Each month, the analysts at ""John Burns Real Estate Consulting"":http://www.realestateconsulting.com/home.aspx (JBRC) get out their red pens and score various aspects of the industry using the grade school scale. Looking at the firm's latest report card, housing overall is very near the bottom of the class, with a D+.
[IMAGE]Let's start with the good marks. Housing affordability got a grade of C-. Affordability, the California-based market research firm said, ""continues to be excellent this month,"" with mortgage rates and median home prices throughout the country still extremely low. JBRC's housing-cost-to-income ratio dropped to 25.2 percent.
""Affordability is so good that owning the median-price home is now less expensive than renting the average apartment,"" the company said in its report.
According to JBRC's assessment, the average 30-year fixed mortgage rate remained flat at 4.99 percent by March month-end, while adjustable mortgage rates fell to 4.20 percent. The share of adjustable-rate mortgage (ARM) applications increased to 5.2 percent by the end of March, but is still significantly less than the peak level of 35 percent of total applications in early 2005.
The existing home market, which took home a grade of D+, worsened this month as sales volume fell and the
[COLUMN_BREAK]months of supply increased, JBRC said in commentary. The same was true for the new home market, but the decline was ""slight"" compared to that of previously-occupied properties, leading the company to assign a C- to the new home sector.
Home sales boomed last fall as the expiration of the original tax credit approached in November. JBRC says with the new deadline of April 30 approaching, sales have improved this spring, but not nearly as much. The pending home sales index through February is nowhere near as robust as last fall, further dampening expectations for sales numbers in the months to come.
""Not only do sales remain low, but also the traffic of interested shoppers is not improving,"" JBRC said.
Housing supply received a failing grade of F. Although vacancy rates in the U.S. have improved in recent quarters, the majority of the country remains oversupplied compared to history, JBRC said. Just six states in the are currently considered undersupplied â€" Oklahoma, Wyoming, New Mexico, North Dakota, South Dakota, and Alaska.
Several factors played a role in housing's overall sub-par grade.
JBRC said, ""The Fed has declared that they are done buying mortgages from the GSEs, elected officials have declared that there will be no more tax credit extension, and recent loan modification clarifications have cleared the way for the mortgage servicers to increase their foreclosure activity, which will result in more distressed sales.""
With all these dynamics in play, the firm concluded, ""Despite the tremendous affordability that exists, we remain very cautious about the back half of 2010 because consumers just aren't showing much interest in homebuying right now.""