|
|
Home Prices Show Strong Quarterly Gain
Home prices rose 6.9 percent in the second quarter, according to the Case-Shiller National Home Price Index compiled by Standard & Poor’s, the strongest quarter-over-quarter gain since the index began in 1987.
According to S&P, the monthly 10- and 20-city index rose 2.2 percent and 2.3 percent respectively in June. The two indexes were up 0.1 percent and 0.5 percent respectively in the last year, the first year-year gains in the monthly measures since September (20-year) and October (10-year) 2010.
The 10-city index rose to its highest level since September 2011 and the 20-city index to its highest level since August 2011.
Economists had expected the 20-city index to grow 1.4 percent in June and be flat year-over-year.
According to the National Association of Realtors, the median price of a single family home rose 4.7 percent in June while the government report from the Census Bureau and HUD showed the median price of a new home fell 3.4 percent in that month.
Year-over-year, the median price of an existing single family home was up 7.5 percent in June, according to the NAR as did the median price of a new home.
Meanwhile, Zillow’s July Real Estate Markets Reports show that home values increased 0.5 percent from June to July, marking another month of healthy monthly appreciation. Inventory shortages are being fueled by negative equity and a slowed distribution of REOs. More on inventory in our next story…
.
.T
Home Inventories Continue Falling
Record low home inventories (homes for sale) which are boosting home values and prices but depressing sales, show no signs of letting up. Though decline is normal this time of year, inventories stubbornly remain at decades-low levels.
The National Association of Realtors reported that the total housing inventory at the end July increased 1.3 percent to 2.40 million existing homes available for sale, which represents a 6.4-month supply at the current sales pace, down from a 6.5-month supply in June.
NAR’s chief economist, Lawrence Yun, said “given population and demographic demand, existing-home sales could be in a normal range of 5 to 5.5 million if all conditions were optimal. Sales may reach 5 million next year, but it will require more sensible lending standards and stronger job creation to push beyond that.”
Yun said there are distortions in housing inventory. “The total supply of housing inventory appears to be balanced in historic terms, but there are notable shortages in the lower price ranges which are limiting opportunities for first-time buyers. The low price ranges also are popular with investors, so entry-level buyers are at a disadvantage because many investors are making all-cash offers.”
.
.
Home Ownership at Lowest Rate in Nearly 50 Years
It seems fewer and fewer people are sharing in the American dream these days, whether by choice or circumstance.
A report released recently from John Burns Real Estate Consulting revealed that the “real” homeownership rate—measured as the percentage of households that own a home and are not seriously delinquent on their mortgage—has fallen to 62.1 percent, the lowest level in almost half a century.
The firm said that the Census Bureau’s 65.5 percent homeownership estimate was a vast overestimate, as it includes 3.8 million homeowners who are 90 or more days delinquent.
While the government and various lenders have taken steps to help struggling homeowners, John Burns Real Estate forecasted that those people are “really just renters in waiting.”
The spread between published and real homeownership rates has historically stayed slightly below 1.0 percentage point. That spread has widened in recent years for several reasons, including the economic downturn and the growing number of borrowers who have figured out how to keep their homes for an extended period without paying.
While the firm remains confident in the shared dream of homeownership, writer and John Burns Real Estate manager Sean Fergus said it’s time to face facts. He wrote, “let’s stop pretending that 65.5 percent of Americans own their own, recognize that the real number is 62.1 percent, and move forward with responsible mortgage programs that allow Americans to achieve the American dream.”
