In 2006 – the final year of the housing bubble – 6.48 million homes were sold. Last year, sales of previously owned homes reached 5.09 million. It was the strongest year of sales since the bubble burst and a 9.1 percent improvement on 2012’s totals, according to new data released by the National Association of Realtors. Lawrence Yun, NAR’s chief economist, said housing has experienced a healthy recovery over the past two years. Existing-home sales have risen nearly 20 percent since 2011, with job growth, record low mortgage interest rates, and a large pent-up demand driving the market, Yun said. Though housing lost some momentum in the fall, sales were up 1.0 percent in December and ended the year near normal, despite limited inventory and disappointing job growth. Total housing inventory at the end of December was down 9.3 percent to 1.86 million homes available for sale, which represents a 4.6-month supply at the current sales pace. Also in the report, the median existing-home price for all housing types was up 9.9 percent from December 2012 at $198,000. Morehere.
Freddie Mac’s U.S. Economic and Housing Market Outlook for January finds four of the key housing indicators moving in the right direction to begin the year. The unemployment rate, though still high at 6.7 percent, is vastly improved and should continue its gradual path to a more consistent and historically normal level. Mortgage delinquencies have also shown great improvement, having been nearly cut in half since their peak. Finally, both affordability levels and home sales continue to trend in the right direction, with the average mortgage payment remaining very affordable in most markets – suggesting there’s still room for more recovery in home prices. Frank Nothaft, Freddie Mac’s chief economist, said the housing recovery continues on a steady pace. According to Nothaft, home prices should rise about 5 percent this year, while home sales – along with other key indicators – will continue to trend in the right direction. More here.
New residential construction ended 2013 at the highest level in six years, according to estimates from the U.S. Census Bureau and the Department of Housing and Urban Development. An estimated 923,400 housing units were started last year, which is 18.3 percent above year-before levels and the best total since 2007. That year, housing starts came in at 1.4 million. Still, despite a strong finish year-over-year, monthly figures fell in December. Privately-owned housing starts dropped 9.8 percent, after surging to the highest pace of the year the month before. But, though starts fell nearly 10 percent, December’s estimate was still the third best month of 2013. Also in the report, building permits were down 3 percent from the previous month. Permits – which are a barometer of future building activity – ended the year 17.5 percent above 2012’s estimate. There were an estimated 974,700 housing units authorized in 2013. More here.
After an unexpected spike in December, builder confidence in the market for newly-built, single-family homes fell a point to 56 in January, according to the National Association of Home Builders Housing Market Index. The index – derived from a monthly survey conducted for the past 25 years – scores builders’ perception of the current market on a scale where any number above 50 indicates more builders view conditions as good than poor. Rick Judson, NAHB’s chairman, said January’s results show that confidence is holding at a solid level. According to Judson, the fact that many markets are showing improvement bodes well for future sales of new homes. Still, all three index components suffered declines in January. The index gauging current sales fell one point to 62, while future sales dropped two and buyer traffic slipped three points. Regionally, the three-month moving averages found the Northeast and West both up four points. The South was unchanged at 56 and the Midwest fell a point to 58. NAHB chief economist David Crowe believes rising home prices, historically low mortgage rates, and significant pent-up demand will continue driving the recovery in the year ahead. More here.
According to the Mortgage Bankers Association’s Weekly Applications Survey, total mortgage loan application volume increased 11.9 percent last week due to a significant drop in the average mortgage rate. The Refinance Index was up 11 percent and the seasonally adjusted Purchase Index rose 12 percent. The previous week’s results included an adjustment for the New Year’s. Michael Fratantoni, MBA’s chief economist, said the drop in rates triggered a pickup in refinance volume, while the change in purchase activity most likely reflects an increase following the holiday season. Still, the gain in purchase demand was more than anticipated and may indicate a strong selling season this coming spring and summer. The MBA’s survey covers more than 75 percent of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. More here.
The number of homeowners who owe more on their mortgage than their home is worth has fallen 47.5 percent since the beginning of 2012. According to the federal government’s most recent Housing Scorecard, released by the U.S. Department of Housing and Urban Development and the U.S. Department of the Treasury, nearly 6 million underwater homeowners have been lifted above water as home prices increased from post-crash lows over the past two years. The improvement has pushed homeowner equity up 55 percent since the end of 2011. In fact, by the third quarter of 2013, homeowner equity was slightly higher than it was at the end of 2003. Despite the progress, officials caution that there is more work to do. Edward J. Szymanoski, HUD’s associate deputy assistant secretary for economic affairs, said there are encouraging signs that the housing market recovery is providing millions of American homeowners with more economic security but there remains work to do in order to address the remaining underwater borrowers. More here.
Home prices surged last year but, according to Trulia’s Price Monitor, the increases were a reaction to the housing crash more than the effects of an improved job market and economy. A recent analysis from Jed Kolko, Trulia’s chief economist, explains how the price gains seen throughout 2013 were a direct response to the housing crash. For example, the individual markets that experienced the highest price increases last year were also those that suffered the most severe price declines during the crash. In other words, the markets that had the most ground to make up were the ones with the most significant increases. Now that most areas have largely recovered the losses suffered during the housing crash, price gains should begin to slow. Kolko says – as the housing market continues to recover – factors such as job growth, rather than this recent rebound effect, will lead to more sustainable, and slower, price increases. Trulia’s Price and Rent Monitors measure how asking prices and rents are trending on both a national and local level. In December, home prices were up 11.9 percent over last year and 0.4 percent above the month before. More here.
Shop around to avoid missing red flags or regretting your decision
Buying the first house you look at it is kind of like marrying the first person you go on a date with — not necessarily a good idea. The average homebuyer looks at least 10 homes over an eight-week search before making an offer. While you don’t need to visit every home in the neighborhood, you should compare at least three homes before making a decision.
Here are the top 4 reasons to shop around:
You might find similar features in another home. When you go on your first showing, you have nothing to compare the home’s pros and cons with. You might love the steam shower in the master bathroom, but another listing nearby might have a better — with a lower asking price.
You’ll learn more about each home’s resale value. Shopping around can help you get a sense of the neighborhood, and can help you gauge which homes have been over-developed for the area. If you buy the nicest home on the block, your property won’t appreciate at the same rate that the surrounding homes do, and you might have trouble selling when you choose to move on.
You’ll catch red flags before you rush in. Rushing to the closing table can also cause you to miss serious maintenance issues. Finding “the surprise behind door number three” is only exciting onThe Price is Right, so make sure you look in every room in the house. If any rooms are “off limits” during the showing, arrange to see them later and have your home inspector examine them carefully.
You won’t wonder if “the grass is greener” across the street. Surveying your options will also help you avoid buyer’s remorse. If you buy without looking at several homes, you could end up feeling as though you’ve made a mistake. If you still love the first house you saw after visiting a few more listings, you can be confident in your decision to make an offer.
According to the Mortgage Bankers Association’s Weekly Applications Survey, the average contract interest rate for 30-year fixed-rate mortgages was unchanged last week from the week before. Mortgage rates held steady for loans with both conforming and jumbo balances, while 15-year rates increased. Demand for loan applications, on the other hand, was up – rising 2.6 percent from the previous week. The Refinance Index spiked 5 percent – after falling 9 percent a week earlier – and the seasonally adjusted Purchase Index fell 1 percent. The results were adjusted to account for the New Year’s Day holiday. Also in the report, the refinance share of total mortgage activity remained at 63 percent from the week before. The Mortgage Bankers Association’s Weekly Applications Survey covers more than 75 percent of all U.S. retail residential mortgage applications and has been conducted since 1990. More here.