The Mortgage Corner
Builder confidence in the market for newly built, single-family homes gained one point in June from a slightly revised level in the previous month to rest at 29 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today. This is the highest level the index has attained since May of 2007.
“This month’s modest uptick in builder confidence comes on the heels of a four-point gain in May and is reflective of the continued, gradual improvement we are seeing in many individual housing markets as more buyers decide to take advantage of today’s low prices and interest rates,” said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB).
Graph: Calculated Risk
Those low interest rates are spurring South Coast existing-home sales, according to Gary Woods’ May MLS report. May marked the third month in a row that sales of homes topped 100 going up to over 130 for the Home Estate/PUD market. The median sales price also shot up to about $825,000 for the month, rising from $756,300 in April. The numbers of escrows also rose in May to about 170 from 142 in April with the median list price on those approximately 170 opened escrows going up from $789,000 in April to about $840,000 in May.
Annual South Coast sales are up from 340 to about 475, a 40 percent rise in a year while the median sales price is down a little from $810,000 last year to about $795,000 for a 2 percent drop. Even more impressive is the surge in escrows, up from 405 to about 605 for a 50 percent upswing with the median list price on those escrows going down 10 percent from $879,000 to about $800,000.
Why? It’s no secret that interest rates have dropped below 4 percent for several months now, and that makes housing all the more affordable.
Graph: Calculated Risk
But there is still a serious backlog of delinquent mortgages, according to the Federal Housing finance Authority’s Q1 report. It’s no surprise that Florida and Nevada lead the pack in delinquent loans, but the fact that New Jersey, Illinois, and New York homeowners are in difficulty is surprising. The largest backlog of foreclosures is in the states with judicial foreclosures, which can take up to one year to complete. Trust Deed states like California avoid the courts for the most part in foreclosure proceedings.
Harlan Green © 2012