Home Prices Recover to Near PreCrisis Levels

first_img July 24, 2015 560 Views Source: FHFAEarlier this month, Fannie Mae’s June 2015 National Housing Survey found that consumer attitudes toward the current condition of the home selling market and future home rental prices may launch purchase activity forward for the rest of 2015.  Optimism among consumers about the housing market has reached new survey highs and strong job and income growth are making consumers appear more favorable in the selling market, indicating a possible increase in the existing home supply.According to the survey, an increase in housing supply from sellers along with higher rental cost expectations, may motivate more potential homebuyers to purchase. Among those questioned, 52 percent believe that now is a good time to sell a home, an increase of three percentage points, a new survey high, and the first time in history this number has surpassed the 50-percent threshold. Simultaneously, 59 percent of those surveyed said they expect rental prices to go up in the next 12 months, an increase of 4 percent and also a new survey high. Tying a survey low, 63 percent of respondents say that now is a good time to buy a home.“Our June survey results show the positive impact on housing of job and income growth,” said Doug Duncan, SVP and chief economist at Fannie Mae. “The expectation of higher rents is a natural outgrowth of increasing household formation by newly employed individuals putting upward pressure on rental rates. A complementary rise in the good time to sell measure suggests that limited inventory, which is putting upward pressure on house prices, gives an increasing advantage to sellers. Together, these results point to a healthier home purchase market, with more renters likely to find owning to be more cost-effective than renting and more sellers likely to put their homes on the market.” Home Prices Recover to Near Pre-Crisis Levels Share The Federal Housing Finance Agency (FHFA) recently determined that the U.S. Purchase-only House Price Index has recovered to pre-crisis levels recorded in April 2006, leaving the national index of house prices just 1.8 percent below the peak level of May 2007.The Mortgage Bankers Association (MBA) showed this rising change of home prices in a chart the organization released on Friday.Industry reports have also revealed that other major house price indexes have also recently closed to within 10 percent of their respective peak price levels, the MBA says.”According to FHFA’s purchase-only regional indexes, the recovery has varied around the country,” MBA said. “Relative to the peak, the regional prices indexes range from 11 percent higher in the West South Central region, to 12.7 percent lower in the Pacific region. Continued increases in prices should reduce the number of households with negative equity, and increase mobility as it improves homeowner’s confidence and ability to “move up.” While affordability is a concern, in many places house prices have not yet recovered to their 2007 levels, while wages and salaries are now 16 percent higher according to the Employment Cost Index.”The MBA says that another potential market impact is that increasing prices could lead to the first post-crisis change in the conforming limit. in Daily Dose, Data, Featured, News Federal Housing and Finance Agency Mortgage Bankers Association U.S. Purchase-only House Price Index 2015-07-24 Staff Writerlast_img