Economy Watch: Home Prices Have Found a Floor, NAR Asserts
- Aug 13, 2010
The latest quarterly survey by the National Association of Realtors asserts “broad stabilization” during the second quarter for metro-area housing prices in most parts of the country. In the second quarter, 100 out of 155 metropolitan areas had higher median existing single-family home prices compared with the second quarter of 2009, including 14 with double-digit increases; two were unchanged and 53 metros showed price declines.
Currently, the national median price for an existing single-family home is $176,900, That represents an increase of 1.5 percent since the second quarter of 2009 but a considerable decrease since the bubble-top median price, which was $217,900 in 2007. In the for-sale multifamily housing sector, metro-area condominium and cooperative -prices were relatively flat at $175,700 during the second quarter, according to NAR, up 0.5 percent since this time last year.
Lawrence Yun, NAR’s chief economist, posits that housing prices found a floor in 2009 (or maybe a basement): “All year we’ve been seeing relatively flat national home prices, which appear to be supported by market fundamentals,” he said in a statement on Thursday. “Prices in some areas remain below replacement construction costs, so even with an elevated supply of existing homes on the market we don’t expect any consequential movement in home prices for the foreseeable future. Very low inventory of newly built homes also will help to support home values.”
Low Rates, More Mortgage Refi
The Mortgage Bankers Association’s latest weekly survey reports that mortgage loan application volume increased for the week ending August 6, but barely. MBA’s market composite index, which measures mortgage loan application volume, increased 0.6 percent on a seasonally adjusted basis from the week ending July 30.
With mortgage rates doing the limbo–how low can you go?–whatever life is in the residential mortgage market is because of historically low rates. According to the MBA, the average interest rate for 30-year fixed-rate mortgages decreased to 4.57 percent from 4.6 percent the previous week, the lowest 30-year rate ever recorded by the survey. Some homeowners are reportedly able to bag rates closer to 4 percent.
The applications survey also noted that average interest rates for 15-year fixed-rate mortgages decreased to 3.95 percent from 4.03 percent. This, too, was the lowest 15-year rate ever recorded in the survey. The takeaway for mortgage holders: if you can do it, do it.
Jobless Numbers Edge Upward
Headline writers had a good day on Thursday, with some noting that unemployment filings “spiked” for the week ending Aug. 7. Initial jobless claims rose by 2,000 to 484,000 for the week—more than expected and in fact the highest level since February 2010.
Even though GM reported a profit in its most recent quarter—a turn of events that would have seemed miraculous not so long ago–the jobs data seemed to weigh heavily on Wall Street on Thursday, with the Dow Jones Industrial Average down 58.88 points, or 0.57 percent. The S&P 500 lost 0.54 percent and the Nasdaq declined 0.83 percent.