Sparked by rising home prices across much of the nation, the housing recovery is now under way, but fiscal uncertainties and other challenges could result in a bumpy ride in the coming months, according to economists participating in a recent National Association of Home Builders (NAHB) webinar on the construction and economic outlook.
“We’re seeing a more robust housing sector than many other parts of the economy,” says NAHB Chief Economist David Crowe. “One of the reasons is we have finally begun to see on a national scale that house prices are picking up again.”
Crowe cited a number of other factors that are carrying the housing momentum forward. These include:
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WASHINGTON (September 17, 2012) – New survey findings, combined with an analysis of historic credit scores and loan performance, show home sales could be notably higher by returning to reasonably safe and sound lending standards, which also would create new jobs, according to the National Association of Realtors®.
Lawrence Yun, NAR chief economist, said there would be enormous benefits to the U.S. economy if mortgage lending conditions return to normal. “Sensible lending standards would permit 500,000 to 700,000 additional home sales in the coming year,” he said. “The economic activity created through these additional home sales would add 250,000 to 350,000 jobs in related trades and services almost immediately, and without a cost impact.” Print This Post
Tim Clark, SAP
Dear Depressed Homeowner,
Ready for some good news? Try this on for size:
“While the general U.S. economy continues to struggle to make gains, for the first time since the end of the recession, housing may actually make a significant contribution to economic growth in 2012, a welcome change to affairs for an otherwise struggling economy.”
The above excerpt comes from CoreLogic’s August MarketPulse Report which provides insight into the current and future health of the U.S. economy with emphasis on housing and mortgage metrics.
CoreLogic knows a thing or two about big data – they retain one of the largest and most comprehensive U.S. real estate, mortgage application, fraud, and loan performance databases in the world. And that’s why I don’t take lightly these four reasons they think the U.S. is heading for a housing recovery: (More …) Print This Post
NEW YORK (CNNMoney) — Even though home prices are rebounding in some parts of the country, the overall housing market won’t start turning the corner until next spring, according to the latest forecast from Fiserv.
The forecast, which tracks 384 housing markets, predicts that nationwide home prices will dip another 1% between March 2012 and March 2013. Print This Post
With the economic recovery sluggish at best, many ask what impact this has on housing. Over the last several years, most economists believed that housing would not recover until the overall economy recovered. However, it now seems that the housing sector may be a driving influence in the recovery.
Here are four reports released in the last 30 days affirming this point:
“In terms of its contribution to real GDP, residential fixed investment has been a positive – albeit modest – force over the most recent four quarters, marking its longest span of back-to-back positive results since 2005.”
“The [overall] resumption in residential activity cannot be understated as the long awaited housing recovery should help buoy consumer confidence and provide a mild lift to second half economic output after what was likely a disappointing first half of the year.”
“The data from the past month collectively point to decelerating economic growth, but growth nonetheless…However, despite signs of deteriorating momentum for economic activity, housing continues to be a bright spot as news from the housing market has been relatively upbeat, presenting a rare upside boost to the economy.”
“As we look back at previous major housing recoveries, 1975 and 1991 began with negative jobs growth…In each case, the home sales recovery was fueled by home price improvement, driving new job growth and those jobs creating a fresh wave of demand that supported a multi-year recovery in housing.”
Is housing a victim to the current economic malaise? No. It may even be the cure. Print This Post
By DAVID WESSEL
The U.S. finally has moved beyond attention-grabbing predictions from housing “experts” that housing is bottoming. The numbers are now convincing.
Nearly seven years after the housing bubble burst, most indexes of house prices are bending up. “We finally saw some rising home prices,” S&P’s David Blitzer said a few weeks ago as he reported the first monthly increase in the slow-moving S&P/Case-Shiller house-price data after seven months of declines.
Nearly 10% more existing homes were sold in May than in the same month a year earlier, many purchased by investors who plan to rent them for now and sell them later, an important sign of an inflection point. In something of a surprise, the inventory of existing homes for sale has fallen close to the normal level of six months’ worth despite all the foreclosed homes that lenders own. The fraction of homes that are vacant is at its lowest level since 2006. Print This Post
by Steve Harney
What impact will the European economic crisis have on real estate here in the U.S.?
Shouldn’t people wait until after the election to find out who will be the President before buying a home?
Today, I want to tell a story about Kevin Miller who works here at Keeping Current Matters and just signed contracts on the home he and Crystal, his wife, are purchasing. Kevin got married about a year ago and recently found out that he is about to become a father. He’s a great guy who truly loves his bride and wants the best for her and their family. It is for that reason that Kevin and his wife started to look
for a home of their own.
What About Greece?
Kevin and I have discussed the purchase at times and the interesting thing is the European situation never came up – not even once! It isn’t that Kevin is naive to the situation. He probably understands it better than most as he has a degree in International Business and Economics. But, he isn’t buying a house in Greece or Spain. He is buying a home in Babylon,New York – in a wonderful neighborhood with a nice backyard that his future children will play in. Does the world economy impact his purchase? Yes it does. It is one of the major reasons he is getting a 30-year mortgage rate under 4%.
What About the Election?
Again, it never came up. We did talk about the fact that he is buying the home for a fraction of what it would have sold for just a few years ago. We did discuss the great school district. We did talk about how convenient the neighborhood is to the things he and Crystal love. Did we talk about the election? No.
Not that the election won’t have an impact. It was just announced that Congress will postpone its decision on the government’s role in mortgage financing until next Spring (aka until after the election). The new rules, which are anticipated to be more stringent than the current rules, won’t be enacted until after Kevin, Crystal and their child are comfortably living in their dream home financed by a 30-year mortgage at an historically low interest rate. Meanwhile, no one knows what the new mortgage requirements will even be next year.
Is the situation in Europe important? Of course. Is this election one of the most important in our nation’s history? Many believe so. Did either of these situations enter Kevin’s mind while he was deciding to buy a home? No.
He was too busy caring about his wife, his new child and his family’s happiness. Print This Post
By Pete Bakel
Despite economic growth of 3.0 percent annualized for the fourth quarter of 2011, incoming data suggest that economic growth slowed during the first quarter of 2012. In line with previous forecasts, Fannie Mae’s (FNMA/OTC) Economic & Strategic Research Group expects growth to slow to slightly more than 2 percent in the first quarter of the year.
The slowdown in economic growth is not indicative of a significant deterioration in the underlying strength of economic activity, but a fading inventory boost to GDP growth. For all of 2012, the Group expects growth to be modest at 2.3 percent as a number of factors combine to constrain activity, including slow real disposable income growth, which should restrain household spending activity; a very small contribution from net exports; and continued fiscal contraction by the federal government, as well as ongoing cutbacks by state and local governments acting as a drag on growth during the year.
“Consumer spending continued its upward trajectory with strong spending on autos and other durable goods, and spending on services showing the largest gain in nearly two years,” says Fannie Mae Chief Economist Doug Duncan. “However, the pickup in consumer spending has outpaced income growth, which means that consumers are increasing their spending by borrowing from their savings. Real disposable income has been flat and that needs to change for a higher pace of economic activity to occur.”
Through the fourth quarter of 2011, residential investment contributed to overall economic growth for the third consecutive quarter, the first time that has occurred since 2005. Recent housing data also indicate some loss of momentum in the first quarter, underscoring the uneven nature of the current housing recovery. However, confidence among consumers improved in March. The Fannie Mae March National Housing Survey shows that 33 percent of Americans expect home prices to increase over the next 12 months, up from 28 percent in February. On the downside, the Group notes a long-term risk to housing concerning federal student loan debt, which has increased dramatically over recent years and may cause a delay in students’ entering the first-time homebuyer market in the future.
On the employment front, the March employment report showed weakening momentum, as the economy created just 120,000 jobs – less than half of the average monthly gain over the prior three months and the smallest gain in five months. However, the setback in the employment report should not necessarily be interpreted too negatively. Other job-related data continue to show signs of improvement with initial jobless claims hovering near a new low of the recovery at the end of March. Despite the unemployment rate dropping to 8.2 percent, the lowest rate in more than three years, it is not indicative of improving labor market conditions, as the rate was driven by a substantial decline in the labor force. The Group expects the unemployment rate to trend down to about 7.5 percent by the end of 2013, with a monthly average gain of approximately 190,000 jobs during 2012 and slightly stronger gains during 2013.
For more information, visit http://www.fanniemae.com Print This Post
Federal Housing Finance Agency (FHFA) recently reported that the National Average Contract Mortgage Rate for the Purchase of Previously Occupied Homes by Combined Lenders, used as an index in some ARM contracts, was 4.08 percent based on loans closed in February.
Beginning this month, FHFA is calculating interest rates using un-weighted survey data. For January, a comparable rate based on unweighted data would have been 4.18 percent. Thus, there was a decrease of 0.10 percent from the previous month’s corresponding un-weighted rate. The average interest rate on conventional, 30-year, fixed-rate mortgage loans of $417,000 or less decreased 5 basis points to 4.36 percent from January’s figure based on unweighted data.
These rates are calculated from the FHFA’s Monthly Interest Rate Survey of purchase-money mortgages. These results reflect loans closed during the February 23-29 period. Typically, the interest rate is determined 30 to 45 days before the loan is closed. Thus, the reported rates depict market conditions prevailing in mid- to late-January.
The contract rate on the composite of all mortgage loans (fixed- and adjustable-rate) was 4.05 percent in February, down 9 basis points from 4.14 percent, based on un-weighted data, in January. The effective interest rate, which reflects the amortization of initial fees and charges, was 4.17 percent in February, down 10 basis points from 4.27 percent, based on un-weighted data, in January. This report contains no data on adjustable-rate mortgages due to insufficient sample size.
Initial fees and charges were 0.93 percent of the loan balance in February, up 0.04 percent from 0.89, based on un-weighted data, in January. Thirty-one percent of the purchase money mortgage loans originated in February were “no-point” mortgages, down three percent from the un-weighted share in January. The average term was 28.8 years in February, up 0.1 years from an un-weighted 28.7 years in January. The average loan-to-price ratio in February was 75.3 percent, down 0.4 percent from 75.7 percent, un-weighted, in January. The average loan amount was $244,300 in February, up $7,300 from an unweighted $237,000 in January.
For more information, visit http://www.fhfa.gov Print This Post
By Mark Fleming
While 2011 was clearly a challenging year, there is a lot to be positive about looking ahead. Economically, while buffeted by natural disasters and fiscal policy indecisiveness at home and a European sovereign debt crisis abroad, the U.S. economy was able to stave off economic stagnation in 2011 and is likely to continue to do so in 2012.
Housing statistics and the duration of the housing downturn to date indicate that 2012 may be the year we begin to turn the corner. In the summer of 2011, economic concerns peaked as the economy appeared to be on the brink of stagnation. (More …)