Housing market reports released last week showed that prices and sales are up from a year ago. The Standard & Poor's Case-Shiller Home Price Index showed a 2.3% increase in prices for March on a year-over-year basis, and the National Association of Realtors said sales of previously owned homes rose 7.6% from March to April - a five-month high - and were up 22.8% from April 2009.
The median existing single-family home price was $173,400 in April, up 4.5% from a year ago.
Government-incentive programs offering tax credits to buyers have helped bolster the U.S. housing market in recent months. First time homebuyers were eligible for an $8,000 tax credit if they signed a contract by April 30.
Mortgage rates continued to fall, increasing affordability. Interest rates for 30-year fixed-rate mortgages averaged 4.78% for the week ended May 27, nearing a record low previously hit in December.
Stabilizing home prices have boosted consumer confidence, luring previously uncertain buyers into the market.
"A majority of the markets have seen price gains recently," said Lawrence Yun, chief economist at the National Association of Realtors. "A return to old-fashioned responsible lending and buying will help the housing market avoid disruptive and painful bubble-bust cycles."
But enough troubling data exists to show that there are still some significant hurdles to clear. For instance:
- Home prices for the March quarter though up from a year ago, were actually down 3.2% from the previous quarter.
- The inventory of unsold housing actually expanded last month.
- As many as 2 million homes have mortgage payments 90 days or more late, meaning they could be the next to join the "shadow inventory" of homes in the foreclosure process.
- And the government-assistance program has ended.
"The housing market may be in better shape than this time last year; but, when you look at recent trends there are signs of some renewed weakening in home prices," said David Blitzer, chairman of Standard & Poor's index committee.
And some worry that the foreclosures yet to come will continue to prevent a price climb.
"We've seen price improvement in some local markets, but on a national basis prices still haven't hit bottom," Patrick Newport, an economist with IHS Global Insight, told Bloomberg.
While buyers have had chances to snag the house buying deal of a lifetime, some homeowners still risk losing money or defaulting on their mortgages.
That brings us to next week's Money Morning Question of the Week: Do you feel better or worse about the U.S. housing market? Have you tried to sell or buy a home in the past year? Are you more or less likely to try and buy or sell a home today, and if so, what might you do differently today than you would have before the financial crisis started? Have you noticed any new or unique real-estate trends in your community?
Send your thoughts, questions and concerns to [email protected].
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News and Related Story Links:
- Bloomberg:
Home Prices Decline 3.1% in First Quarter, FHFA Says - Bloomberg:
Home Prices in U.S. Cities Rise Less Than Forecast - Money Morning:
Surge in Strategic Defaults Threatens Housing Market Recovery - Money Morning News Archive:
Question of the Week Feature