Tuesday, October 23, 2012
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| Housing Stages Weak Rebound |
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Housing stages weak rebound - USATODAY.com
Home sales kept up their recovery in July, but the market's slow progress makes some
economists question why record-low mortgage rates aren't having a bigger impact.
The National Association of Realtors said sales of
previously occupied homes rose 2.3% from June, to a
seasonally adjusted annual rate of 4.47million. That was
still the second-worst pace of the year and followed a
decline in June. A 5.5 million rate is considered healthy.
The median price of homes sold rose 9.4% from a year
ago -- the sharpest increase since January 2006 -- but
the gain may be deceptively large. The Realtors association says that higher median
prices are due to fewer sales of small, less-expensive homes.
The price gains also reflect a smaller percentage of foreclosure-related distress sales,
Moody's Analytics economist Mike Zoller said.
Distressed homes -- including foreclosures and other properties sold at steep discounts
from market value -- accounted for 24% of July sales compared with 29% a year ago.
Another reason lower-priced homes are in short supply is many owners are still in
financial distress five years into the housing bust, said Stan Humphries, chief economist
of real estate website Zillow.
Almost half of homeowners younger than 40 owe more on their homes than they are
worth, keeping cheaper homes off the market.
That skews statistics by making the Realtors' median sales price, which reached
$187,300 last month, reflect a different mix of homes than it once did.
"Appreciation will go flat once people are out of having negative equity and put their
homes on the market," Humphries said. "As people sense a recovery is afoot, they may
price their homes higher and be disappointed."
July's sales pace missed economists' expectations for an annual rate of about 4.52
million home sales, says UBS economist Drew Matus. One reason is that credit continues
to be relatively tight, as former homeowners who consented to short sales or lost homes
to foreclosure are largely unable to get loans for new properties.
Lawrence Yun, the Realtors association's chief economist, said sales could be stronger if
not for "unnecessarily tight lending standards and shrinking inventory supplies."
"Mortgage interest rates have been at record lows this year while rents have been rising
at faster rates," Yun said. "Combined, these factors are helping to unleash a pent-up
demand."
The average 30-year fixed-rate mortgage fell to a record-low 3.55% in July compared
with 4.55% in July 2011, according to Freddie Mac.
Worries about jobs also may be keeping some home buyers on the sidelines, after job
growth slipped in the second quarter, said Patrick Newport, an economist at IHS Global
Insight.
"These are not great numbers," Newport said. "We have record-low mortgage rates.
Something is going on."
Economists have predicted the housing market will begin slowly reversing its more than
30% slide in prices since the 2006 peak, though most do not expect substantial price
gains until at least 2013 or 2014.
© 2012 USA TODAY, a division of Gannett Co. Inc.
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| Posted at 11:31:01 AM |
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