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Less Mortgage Credit, More Home Sale Price Gains

Phil Hall
Feb 05, 2016
The latest housing market data finds a slight drop in mortgage credit availability and a handsome price gain for home sellers

The latest housing market data finds a slight drop in mortgage credit availability and a handsome price gain for home sellers.

The Mortgage Bankers Association (MBA) reported that its’ Mortgage Credit Availability Index (MCAI) dropped by a slight 0.4 percent to 123.8 in January. Two of the four MCAI component indices saw a decline—the Conforming MCAI was down 1.5 percent and the Government MCAI slipped by 0.8 percent—while the Jumbo MCAI upticked by a scant 0.2 percent and the Conventional MCAI was unchanged.

“Credit availability decreased over the month, driven by a decline in some FHA and conventional offerings as compared to the previous month,” said Lynn Fisher, MBA’s vice president of research and economics. “These declines in the MCAI were only partially offset by loosening among adjustable rate mortgage and jumbo lending programs."

Separately, RealtyTrac announced that home sellers enjoyed an average price gain since purchase of 11 percent ($20,378) last year, which is the biggest average price gain since 2007.

As part of its Year-End 2015 U.S. Home Sales Report, RealtyTrac also found that the top three counties experiencing the largest price gains were in California’s Bay Area: San Mateo County in the San Francisco metro area (65 percent average home price gains for home sellers); Alameda County, also in the San Francisco metro area (64 percent average gain); and Santa Clara County in the neighboring San Jose metro area (63 percent average gain).

Furthermore, RealtyTrac determined that the median home price at the end of 2015 was $206,500, up 10 percent from a year earlier. Among 87 major metropolitan statistical areas analyzed for this data, 79 (91 percent) posted a year-over-year increase in median home price at the end of last year. As for the other eight markets, Houston was the only market with a population of at least one million to post a year-over-year decrease (down two percent); Bridgeport, Conn., had the largest metro area drop, with an eight percent year-over-year decline.

“With some local market exceptions, the 2015 home sales data paints the picture of a properly functioning U.S. housing market where homeowners can once again count on real estate as an appreciating asset—a long-touted axiom soundly debunked as ironclad truth between 2008 and 2013,” said Daren Blomquist, vice president at RealtyTrac. “This return to consistent home price gains for sellers should reinforce confidence in real estate in 2016 and produce another year of solid sales volume as homeowners cash out their equity gains.”

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