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New Housing Data Reaffirms a Strengthening Market

Phil Hall
Feb 10, 2016
The calendar might tell us that today is the somber Ash Wednesday observance, but there was still a bit of Mardi Gras-level felicity to be found in today’s housing market data

The calendar might tell us that today is the somber Ash Wednesday observance, but there was still a bit of Mardi Gras-level felicity to be found in today’s housing market data.

The National Association of Realtors (NAR) determined that an average of 89 percent of measured metro areas saw increasing home prices during 2015, an increase from 83 percent in 2014 and 88 percent in 2013. The national median existing single-family home price in the fourth quarter of 2014 was $222,700, up 6.9 percent the $208,400 of a year earlier. The national median existing single-family home price in the fourth quarter was $222,700, up 6.9 percent from the fourth quarter of 2014 ($208,400). And while total existing-home sales declined 5.4 percent to a seasonally adjusted annual rate of 5.18 million in the fourth quarter, it was still 2.4 percent higher than the fourth quarter of 2014. 

NAR also reported that the median existing single-family home price increased in 81 percent of nearly 1,800 measured markets in a year-over-year measurement, while only 34 areas (19 percent) recorded lower median prices from a year earlier.

“Even with slightly cooling demand, the unshakeable trend of inadequate supply in relation to the overall pool of prospective buyers inflicted upward pressure on home prices in several metro areas,” said Lawrence Yun, NAR chief economist “As a result, homeownership continues to be out of reach for a number of qualified buyers in the top job producing, but costliest, parts of the country–especially on the West Coast and parts of the South.”

But Yun warned that housing affordability will remain an elusive concept into 2016. “Without a significant ramp-up in new home construction and more homeowners listing their homes for sale, buyers are likely to see little relief in the form of slowing price growth in the months ahead,” he said. 

Separately, the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending Feb. 5 determined that the Market Composite Index increased 9.3 percent on a seasonally adjusted basis and 12 percent on an unadjusted basis compared with the previous week. The seasonally adjusted Purchase Index increased 0.2 percent from one week earlier, while the unadjusted Purchase Index increased seven percent compared with the previous week and was 25 percent higher than the same week one year ago. The Refinance Index increased 16 percent from the previous week, and the refinance share of mortgage activity increased to 61.2 percent of total applications from 59.2 percent the previous week.

The government loan programs saw little positive momentum: The FHA share of total applications decreased to 12.3 percent from 12.9 percent the week prior, while the VA share of total applications remained unchanged at 11.1 percent and the USDA share of total applications decreased to 0.6 percent from 0.7 percent the week prior.

In other data news, Quicken Loans reported that average home appraisal values in January were 1.75 percent lower than what homeowners were anticipating, according to the company’s Home Price Perception Index (HPPI). January was the fifth month that Quicken Loans’ HPPI moved closer to some degree of equilibrium, although homeowners and appraisers in many metro areas still had very different ideas of valuation.

Quicken Loans’ National Home Value Index (HVI) determined that values decreased 0.42 percent from December to January, although year-over-year growth increased 3.37 percent.

“It’s always important to understand your local real estate market,” said Quicken Loans Chief Economist Bob Walters. “If home values are growing in the area, homes may be gaining equity faster than consumers realize. On the other hand, if the local market is struggling, the appraisers–who are most aware of home value changes–may recognize this before homeowners come to terms with reality.”

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