"The U.S. Housing Bust Is Over", "Thirty-year Mortgage Rates drop to another Record Low", and "Multiple Offers Return as Buyers are Back" are just a few of the great real estate headlines from this past weekend
The U.S. Housing Bust Is Over - Wall Street Journal
The housing market has turned—at last. The U.S. finally has moved beyond attention-grabbing predictions from housing "experts" that housing is bottoming. The numbers are now convincing. Nearly seven years after the housing bubble burst, most indexes of house prices are bending up. "We finally saw some rising home prices," S&P's David Blitzer said a few weeks ago as he reported the first monthly increase in the slow-moving S&P/Case-Shiller house-price data after seven months of declines.
Nearly 10% more existing homes were sold in May than in the same month a year earlier, many purchased by investors who plan to rent them for now and sell them later, an important sign of an inflection point. In something of a surprise, the inventory of existing homes for sale has fallen close to the normal level of six months' worth despite all the foreclosed homes that lenders own. The fraction of homes that are vacant is at its lowest level since 2006. The reduced inventory of unsold homes is key, says Mark Fleming, chief economist at CoreLogic, a housing data-analysis firm. For the past couple of years, house prices have risen in the spring and then slumped; the declining supply of houses for sale is reason to believe that won't happen again this year, he says.
Builders began work on 26% more single-family homes in May 2012 than the depressed levels of May 2011. The stock of unsold newly built homes is back to 2005 levels. In each of the past four quarters, housing construction has added to economic growth. In the first quarter, it accounted for 0.4 percentage points of the meager 1.9% growth rate. "Even with the overall economy slowing," Wells Fargo Securities economists said, cautiously, in a note to clients, "the budding recovery in the housing market appears to be gradually gaining momentum." Economists aren't always right, but on this at least they agree: A new Wall Street Journal survey of forecasters found 44 believe the housing market has reached its bottom; only three don't.
Thirty-year Mortgage Rates drop to another Record Low - Freddie Mac
Mortgage buyer Freddie Mac says the average rate on the 30-year loan fell to 3.56%. That's down from 3.62% last week and the lowest since long-term mortgages began in the 1950s. The average rate on the 15-year mortgage, a popular refinancing option, dipped to 2.86%, below last week's previous record of 2.89%.
The rate on the 30-year loan has fallen to or matched record low levels in 11 of the past 12 weeks.
Cheaper mortgages have contributed to a modest housing recovery this year. Home sales were up in May from the same month last year. Home prices are rising in most markets. And homebuilders are starting more projects and spending at a faster pace. Low mortgage rates could also provide some help to the economy if more people refinance. When people refinance at lower rates, they pay less interest on their loans and have more money to spend. Many homeowners use the savings on renovations, furniture, appliances and other improvements, which help drive growth.
Multiple-offers Return as Buyers are Back - National Association of Realtors
Record tight inventories are making it increasingly difficult for growing numbers of buyers, who are creating multiple-bid environments in markets that haven’t seen buyers battle over homes in six years. Buyers are back but sellers aren’t, especially in Western markets recovering from large volumes of foreclosures. The result is that inventories are still tightening as the spring buying season ends. Buyers are fighting over what’s available, often to the benefit of those sellers who took a risk in this year’s evolving marketplace.
Prices are reported to be on the uptrend with 62 percent of REALTORS® reporting constant or increasing prices compared to the same time a year ago, according to the National Association of REALTORS’® (NAR) REALTOR® Confidence Index for May29 -June 8, 2012 that was released recently.
Buyer demand is reported to be growing faster than supply, and many REALTORS® are reporting multiple offers. However, buyer foot traffic slowed in May compared to last year, perhaps as buyers grew discouraged by slim pickings.
However, buyer traffic is still well above the moderate level, but seller traffic is flat, according to the NAR survey. First-time homebuyers accounted for 34 percent of total buyers. Normally first-time buyers are in the neighborhood of 40 percent of total residential sales, according to NAR’s Profile of Home Buyers and Sellers.