Existing Homes Sales and Prices Rise
Existing-home sales continued to improve in August, and the national median price rose on a year-over-year basis for the sixth straight month, according to the Washington, D.C.-based National Association of Realtors.
Lawrence Yun, NAR chief economist, said favorable buying conditions get the credit. "The housing market is steadily recovering with consistent increases in both home sales and median prices. More buyers are taking advantage of excellent housing affordability conditions," he said. "Inventories in many parts of the country are broadly balanced, favoring neither sellers nor buyers. However, the West and Florida markets are experiencing inventory shortages, which are placing pressure on prices."
According to Washington, D.C.-based Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 3.6 percent in August from a record low 3.55 percent in July; the rate was 4.27 percent in August 2011.
Builder Confidence Rises for Fifth Month
Builder confidence in the market for newly built, single-family homes rose for a fifth consecutive month in September to a level of 40 on the Washington, D.C.-based National Association of Home Builders/Wells Fargo Housing Market Index. This latest three-point gain brings the index to its highest reading since June of 2006.
"This fifth consecutive month of improvement in builder confidence provides further assurance that the housing market is moving in a positive direction, but there's still a long way to go on the road to recovery and several obstacles are slowing our progress," said NAHB Chairman Barry Rutenberg, a home builder from Gainesville, Fla. "In particular, unnecessarily tight credit conditions are preventing many builders from putting crews back to work, which would create needed jobs, and discouraging consumers from pursuing a new-home purchase."
More Borrowers Now Above Water
Santa Ana, Calif.-based CoreLogic says 10.8 million, or 22.3 percent, of all residential properties with a mortgage were in negative equity at the end of the second quarter of 2012. This is down from 11.4 million properties, or 23.7 percent, at the end of the first quarter of 2012. An additional 2.3 million borrowers possessed less than 5 percent equity in their home, referred to as near-negative equity, at the end of the second quarter. Approximately 600,000 borrowers reached a state of positive equity at the end of the second quarter of 2012, adding to the more than 700,000 borrowers that moved into positive equity in the first quarter of this year.
"The level of negative equity continues to improve with more than 1.3 million households regaining a positive equity position since the beginning of the year," said Mark Fleming, chief economist for CoreLogic. "Surging home prices this spring and summer, lower levels of inventory and declining REO sale shares are all contributing to the nascent housing recovery and declining negative equity."
Single-Family Construction Fuels Increase
Nationwide housing production rose 2.3 percent to a seasonally adjusted annual rate of 750,000 units in August, according to the Washington, D.C,-based U.S. Department of Housing and Urban Development and the U.S. Census Bureau. This increase was fueled entirely by gains in the single-family sector, where the pace of new construction rose in every region for a combined 5.5 percent gain to 535,000 units.
"The pace of overall housing production has been edging gradually upward all year as consumers become more confident in their local housing markets, and the latest data are further evidence that the housing recovery is here to stay," added NAHB Chief Economist David Crowe. "That said, the pace of this recovery continues to be constrained by various hurdles, including a tough lending environment, inaccurate appraisals and more recently, rising prices on key building materials."