For the past few years, problems of excessive inventory have plagued the housing market. Whether it was concern about the number of homes in the shadow inventory or downward pressure on prices caused by too many for-sale properties and not enough buyers, inventory was an issue for the health of the housing market. More recently, however, the discussion has shifted to the effects of an increasing number of markets facing an inventory shortage. Recent data from the National Association of Realtors shows inventory of for-sale single family homes, condominiums, townhouses, and co-ops fell by nearly 20 percent in June compared to the year before and was down in all but three of the included 146 markets. Due in part to falling inventory, the median national list price was up 2.68 percent and the median age of the existing inventory was down nearly 10 percent year-over-year. Falling inventory and steadily rising prices are both signs of a market recovery. More here and here.
According to the Mortgage Bankers Association’s Weekly Applications Survey, the Refinance Index increased 0.8 percent last week and is now at its highest level since April 17, 2009. The increase marks the third consecutive week of improvement and follows a 2.0 percent gain the week before. The refinance share of total mortgage activity rose to 81 percent, which is the highest its been since January. Still, total mortgage activity was only up 0.2 percent because of a 2.0 percent drop in the seasonally adjusted Purchase Index. Mortgage rates were relatively flat from the previous week. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances increased to 3.75 percent from 3.74 percent the week before. The average rate for 30-year mortgages with jumbo loan balances also increased, moving up to 4.01 percent from 3.99 percent the previous week. More here and here.
Though job creation numbers have slowed during the second quarter, the housing market continues to show signs of improvement. According to Freddie Mac’s most recent Economic Outlook report, record-low mortgage rates and a revamped HARP program have fueled a surge in refinance activity, while housing starts, home sales, and prices have picked up across many markets. Over the first five months of 2012, housing starts have averaged an annual rate of 719,000, which represents a 26 percent increase over the same period one year earlier. At the same time, new-home sales are up 17 percent and existing-home sales have gained 7.0 percent. And though job growth has lagged after posting significant gains during the first quarter of 2012, the slowdown may be due to shifting economic activity caused by a mild winter. Frank E. Nothaft, Freddie Mac’s chief economist, said that housing has turned a very large corner, despite not having played its traditional role coming out of the recession. Freddie Mac expects that a gradual strengthening of economic growth during the second half of the year will boost job numbers and lead to further gains for the housing recovery. More here.