Housing Stats Improve as Mortgage Rates Remain Attractive

The housing crisis was an eye opener for everyone and showed how much of an influence this sector has on the economy. As time has passed, a recovery, although slow, has been occurring and is expected to lead the way for economic growth. The recent bundle of housing statistics shows that these improvements to the housing market are happening as mortgage rates remain attractive to consumers.

Starting with Builder Confidence, the National Association of Home Builder's/Wells Fargo Housing Market Index showed an increase of one point to 41 which is the strongest report since June of 2006. This was the sixth straight month of increases and provides evidence of growing confidence amongst builders in regards to new single family homes.

For the month of September, Existing Home Sales dropped 1.7%, but this was still 11% higher than a year ago. During the same time, Housing Inventory also decreased by 3.3% and represents a supply for approximately 5.9 months. Inventory is currently at the lowest level since March, 2006. Low inventory is leading to higher home prices and increased Builder Confidence as the need for newly built homes increases. As many consumers have been able to refinance and lower their mortgage payments through HARP 2.0 and the FHA streamline refinance, there are fewer homes available which is contributing to lower inventory. These programs have helped to prevent strategic defaults while, at the same time, put more money back into the hands of consumers for spending as they see fit. Both programs are designed to help borrowers who have loans from prior to June 1, 2009. In addition, these borrowers who are underwater are less likely to sell their homes until there is a growth of equity in their property.

Sales of new single family home increased 5.7% in September, according to the U.S. Census Bureau and the Department of Housing and Urban Development. August numbers were revised to show a decrease from 373,000 units to 368,000. However, September reflects a 27.1% increase for new home sales from September of 2011.

With low inventory in place, Housing Starts for September increased to an annual rate of 872,000 which was a 15% increase from August and way above predictions of 770,000. This was the third straight month of increases and the highest annual rate in more than four years. Building Permits, which measure future activity, rose 11.6% in September and was 45.1% high than a year ago.

Low mortgage rates have created a boom in mortgage refinances throughout the country. While consumers have become more confident in the economy, many are staying put, especially those who have refinanced to better loan terms. For the housing market, these circumstances are creating the low inventory which is slowly pushing prices higher. While this may be good news for sellers, builders and current homeowners who need the equity, it can become a problem for potential home buyers who may find themselves pushed out of the market.

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