News/Blog

New and Existing Home Sales Jump – Best in Several Years:

resaleEXISTING HOMES:
The National Association of Realtors said that December sales of previously-owned homes were up 12.8% from a year ago. That brought full-year sales to 4.65 million, up 9% from 2011 and the best year for home sales since 2007, when there were 5 million homes sold just before the start of the recession.

The improved demand for homes in December led to the inventory of homes for sale to fall to 1.82 million homes on the market, the lowest supply since January 2001. The tighter supply, and the drop in distressed sales, have helped to lift home prices so that the median sales price for the year rose to $176,600, up 6.3% from 2011. That’s the biggest gain in prices in since the bubble year of 2005.

Realtors are predicting strong sales should continue into 2013 and beyond. It has a forecast for 5.1 million existing home sales this year, and 5.4 million next year.

NEW HOMES:
The Commerce Department said than New U.S. single-family home sales hit a seasonally adjusted 369,000-unit annual rate.

The median price for a new home rose to $248,900 in December from $245,600 in November, according to figures that are not adjusted for seasonal swings. Rising prices are seen as a sign of improving health in the housing market.

Economists think home building added to economic growth last year for the first time since 2005. Friday’s report showed 367,000 new homes were sold last year, the most since 2009.

New housing starts reach the best in over 4 years

The rebound in U.S. home building accelerated in December, capping the best year for the industry since 2008 and adding to signs that residential real estate is contributing to economic growth.

According to Commerce Department data, New Home Starts climbed 12.1 percent last month to a 954,000 annual rate, which exceeded all forecasts of economists. Spurred by record-low mortgage rates, home construction will probably keep making headway in 2013 as it recovers from the worst slump since the Great Depression.

Housing starts remain short of the 2.07 million in 2005 at the peak of the boom, which was three-decade high. They averaged 1.74 million a year from 2000 through 2004. All four regions of the country showed a gain in starts last month, led by a 24.7 percent surge in the Midwest. Construction of single-family houses climbed 8.1 percent in December from the prior month, to the highest level since June 2008. Work on multifamily homes jumped 20.3 percent.

With economic growth starting to pick up in 2013, so will mortgage rates

Home prices are now rising at their fastest pace since 2005. Housing bulls are running again, pointing to rising construction starts, rising home sales and falling mortgage delinquencies.“Low prevailing mortgage rates, the limited supply of existing homes for sale (either due to the few foreclosure completions or the number of underwater borrowers who cannot sell), and the anemic levels of new home construction are facilitating affordability and feeding demand,” noted analysts at Fitch Ratings. “These factors are offsetting weak fundamentals that would otherwise hinder home price growth, such as high structural unemployment and lackluster wage growth. With economic growth starting to pick up in 2013, so will mortgage rates.Mortgage rates directly correlate with economic growth. As the economy grows, so will rates. But is that a bad thing for housing? Actually, its not. Historically, when mortgage rates start to trend upward, purchasers finally “get off the fence” and pull the trigger on that next home particularly with home prices rising. Plus, the uptick in mortgage rates that results from a growing economy will still be relatively low compared to other periods when the housing market flourished. It will certainly dampen the activity of mortgage refinance in Nebraska, but will spur purchase activity.

“Paid Off” homes point the way to next round of housing demand:

We are all too familiar with the constant media reports that state that approximately one third of home owners are “upside down” or “underwater” on their mortgage. This is when they owe more on their mortgage than what their home is worth. As home prices have been steadily increasing, these people are less “underwater” than a year ago but they are still essentially stuck in their current home. But a new report by Zillow shows that one third of all homes are owned with no mortgage at all. Demographics, home prices and geographical location all seem to play into non-mortgaged home ownership, according to Zillow’s survey. Obviously, the longer someone owns a home, the more likely they are to have paid off a mortgage. When looking at non-mortgaged ownership rates as a percentage of homeowners in various age groups, however, Zillow found 34.5 percent of 20- to 24-year-old homeowners have no house mortgage. This represents an upwardly mobile block of homeowners that can sell their homes and purchase a new one.