homes being put up for sale in anticipation of the spring home buying season, asking prices are up from last year in 97 of 100 metropolitan areas tracked by Trulia’s Price Monitor. Typically, more homes on the market keeps prices from increasing but, because this spring is expected to be a good one for housing, prices have continued to rise. In fact, asking prices are up 10 percent nationally over the past year and climbed 1.2 percent in March from February’s level. The report also found that price per square foot increased more in cities than in suburban neighborhoods. High-density, urban neighborhoods experienced price increases of 9.8 percent since last year, while homes in the suburbs saw prices rise 9.4 percent. Still, population growth in suburban neighborhoods was stronger than city neighborhoods over the past year. According to the report, this is true because – though more people moved to the suburbs – there is more room for new construction in suburban areas and the ability to create more inventory to meet buyer demand helps moderate price gains. More here.

Gov’t Report Finds Housing Market Progress

According to data released by the U.S Department of Housing and Urban Development and the U.S. Department of the Treasury, the housing recovery continues to make progress, though some markets are doing better than others. The March edition of the administration’s Housing Scorecard – which collects key data on the health of the housing market and the federal government’s ongoing recovery efforts – finds foreclosure starts trending downward, homeowners’ equity rising, and home prices stable. Kurt Osowski, HUD’s deputy assistant secretary for economic affairs, said homeowners’ equity is now over $10 trillion and foreclosure starts are at their lowest level since 2005. The Scorecard also shows that, according to the most recent S&P/Case-Shiller 20-City Home Price Index, home prices are now back to their mid-2004 levels, though month-over-month improvement weakened this past winter. Despite the progress, Osowski cautions that, because the recovery is stronger in some markets than others, there is more work to be done to help responsible homeowners and encourage further recovery. More here.