As rents continue to rise, buying becomes a more and more attractive option as home affordability, or the percent of income it takes to pay the mortgage, continues to be among the most favorable in history. Trulia’s Winter 2012 Buy vs. Rent Index, which measures the relative cost of renting compared to asking prices of homes found that in 98% major metropolitan areas sampled, it was more affordable to buy than to rent.
In MillionsHome sales dipped 0.9% in February to 4.59 million units, yet are 8.8% higher from a year ago. A strengthening economy is improving consumer confidence with an increasing amount of people in the market. Additionally, as the market shows signs of improvement, more people are feeling the urgency to buy while prices and interest rates are still at some of the most affordable levels in history.
In ThousandsAfter slipping a bit at the beginning of the year, median home prices rose to $156,600, up 0.3% from a year ago. NAR President Moe Veissi said, “People realize that home ownership is an investment in their future. Given an apparent overcorrection [dropping prices as an overreaction to market conditions] in most areas, over the long term home prices have nowhere to go but up.”
Inventory- Month's Supply
In MonthsHousing inventory rose 4.3% in February to 2.43 million homes, representing a 6.4-month supply, up from 6.0 in January. There are several factors driving this increase in the inventory of homes. First, banks have settled major lawsuits regarding fraudulent foreclosure practices with state governments, which has enabled them to start moving many foreclosures off their balance sheets and into the market. Pending sales are up, and home building is starting to show signs of life again after three years of low new-housing construction.
Source: National Association of Realtors
30-year fixed mortgages continued to improve home affordability by dropping to 3.89% in February, the lowest on record since 1971. Indications are that these rates may have begun to find a bottom as well, as they have shown rising levels in Freddie Mac’s weekly index, adding to the urgency to buy a home now while these rates continue at record lows.
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