3 Bedrm house
Home prices are low, but their rate of decline is generally slowing. In some markets, prices have stabilized or are rising. Home sales activity is slowly rising. Mortgage rates are remaining at historic low levels. Certain incentives, such as the tax credit for first-time buyers, are working.
“Low mortgage rates are helping to support the housing market,” said Frank Nothaft, chief economist for Freddie Mac. “The 30-year fixed-rate mortgage rate peaked this year over the week of June 11 and is now at about a quarter of a percentage point lower. This has led to a 7.2 percent increase in conventional mortgage applications for home purchases, according to the Mortgage Bankers Association.
“The decline in house prices is moderating. Home values fell at a monthly rate of 0.6 percent in April, representing the smallest decrease since June of last year. Home prices rose in eight of the cities in April,” Nothaft said.
Positive news was also reflected in the results of a survey taken by the firm Leading Real Estate Companies of the World. It revealed that more than 63 percent of brokers indicated the mood of consumers has improved since the beginning of this year.
Market activity, including open-house attendance, property showings and Web site traffic, is much more favorable as compared with this time last year, according to 68 percent of the survey respondents. The majority of activity is in the first-time homebuyer market. The second most active group is move-up homebuyers, followed by real estate investors.
Low home prices are the primary driver of current activity, according to 72 percent of respondents. The federal first-time homebuyer tax credit and low mortgage interest rates are also determining factors for many, it was noted by 63 percent of brokers responding.
Another indication of market improvement is the increasing home sales in many areas. Rising sales were reported in May for the fourth straight month — for the first time in nearly five years — according to the National Association of Realtors. NAR’s Housing Affordability Index is at near-historic highs.
Q: What is the government doing to help homeowners avoid foreclosures?
A: Among other things, the administration’s Home Affordability Refinance Program has been expanded, making refinance mortgages available to homeowners whose current loan balance is up to 125 percent of the home’s market value. Shaun Donovan, secretary of the Department of Housing and Urban Development announced the new parameters.
“I believe this will make a critical difference in our ability to help many more Americans stay in their homes,” he said.
Originally, the refinance program applied to a borrower whose mortgage, owned or guaranteed by Fannie Mae or Freddie Mac, did not exceed 105 percent loan-to-value. The expansion to 125 percent should broaden the program’s reach to deeply underwater borrowers.
