New-Home Sales Rise to Fastest Pace Since 2008

For the third consecutive month, sales of new single-family homes posted gains, rising 2.1 percent in May, according to housing data released Tuesday by HUD and the U.S. Census Bureau.
"Builders are reporting increased demand for new homes as buyers seek to take advantage of historically low mortgage rates while they remain so favorable," says Rick Judson, National Association of Home Builders chairman. "Consumers in markets nationwide are definitely becoming more confident about making a home purchase as firming prices and tighter inventories provide further evidence of the ongoing housing recovery."
New-homes sales moved to the fastest sales pace in May since July of 2008. Inventories also rose in May, reaching a 4.1-month supply at the current sales pace.
Regionally, sales posted double-digit increases in May by 40.7 percent in the Midwest and a 20.7 percent increase in the Northeast. In the West, new-home sales rose 3.6 percent while posting a 9 percent decrease in the South. Source: National Association of Home Builders

Home Prices Rising at ‘Unsustainable’ Rate

Home prices have been soaring by double digits compared to last year’s numbers and the National Association of REALTORS® are calling the rises “unsustainable.”

The price for existing home sales surged 15.4 percent higher in May compared to last year.

"Some of the increases can be explained by the fact that it is recovering from an over-corrected situation," says Lawrence Yun, NAR chief economist. "But with people's income rising at only 1 or 2 percent and prices rising in double digits, it cannot continue.”

The price discounts for bank-owned homes are vanishing rapidly, says Rick Sharga of Carrington Mortgage Holdings. Prices of distressed homes — particularly in markets like California, Arizona, and Florida — are rising faster than traditional home prices.

"You can at least make an argument that part of the dramatic increase in median home prices can be attributed to the foreclosure discount evaporating,” Sharga says. “That suggests that overall home price increases may be slightly overstated.”

However, according to NAR’s latest report, more expensive homes are seeing higher price rises. For example, homes priced at more than $500,000 have had prices soar 33 percent in the last year while homes priced below $100,000 have had prices down 9 percent year-over-year. Source: “Home Price Rise ‘Unsustainable,’ Realtors Report Says,” CNBC (June 20, 2013)

Home Ownership Makes Happier, Healthier Families, Survey Shows

Owning a home can make families healthier, happier, and more financially secure, according to new research by Canada Mortgage and Housing Corp. on the benefits of home ownership. Researchers worked with Habitat for Humanity families to evaluate how their lives changed after moving into their homes.
Eighty-nine percent of the Canadian families surveyed said their lives improved since they moved into their homes. Eighty-six percent said they’re happier since owning a home.
The survey also found home ownership led to an improvement in children’s school performance. The families reported that the children had increased confidence, improved behavior, higher grades, and enjoyed school more after becoming home owners.
What’s more, more than 75 percent of families surveyed say their health had improved since becoming home owners. They reported fewer illnesses caused by colds, flu, allergies, and stress, according to the study.
Canada’s home ownership rate -- at about 70 percent -- is one of the highest in the world.
The study’s release coincided with the National Association of REALTORS(R) recent release of a new publication, “Social Benefits of Homeownership and Stable Housing."
"There is evidence from numerous studies that attest to the benefits [of home ownership] accruing to many segments of society,” according to Canadian researchers. “Home ownership boosts the educational performance of children, induces higher participation in civic and volunteering activity, improves health care outcomes, lowers crime rates and lessens welfare dependency."
Source: “Owning a Home Makes Families Happier, Healthier,” Realty Times (June 18, 2013)

Where Asking Prices Are Rising the Most

Median list prices in May edged up 2.10 percent month-over-month, as housing inventories also were on the rise, creating a greater balance between supply and demand, according to realtor.com’s latest Real Estate Health Report.
The nationwide median list price was $199,000 for May, and up 4.79 percent year-over-year.
"We are seeing large regional markets across the country leading the way to national recovery. These regions are acting as a microcosm for what's slowly happening in the larger real estate market," says Steve Berkowitz, chief executive officer of Move. "Overall, we're seeing seller confidence beginning to respond to consumer demand. Nationally, there are more homes going on the market for a shorter amount of time. And this is happening in our hot markets on a much larger scale."
California housing markets are seeing some of the highest median price gains. The following 10 markets have seen the highest year-over-year list price gains:
1. Sacramento, Calif.: up 42.45%
Median list price: $284,900
2. Oakland, Calif.: up 38.27%
Median list price: $495,000
3. Detroit, Mich.: up 31.73%
Median list price: $125,000
4. San Jose, Calif.: up 30.58%
Median list price: $679,000
5. Los Angeles-Long Beach, Calif.: up 27.80%
Median list price: $428,000
6. Fresno, Calif.: up 27.48%
Median list price: $219,900
7. Phoenix-Mesa, Ariz.: up 27.03%
Median list price: $235,000
8. Stockton-Lodi, Calif.: up 25.63%
Median list price: $199,750
9. Reno, Nev.: up 24.23%
Median list price: $235,900
10. Santa Barbara-Santa Maria-Lompoc, Calif.: up 24%
Median list price: $775,000

30-Year Mortgage Rates Climb Near 4% Range

For the sixth consecutive week, mortgage rates inched higher, continuing to climb from all-time lows, Freddie Mac reports in its weekly mortgage market survey. The 30-year fixed-rate mortgage—the most popular among home buyers—has now climbed a half percentage point since last month.
A strengthening economy and positive employment report this month prompted fixed-rate mortgages to climb higher this week, says Frank Nothaft, Freddie Mac’s chief economist.
Freddie Mac reports the following national averages with mortgage rates for the week ending June 13:
  • 30-year fixed-rate mortgages averaged 3.98 percent, with an average 0.7 point, rising from last week’s 3.91 percent average. A year ago at this time, 30-year rates averaged 3.71percent.
  • 15-year fixed-rate mortgages averaged 3.10 percent this week, with an average 0.7 point, increasing from last week’s 3.03 percent average. Last year at this time, 15-year rates averaged 2.98 percent.
  • 5-year adjustable-rate mortgages averaged 2.79 percent, with an average 0.6 point, rising from last week’s 2.74 percent average. Last year at this time, 5-year ARMs averaged 2.80 percent.
  • 1-year ARMs averaged 2.58 percent, with an average 0.4 point, holding the same as last week. A year ago, 1-year ARMs averaged 2.78 percent.
"With the ongoing run-up in fixed mortgage rates, adjustable-rate mortgages (ARMs) are becoming more popular among home owners looking to refinance and for home purchasers,” says Nothaft.
Source: Freddie Mac

Mortgage Applications Fall as Rates Surge

Mortgage applications for home purchases and refinancing continued to fall, dropping 11.5 percent last week, amid rising mortgage rates. Interest rates rose above 4 percent for the first time in a year, according to the Mortgage Bankers Association.
Applications for refinancings saw the largest declines, with applications falling 15 percent last week, the MBA reports. Meanwhile, applications for home purchases, an indicator for future home sales, fell 1.6 percent last week.
Many analysts blame the decreasing applications on rising mortgage rates. The fixed 30-year mortgage rate averaged 4.07 percent for the week ending May 31, its highest level since April 2012, the MBA reports. Fed chairman Ben Bernanke recently indicated that the Fed may soon scale back its bond purchase program, which has helped to keep mortgage rates near all-time record lows.
Source: “Mortgage applications drop as rates surge: MBA,” Reuters (June 5, 2013)
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