In what may go down as a banner day for the housing market, three pieces of good news out today point to the possibility of a recovery on multiple fronts.
Homebuilder confidence hit a five-year high, while housing affordability -- an index based on the relationship between median home prices, median family incomes, and average mortgage interest rates -- has never been better. And, for the first time in nine years, Realtors reported an increase in year-over-year earnings.
"[The data] shows us that buyers are in a position to buy. As job markets improve, they have more to spend, and they're able to take advantage of today's housing affordability," said Jed Kolko, chief economist of listing service Trulia. "We're seeing a recovery on all fronts."
What's more, Kolko said, an uptick in price indexes like Trulia's Price Monitor
both reflect and should spur more activity. "We see that asking prices are already up year-over-year nationally, and quarter-over-quarter, almost in every metro in the country."
Builder confidence, as measured by the National Association of Home Builders' Housing Market Index, surged four points from a slight slump in April
, to 29 on a scale of 100, the NAHB reported today. The jump is based on improved buyer traffic and increased home sales, as noted by builders.
"While home building still has quite a way to go toward a fully healthy market, the fact that the HMI has returned to trend is an excellent sign that firming home values, improving employment and low mortgage rates are drawing consumers back," said NAHB chief economist David Crowe.
Crowe added that a nascent recovery would pick up pace if it weren't for banks' reluctance to ease lending standards. Indeed, many experts point to the the tight credit environment as the chief thing keeping homebuyers from capitalizing on otherwise perfect-storm buying conditions that are a result of record low mortgage interest rates
and rock-bottom home prices.
The latest Housing Affordability Index
corroborates the view that market conditions are possibly as friendly to buyers as they've ever been. The index, which measures affordability based on the relationship between median home price, median family income and average mortgage interest rates, broke the 200 mark for the first time since record keeping began in 1970, NAR announced today.
According to the NAR, the index shows that a median-income family, earning just under $61,000, could afford a home costing $325,500 in the first quarter, which is more than double the national median existing single-family home price of $158,100. The median monthly mortgage principal and interest payment for a median-priced home would take only 13.5 percent of gross income.
All this activity has Realtors breathing a sigh of relief. For the first time since 2002, agents saw their income increase, rising 2.3 percent to $34,900 in 2011.
"Many Realtors have persevered through very difficult market conditions and understand the cyclical nature of the business, but have never had to endure a cycle like the one that is presently waning," said Paul Bishop, NAR's vice president of research. "The good news is home sales are rising, overall activity is expected to be notably better this year and individual prospects are much brighter given there are fewer Realtors than several years ago."
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