Week after week, the economic signs pointing to a recovery underway in the home real estate market just get stronger.
Now that’s not to say everything is improving in the economy overall, or even in housing for that matter. We all know that hundreds of thousands of jobs are still being lost every month across the U.S., and Federal Reserve Board chairman Ben Bernanke says the unemployment rate is likely to rise a little more before the economy digs itself out of recession later this year.
But for housing, most of the key indicators continue to point up. Here’s a quick rundown:
Pending home sales took a 3.2 percent jump last month — the second straight month of positive growth. These are signed home sale contracts that haven’t yet gone to closing, but are scheduled to do so in the next 60 to 90 days.
Lawrence Yun, chief economist for the National Association of Realtors, said we’re now at “the leading edge of first time buyers responding to very favorable affordability conditions, and an $8,000 tax credit.”
Mortgage applications for future home purchases also surged again, up five percent nationwide last month, according to the Mortgage Bankers Association. Rates are firming up in response to the rising demand for mortgage money. They rose last week on average to 4.8 percent for 30 year fixed rate loans and 4.6 percent for 15 year mortgages.
Those rates are still close to all-time record lows, but with more people jumping into the home buying market, they could easily go back over the five percent level in the coming weeks, say economists.
The affordability index also continues to hover near its all time best. According to the National Association of Home Builders, the median income American family, earning $61,000 a year, can now afford to buy a $290,000 home with a 20 percent downpayment, assuming 25 percent of gross income is devoted to mortgage principal and interest, thanks to low financing rates.
The median priced home meanwhile goes for about $175,000.
Equally important, consumer psychology is turning positive on housing, something potentially huge for anyone looking to sell property. When the Gallup polling organization asked a national sample of Americans last month whether this is a “good time to buy a house,” 71 percent said “yes.” That’s an increase of 18 percent in a year, and the highest level in four years.
May 12, 2009; by Kenneth R. Harney