Home Sales Up, Inventory Down
A new survey by the National Association of Realtors? shows that home supplies are dwindling and sales are on an upward swing.
The findings suggest yet again that the market is on the mend. The housing bust that happened in 2006 cost home prices dearly. In the glory days of 2004 and 2005, homes sat about four weeks on the market before finding an owner. In 2009, while in the middle of a downturn, non-distressed properties took as much as 10 months to sell. All across the country homeowners were left with underwater mortgages. Prices tumbled, foreclosures skyrocketed and lenders tightened their purse strings. The free fall of prices that was in effect until a few months ago finally seems to have been checked. With inventories on the decline, demand should be up resulting in more price climbs in the coming months.
?As inventory has tightened homes have been selling more quickly,? said NAR chief economist Lawrence Yun. ?A notable shortening of time on the market began this spring, and this has created a general balance between homebuyers and sellers in much of the country.?
NAR said in July that the median time a home had to sit on the market dropped 29.6 percent to 69 days compared to a year ago. This included short sales which typically take about three months to sell. And one third of homes sold in July had a market wait of less than a month. The mantra is still proper, sensible pricing.
?This equilibrium is supporting sustained price growth, and homes that are correctly priced tend to sell quickly, while those that aren?t often languish on the market,? said Yun.
Condo and Apartment Segments Continue to Thrive
It?s not just single family homes that are on the recovery path. A new Multifamily Production Index (MPI) by the National Association of Home Builders, which measures multifamily builder and developer optimism, shows that builder sentiment improved for the eighth consecutive quarter.
The index rose to 54 in the second quarter, the highest reading since the second quarter of 2005. According to a NAHB release, the MPI ?takes into account three key elements: construction of low-rent units, market rate rentals and for sale condominiums. The segment seems to be performing really well, but like in the single-family market, strict lending continues to put speed bumps on a faster recovery.
?The apartment and condo housing sector is continuing on a path of steady recovery as new construction has increased to try to keep up with current consumer demand,? said W. Dean Henry, CEO of Legacy Partners Residential in Foster City, Calif., chairman of NAHB?s Multifamily Leadership Board. ?However, credit continues to be an issue for many developers around the country, making it difficult to keep pace with this demand.?
The MPI index tracking builder and developer sentiments for rental properties touched 63 in the second quarter, and at 41, the condominium segment recorded its highest reading since the fourth quarter of 2005. Low-rent units recorded an all-time high of 61.
?The strength of the MPI suggests that multifamily production is likely to increase somewhat going forward,? said NAHB Chief Economist David Crowe. ?Multifamily production has already recovered substantially from a historic low of about 110,000 starts a year in 2009 and 2010 to the current annual rate of a little over 200,000. However, prior to the downturn multifamily starts remained about 300,000 per year for 12 consecutive years, so there is room for further improvement before apartment and condo production return to normal, sustainable levels.?
Freddie and Fannie Propose Hike in Mortgage Guarantee
Housing finance giants Fannie Mae and Freddie Mac said they will hike the fees for guaranteeing credit risk. The cost would transfer to borrowers, slightly raising the amount they pay on mortgages.
According to news reports, Edward DeMarco, acting director of the Federal Housing Finance Agency, directed the companies to raise the guarantee fees on single-family mortgages by an average of 10 basis points. This would ?represent a step toward encouraging greater participation in the mortgage market by private firms,? ?DeMarco said. It would also help curtail the government?s role in housing finance.
For borrowers, a 10-basis-point hike would mean an estimated increase of $15 per month in fees on a $200,000, 30-year fixed mortgage plan.
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