On Thursday, the National Association of Realtors (NAR) said its seasonally adjusted index for pending sales of existing homes rose to a reading of 106 in April, up 10.3 percent from a year earlier. “The housing market continues to squeak out gains from already very positive conditions,” said Lawrence Yun, the group’s chief economist.
Economists view pending home sales as a measure of signed contracts to purchase homes. The data suggests that the U.S. housing market is continuing to recover. The first quarter of 2013 was also a bullish period for the real estate industry.
According to the Home Price Index, a monthly housing metric from the Federal Home Finance Agency (FHFA), U.S. property values climbed by close to two percent between January and March of this year. Q1 2013 marks the seventh consecutive quarter of growth. Home values increased by 7 percent nationwide compared to the same period last year.
“Housing continued to rebound, with housing starts recording a 27 percent gain for the year while new home sales rose 20 percent from 2011,” the NAR stated on its website. “Existing home sales grew by 9 percent during the year, with shrinking inventories driving up prices of existing homes.”
The West Coast is seeing the biggest gains. California is the hottest regional market in this recent resurgence. According to a report by the Wall Street Journal, the number of homes sold in recent months that had been flipped has reached the highest levels since late 2005.
Real estate agents, who make their commissions on transactions, are happy to see the higher turnarounds in home ownership. Cal-American Corporation, which invests and manages commercial and residential properties throughout the state, is seeing favorable opportunities in their business. “We were named in the Inc. 500, and I personally was named as one of the top 30 realtors under 30 years old in the country,” says Jessie Rodriguez, a licensed realtor in San Bernardino County.
Additionally, real estate firms such as Cal-American are seeing declines in foreclosed homes on the market. Of the previously owned homes sold in April, only 13.5 percent were foreclosures. In April 2012, foreclosed properties represented 30.3 percent of sales.
“Commercial real estate recorded a year of growth and expansion,” according to NAR. “Fundamentals strengthened throughout the year, with declining vacancies and rising rents. The apartment sector was the bright star, as office and industrial spaces found favorable conditions. With a strengthening foundation, investment sales found a higher ledge on their climb from the depths of the 2008-09 Great Recession.”
The Home Price Index tracks the change in a given home’s value between subsequent sales. The index is benchmarked to a value of 100, which is meant to represent the U.S. housing market as it existed in 1991.
“In March 2013 — for the first time since February 2009 — the Home Price Index topped 199. More important, though, is that the Home Price Index has climbed for 14 straight months, which suggests that the U.S. housing recovery is a little more permanent than economists originally believed,” according to the Mortgage Reports.
In the current market, buyer demand is strong. Entrepreneurs are “flipping” more houses (buying and selling a home in less than six months). Mortgage rates also remain favorable.
The Federal Reserve’s bank prime loan remained at 3.25 percent. “While [higher rates] may slow some of the refinance momentum, rates are nonetheless low and home-buyer affordability high, which should further aid home sales and construction in coming weeks,” Frank E. Nothaft, Freddie Mac vice president and chief economist, said earlier this week.
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