Market Studies

For the fourth consecutive month, the RE/MAX National Housing Report found an overall increase in median home price across the country. In May, the national median home price was $166,500, a 6.1 percent increase year-over-year and a 4.1 increase month-over-month. Of the 53 metros surveyed, a record 46 showed rises in median home price, with nine seeing double-digit increases. Closed transactions across the United States also rose in May, with markets showing an overall increase of 12.6 percent from April and 12.8 percent from May 2011. May 2012 marked the 11th straight month of year-over-year home sales gains.

Housing permits soared in May to their highest level since September 2008, surging 7.9 percent to 780,000, the Census Bureau and Department of Housing and Urban Development reported jointly Tuesday but housing starts dropped 4.8 percent to 708,000 giving back all of April's gain. At the same time, permits for April were revised upward to 723,000 from the originally reported 715,000. April housing starts were also revised upward to 744,000 from the originally reported 717,000.

The middle class seemed to take another drubbing Monday with news that U.S. median household net worth fell 35 percent between 2005 and 2010. Excluding home equity, the Census Bureau found that median household net worth ticked up by 8 percent during the financial crisis. Who got hit the hardest? Of the many age groups, heads of households from 35 to 44 accounted for nearly 60 percent of the decline in net worth during the five-year period. But they weren't alone: Median net worth also declined for all age groups between 2005 and 2010.

Home prices and mortgage delinquencies appear to be stabilizing, but how well U.S. residential mortgage backed-securities (RMBS) issued before 2008 perform will depend on three key variables, according to a Standard and Poor's report. Those three variables are collateral performance, the effectiveness of structural protections, and the behavior of transaction parties such as servicers and bond trustees.

The housing market in California looked sunny in May with strong sales and stabilizing home prices, the California Association of Realtors (C.A.R.) reported Friday. A release from the association showed that home prices in the state posted gains for the third consecutive month, and home sales finished well above last year's pace. Closed escrow sales of existing, single-family detached homes in California rose 3.4 percent to a seasonally adjusted annualized rate of 572,260. This is up from April's revised rate of 553,670 and is a 21.5 percent increase from 470,910 in May 2011.

Builder confidence rose one point in June to 29, its highest level since May 2007, the National Association of Home Builders reported Monday. The Index for May, originally reported as 29, was revised down to 28. Economists had expected the Index to be flat compared the original report for May. The total Index in June was up 16 points from June 2011, the strongest year-year gain since December 1998. The Index has improved year-year for 12 straight months as it did from July 2009 through June 2010 before going into a five month swoon.

Fannie Mae and Freddie Mac completed nearly 2.3 million foreclosure prevention actions by from the start of their conservatorship to the end of March 2012, according to FHFA'ss Foreclosure Prevention Report for first-quarter 2012. The report, released Friday, showed that over 1.9 million of the foreclosure prevention actions undertaken by the GSEs have helped borrowers keep their homes. Moreover, half of borrowers who received loan modifications in Q1 2012 had their monthly payments reduced by more than 30 percent, with one third of those including principal forbearance.

Following reports that the Reuters/University of Michigan consumer sentiment index had fallen significantly from 79.3 in May to 74.1 in June, economists offered commentary on the meaning behind the numbers. In addition to the consumer sentiment index, the current conditions index reportedly fell from 87.2 in May to 82.1 in June, while the expectations index declined to 68.9 this month from 74.3 the month before.

Delinquent borrowers who responded to Fannie Mae's National Housing Survey for the first quarter of 2012 expressed more negative viewpoints toward homeownership and paying their mortgage compared to underwater borrowers and those who have seen their home values decline. The data was collected to learn more about the attitudes of the delinquent borrower population that is oftentimes difficult to reach.

Sales are down, then they're up. Home prices are up, then they've fallen. Clearly, it has been an unstable journey for the housing market, with hopeful reports dashed by disappointing data a month later. As the market tries to maintain confidence that it's riding on a recovery that is here to stay, what does it need to continue strengthening? What the for-sale market needs most is a sustained increase in employment to bring household growth back to its longterm pace, the Joint Center for Housing Studies of Harvard University concluded in a report.