Story URL: http://news.medill.northwestern.edu/chicago/news.aspx?id=205926
Story Retrieval Date: 10/22/2014 1:25:54 AM CST
U.S. Census Bureau/ MEDILL/ Aimee Yuyi Chen
Sales of new-built homes in the U.S. increased in April, while house prices rose in the first quarter of 2012.
According to the U.S. Census Bureau, new single-family home sales in April rose 3.3 percent to a seasonally adjusted annual rate of 343,000, compared with the revised March rate of 332,000. It is also 9.9 percent higher than the April 2011 estimate of 312,000.
The rising home sales show the “first concrete indications that the U.S. home market has turned a corner,” said John Tashjian, principal of Centurion Real Estate Partners in New York.
“It started on a path towards stability with growth coming next year,” Tashjian added.
However, Ivan Choi, a senior vice president at Matt Martin Real Estate Management LLC in Austin, Texas, expressed a conservative perspective.
“We still have an ‘overhang’ of delinquent loans and properties that are in foreclosure that have yet to appear on the market,” Choi said in an e-mail. “Our housing finance system is still weak, with the government essentially propping it up. Until these situations improve, along with unemployment, it’ll be hard to get to a housing market that is truly vibrant and full of life.”
The April median price of new homes sold was $235,700 while the average sales price was $282,600.
Meanwhile, the Mortgage Bankers Association reported that its Market Index, which measures mortgage applications, increased 3.8 percent in the week ended May 18.
According to the association’s weekly survey, which covered more than 75 percent of all U.S. mortgage applications, the Refinance Index increased 5.6 percent from the previous week, making the third consecutive weekly increase and reaching the highest level since Feb. 10.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $417,500 or less reached a historic low of 3.93 percent. The rate for loan balances greater than $417,500 climbed to 4.25 percent.
The low interest rates are important factors that contributed to the raising home sales, Choi said.
“Unbelievably low interest rates definitely help the housing market. Paired with low house prices, it’s a winning combo,” Choi noted. “Having said that, access to mortgage credit is still tough. If access improves, the housing market will have a good boost.”
The four-week moving average of the seasonally adjusted Market Index climbed 3.72 percent and the Refinance Index was up 4.83 percent in the four-week period ended May 18.
According to the Federal Housing Finance Agency, U.S. house prices in the first quarter of 2012 rose 0.6 percent from the December quarter, and 0.5 percent from the year-earlier quarter.
During the spring buying season, said Gary Benson, president of Garrison Partners Inc., a Chicago-based real estate company, larger single-family homes are selling fast, thus home prices are going up.
“You have to recognize that the February, March and April numbers typically can represent 40 to 45 percent of the annual absorption,” he explained. “Families are usually looking to purchase in the spring so they can move their children and family in the summer and adjust to the new neighborhood or what not.”
“The larger single-family home market is probably the strongest in the spring selling season,” he added.
Illinois home sales totaled 9,961 in April, up 15.7 percent from 8,606 in April last year, the Illinois Association of Realtors said Tuesday.
The April statewide median price was $135,000, up $5,000 from the March figure. It was the third consecutive month of median price increases in Illinois.
Although many reports show positive signs in the real estate market, Choi said homebuyers will not see many major changes in the market for the remainder of 2012.
“The foreclosure backlog, employment situation, Fed involvement in mortgage credit, continued uncertainty in real estate and mortgage… These are not small problems,” he said in his email.