Market Studies

Home values still rose into November, marking more than a year of monthly price gains, while national rents fell flat, according to data from Zillow. On a monthly basis, home values inched up by 0.6 percent from October, with the Zillow Home Value Index at $156,200 for November. For 13 straight months now, prices have displayed monthly gains. As home values rose, national rents averaged a slight 0.1 percent month-over-month drop, falling to a value of $1,278 in November, according to the Zillow Rent Index. Over a one-year period, rents still increased by 4.5 percent.

Short sales continued to increase in October, while foreclosure starts fell, according to data from HOPE NOW. Completed short sales reached 38,518 in October, representing a 13 percent increase from September. Meanwhile, HOPE NOW also reported nearly 6 million struggling homeowners have received a permanent modification since 2007. Among the modifications, 4.8 million were proprietary loan modifications, while 1.1 million mods were through the government's Home Affordable Modification Program (HAMP).

Despite a continuing surge in builder confidence, housing starts dropped 3.0 percent in November to 861,000 the Census Bureau and HUD reported jointly Wednesday. At the same time start activity for both September and October was revised lower. Applications for permits, according to the report, rose 3.6 percent to 899,000--the highest level since July 2008 as permit activity for October was revised slightly upward.

After rising in the third quarter, overall economic growth is expected to decline this quarter and in early 2013, according to Fannie Mae. However, the GSE anticipates further strengthening in the housing market. Economists at Fannie Mae anticipate economic growth of less than 2 percent for the first half of 2013 followed by more accelerated growth for the remainder of the year. Fannie Mae anticipates a 7.5 percent rise in home sales over the course of 2013 after this year's 10.2 percent increase.

Foreclosure inventory in California continued its steady decline in November, according to data from ForeclosureRadar. The total number of preforeclosures, foreclosures scheduled for sale, and REOs fell 7.6 percent from October to November and declined by 31.8 percent from a year ago. ForeclosureRadar said, ""the significant decline in foreclosure inventory over the past year has contributed to what some are calling an 'inventory crisis' of total homes for sale."" The company attributes foreclosure cancellations as part of the reason for the decline.

According to RE/MAX's latest National Housing Report, prices rose both on a month-to-month and year-over-year basis. The median price for homes sold in November was 3.6 percent higher than October and 6.9 percent higher than November 2011. November is the 10th straight month to experience year-over-year price gains. Perhaps the biggest contributing factor the continued rise in prices is a dwindling inventory. The average number of homes for sale in November was about 8.0 percent lower than in October and 29.1 percent lower than the previous year.

Builder confidence continued to improve in December as the Housing Market Index (HMI) rose two points to 47, its highest level since April 2006, the National Association of Home Builders reported Tuesday. It was the eighth straight monthly increase in the index and matched economist expectations.

With fluctuations in rental and owner markets over the past few years, it can be difficult to determine whether one is better off renting or owning. In Manhattan, renting is currently the more financially viable option, according to a new study by the Federal Reserve Bank of New York.

The housing market has managed to be one of the few areas in the economy that is ""essentially unshaken"" by fiscal cliff uncertainties, according to a commentary from the Wells Fargo Securities Economics Group. Based on recent moves from the Federal Reserve, the commentary further noted the Fed ""appears to be banking on a housing recovery."" Last week, the Fed announced plans to continue buying $45 billion in long-term securities amid the expiring Operation Twist. The Fed also maintained its pace of buying $40 billion in MBS. In addition to actions from the Fed, the housing market has gained support from other factors such as an improving unemployment rate, increasing home prices and sales, and decreasing foreclosures.

The expectation for prices to continue rising is creating urgency among consumers to buy now, according to a Redfin survey of 1,084 active homebuyers. The percentage of homebuyers who believe prices are bound to move higher in the next 12 months increased to 71 percent in the fourth quarter from 61 percent in third quarter, according to the survey. While rising prices are causing some buyers to purchase now, low inventory is prompting others to hold off on their search.