Spring is officially here. The warmer season will hopefully bring a much-needed warm-up to the housing market, which suffered from the harsh winter weather.
Weather, tight credit, and higher home prices were the cause for stagnant housing in recent months, according to the National Association of REALTORS® (NAR). February Existing Home Sales fell by 0.4 percent from January to 4.60 million units on an annualized basis. While this figure was in line with estimates, it was still 7.1 percent less than the number of Existing Home Sales registered one year ago.
Weather was also blamed for lower-than-expected Housing Starts in February, reported at 907,000. Housing Starts have been declining since November's annual rate of 1.101 million—the highest since 2008. However, Building Permits, a sign of future construction, increased by 7.5 percent in February to 1.018 million, well above expectations.
Better readings are anticipated in future housing reports, as the weather becomes milder around the nation.
Housing Out of Reach for First-timers?
It seems first-time homebuyers are being squeezed out of the market due to rising home prices and tighter lending requirements.
First-timers accounted for 26 percent of purchases in January, down from 30 percent a year earlier, according to the NAR. This figure is the lowest the NAR has recorded since it began monthly measurements in October 2008, according to Bloomberg.
Strong housing markets are indicated by robust constructions starts, new home sales and first-time homebuyer volume. A worrying trend is that there is insufficient inventory for average priced homes, with home sales over $250,000 increasing by 8.2 percent, and those under $250,000 decreasing by 10.7 percent, according to the NAR.
Prices on the Rise
U.S. home values continue to rise as buyers compete for a limited supply of properties for sale. Prices climbed 12 percent in January from a year earlier, the twenty-third consecutive gain, said Irvine, California-based CoreLogic Inc. last month.
Analysts assert that there aren't enough homes on the market, with recovery efforts since 2008's housing bubble focusing too much on the financing side, and not enough on the physical side. Conditions could improve as building permits are approved and housing starts slowly pick up the pace.
The Bottom Line
Home loan rates remain attractive compared to historical rates. If you have any questions about your personal situation or would like to inquire about housing and home loans, please don't hesitate to contact Gary Umholtz with RPM Mortgage at (707) 343-9510.