RATES STAY LOW AS HOME PRICES ARE UP

Home PricesIt’s been a busy summer for homebuyers. The National Association of REALTORS® reported that its pending home sales index climbed 6.1 percent in May—the biggest advance since April 2010. The gain exceeded even the most optimistic estimates in a Bloomberg survey of 37 economists, whose median forecast called for a mere 1.5 percent gain.

“Housing is beginning to bounce back,” says Paul Ashworth, chief U.S. economist at Capital Economics Ltd. “Mortgage rates have backed down a bit recently. Home prices are still rising, which means fewer people have mortgages that are under water. The longer the housing recovery goes on, the more people will gain confidence to join in.”

However, other figures have been less optimistic. Sales of brand new homes unexpectedly declined in June, and are down nearly 12 percent from June 2013, according to figures from the Commerce Department. Housing Starts and Building Permits, a sign of future construction, were also below expectations in June. Will this fall bring a hot housing market, or will the sector cool along with the temperatures?

Low RatesHome Prices on the Rise A monthly report from research firm CoreLogic showed prices nationally, including distressed sales, were up 8.8 percent in May when compared to May of last year. Prices increased the most in western states, including Hawaii, California and Nevada. While home values are still increasing, they are doing so at a much more normal pace than their swift and unprecedented gains last year.

Indeed, in early July, the S&P/Case-Shiller Index showed property values increased 10.8 percent in April from April of last year, with steady month-over-month gains in 2014. Home-improvement retailers and many others reliant on the housing industry are sure to be watching upcoming reports closely, so they can evaluate what the figures portend.

The Bottom Line Home loan rates remain at some of their lowest levels in months. If you would like to inquire about housing and home loans, please don’t hesitate to contact me.

This article was taken from my August 2014 issue of YOU Magazine. Click here to view the full newsletter.

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