Housing Market Looking Up
The housing recovery has been slow and the small progress has often been hampered by a step or two backwards. But overall, industry experts generally speak positively about the direction of the real estate market.
Last month, new home sales last month dipped 0.9% from December’s revised figures, but remain 3.5% above levels from January 2011, the National Association of Home Builders reported on Friday. Also, the inventory of new homes for sale continued to drop to another record low in January to a 5.6 month supply at the current sales pace.
“Outside of the upwardly revised December number, this is actually the best sales pace we’ve seen since April of 2010, when the home buyer tax credit was in effect,” noted Barry Rutenberg, NAHB chairman and a home builder from Gainesville, Florida. Rutenberg added that recent indicators “have provided evidence that consumers are becoming more confident about making a home purchase.”
Home mortgage interest rates remain historically low and continue to spur home sales. Freddie Mac reported on Thursday that the national average for a 30 year fixed-rate mortgage edged up from three weeks at or near all-time record lows of 3.87%. Last week’s average rate of 3.95% is still a great deal for home buyers - despite the small increase, the current rate is a full percentage point below the average rate one year ago.
Frank Nothaft, Freddie Mac vice president and chief economist, said, “New data releases this week suggest the housing market is continuing to gradually improve,” citing reports from key industry groups.
The reports cited include a release from the Mortgage Bankers Association reporting that seriously delinquent mortgages fell to the lowest quarterly share since the beginning of 2009, and a Census Bureau release stating that new residential construction in January outpaced the market consensus forecast. Also noted was the National Association of Realtors report that the pace of existing home sales last month was the strongest since May 2010.
On Wednesday, NAR reported that January existing home sales increased 4.3% from the previous month and are 0.7% above levels from January 2011, representing a 6.1 month supply of homes at the current sales pace.
Lawrence Yun, NAR chief economist, said, “The uptrend in home sales is in line with all of the underlying fundamentals – pent-up household formation, record-low mortgage interest rates, bargain home prices, sustained job creation and rising rents.”
NAR President Moe Veissi and broker-owner of Veissi & Associates Inc., in Miami, said buying power is enticing more potential home buyers. “Word has been spreading about the record high housing affordability conditions and our members are reporting an increase in foot traffic compared with a year ago,” he said. “With other favorable market factors, these are hopeful indicators leading into the spring home-buying season. We’re cautiously optimistic that an uptrend will continue this year.”
National Association of Home Builders
National Association of Realtors
Mortgage Bankers Association
U.S. Census Bureau