Tag Archives: Home Prices

Home sales rose 25 percent month-over-month in March, reflecting the normal spring spike that occurs every year, according to Redfin. On a year-over-year basis, however, sales were up just 0.9 percent--the smallest gain in 14 months. Ten of the 19 markets tracked by Redfin saw sales increase year-over-year, one fewer than February. All 19 markets posted month-over-month improvements. Home prices also saw a nice boost, growing 6.2 percent from February and 15 percent from March 2012. However, the number of homes for sale fell 31 percent from March 2012 to March 2013.

Rising home prices and higher levels of short sales are leading to declining loss severities in the residential mortgage-backed securities (RMBS) market, according to Fitch Ratings. The agency's quarterly report noted its Loss Severity Index declined from 67.5 percent in the first quarter of 2012 to 64.2 percent in the first quarter of this year. Loss severities on short sales tend to be 10 to 15 percent lower than loss severities on REOs, according to Fitch. Also, short sales are generally resolved about 12 months sooner than REOs, the agency stated.

With the price of a new home barely above year-ago levels, builder confidence fell for the third straight month in April, dropping two points to 42, the lowest level since October, the National Association of Home Builders reported. Economists had expected the Housing Market Index (HMI), the measure of confidence, to improve to 45 from March's reading of 44. It was the second straight month the index fell when economists had expected it to improve.

A recent industry survey detects rising optimism in the commercial real estate sector and the single-family housing sector over the next few years. The survey, conducted in March by the Urban Land Institute and Ernst & Young, finds a consensus among economists and analysts that the real estate market will improve as transaction volumes rise and vacancies decline. Commercial real estate transactions totaled about $290 billion last year and are expected to rise to $310 billion this year. By 2015, analysts expect volumes of about $360 billion. The single-family market is anticipated to experience a rise in housing starts and a deceleration in price increases.

While rapid price gains have recently prompted fears of another housing bubble on the horizon, recent reports from Capital Economics and Redfin asserted no such bubble is forming--at least not on a national level. Capital Economics addressed concerns that home price increases, which are rising twice as fast as gains in income and residential rent, are not sustainable in the long run. One argument the firm made is housing actually has more to gain than lose from rapid price gains since it would help more homeowners rise out of negative equity and help those with low equity.

Even as prices continued to rise in last year's fourth quarter, American homeowners found themselves paying less in monthly mortgage payments compared to pre-bubble norms, according to Zillow. At the end of Q4 2012, with mortgage rates in the 3 percent to 4 percent range, homeowners paid just 12.6 percent of their monthly income on mortgage payments, down 36.9 percent from pre-bubble norms, Zillow reported. Though low rates have driven affordability up, homes themselves have become more expensive in many areas, even as wages dropped or stagnated.

According to a FICO survey, 71 percent of bankers polled believe home prices are ""rising at a sustainable pace"" in the context of mortgage lending risk. On the credit health side, 39 percent of respondents expect mortgage delinquencies to fall over the next six months, while another 45 percent expect delinquencies to remain flat. Sixteen percent anticipate an increase in delinquencies, making this first-quarter survey the most optimistic since the surveys started.

Fannie Mae found consumers continue to view the housing market with relative optimism, despite wavering confidence in the economy, according to the GSE's national housing survey. Forty-eight percent of survey respondents expect home prices to rise over the year, unchanged from February's all-time high for the monthly survey, which started in June 2010. Another survey high was reached in response to the home-selling environment. Twenty-six percent of respondents say now is a good time to sell a home, a 1-percent increase from February.

The housing industry is making ""important progress across many key indicators,"" according to the Obama Administration's latest housing scorecard, but as usual, the administration continued to warn the ""overall recovery remains fragile."" In the March report, the administration highlighted data showing improvements in home prices. In conjunction with the scorecard, the administration also released its progress report on the Making Home Affordable Program.

With the spring house hunting season upon us, Trulia reported a 7.2 percent year-over-year increase in asking prices on the national level. On a seasonally adjusted basis, prices rose 1.1 percent month-over-month. On the other hand, rent price growth--for single-family homes, at least--showed signs of stagnancy in March. Nationally, rent for single-family homes increased 0.1 percent year-over-year. ""Why have rents stopped rising on single-family homes? More supply,"" explained Jed Kolko, chief economist at Trulia.