New and existing home sales rising

New and existing home sales rising

Newly constructed home sales rose 3.3 percent month-over-month in April to a seasonally adjusted annual rate of 343,000, the Commerce Department and HUD reported. On a yearly basis, new home sales rose 9.9 percent. And, the good news did not end there. This report was followed by the National Association of Realtor's existing home sales report released in late May.

It showed the sale of existing homes rose 3.4 percent on a monthly basis and 10 percent year-over-year. In comparison to the sale of existing homes, Paul Diggle, property economist with Capital Economics, said new home sales will still continue to lag behind the existing home sales market, and one of the reasons for this is competition with discounted foreclosures and short sales.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 3.4 percent to a seasonally adjusted annual rate of 4.62 million in April from a downwardly revised 4.47 million in March, and are 10.0 percent higher than the 4.20 million-unit level in April 2011.

Mortgage rates at historic lows

Seller's market returning

Here's an interesting quote from USA Today:
"The dwindling inventories (of homes for sale) - driven by a mix of reluctant sellers, fewer foreclosure resales and rising demand - are spreading as the housing market gains strength. The number of homes for sale in April hit a 6.6-month supply, down from 9.1 months a year ago, the National Association of Realtors says. A six-month supply is considered a healthy market.

"Some markets have fallen below that. Last month, nine of 18 leading markets tracked by real estate brokerage Redfin had less than a three-month supply. That means it would have taken three months to sell all of the listed homes at April's sales pace."

Home affordability at record highs

Seldom has home affordability been as high as it is today. With low mortgage rates and low prices, homeowner affordability continues to hit record levels, reaching another high for the first quarter of 2012, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index.

During the previous record-breaking 2011 fourth quarter, 75.9 percent of homes sold were affordable to median-income earners. For this most recent quarter, data showed 77.5 percent of all new and existing homes sold were affordable to families earning the national median income of $65,000.

The key reason for the high level of affordability is that home prices nationwide are off about 36 percent from their peak. Median income has risen by about 10 percent. And mortgage rates are below 4 percent.

Home values rising

National home values rose for the second month in a row in April, climbing 0.7 percent from March according to the Zillow Real Estate Market Reports. This is the largest monthly increase in home values since January 2006, when they rose 0.8 percent.

The National Association of Realtors reports that the median price of an existing home in April climbed 10.1 percent to $177,400 from $161,100 in April 2011, the strongest year-to-year gain since January 2006. The median price in April reached its highest level since July 2010 when it was $182,100.

Changing profile of the future home

Evolving trends will result in some dramatic changes in the design and features incorporated in future new homes. Most significant changes include smaller sized homes generally, more "green" elements and high-tech capabilities, larger great rooms, higher ceilings, inclusion of an office or special-interest room, and more fireplaces.

A survey of leading housing professionals by the National Association of Home Builders revealed an insightful preview of the new home in year 2015.

"When building professionals were asked to rate the probability of five broad trends taking hold over the next few years, two trends stand out as the most probable to occur: the single-family home will get smaller and it will have more green features," the NAHB survey report stated.

The mortgage delinquency rate is dropping

The national mortgage delinquency rate is at its lowest level since the first quarter of 2009, according to a report from TransUnion. Delinquencies finally dropped during the past quarter after two consecutive quarterly increases.

"The national delinquency rate, which includes borrowers 60 or more days past due, is 5.78 percent for the first quarter of 2012, a quarterly and yearly drop when the rates were 6.01 percent and 6.19 percent," the report stated.