Paul Sakuma/Associated Press
Paul Sakuma/Associated Press
The housing market’s rebound is gaining strength as foreclosure sales slow and more people who are not in financial trouble put their homes on the market.
New signs are adding to recent evidence of housing’s upward momentum:
Existing-home sales in August were the strongest since May 2010. They rose 7.8 percent last month to a seasonally adjusted annual rate of 4.82 million, the National Association of Realtors reported Wednesday.
August housing starts, including houses and apartment buildings, rose 2.3 percent from July to a seasonally adjusted annual rate of 750,000, the Commerce Department said Wednesday. Single-family home starts rose 5.5 percent, reaching their best annual rate since April 2010. The pace of newly issued building permits fell 1 percent, down from a four-year high in July.
Home builders are getting ebullient. On Tuesday, the National Association of Home Builders reported that builders’ confidence is the highest since 2006. The NAHB’s list of 99 improving local markets now includes hard-hit areas such as Jacksonville, Fla., and Tucson, Ariz.
Housing prices have fallen so sharply that the ratio of home prices to incomes is now near the average from 1985 to 2000, said Stan Humphries, chief economist at real-estate web site Zillow.com. Factor in interest rates, and house payments are 16 percent easier for today’s average buyer than they were for a decade and a half before the bubble, he said.
“Prices have gotten so low, and affordability so high, that buyers have come off the fence,’’ Humphries said.
Wednesday’s data show that the supply of homes added to the market is rising, even as foreclosure sales slow, meaning regular buyers and sellers are gaining confidence, Moody’s Analytics economist Celia Chen said. Demand is growing even faster than new supply, putting pressure on prices, she said.
The national median existing-home price was $187,400 in August, up 9.5 percent from a year ago, the Realtors said. The increase was the biggest since January 2006.
Stable prices are bringing out buyers who hesitated while values were falling, said Stephen Paul, executive vice president of Mid-Atlantic Builders in Rockville, Md. His summer sales tripled this year, to 15 units from five last year. Low down-payment mortgages backed by the Federal Housing Administration are filling gaps remaining in private financing markets, he said.
“We had our best summer in seven years,’’ Paul said. “If I’m selling in July and August, when markets are in hibernation, people are looking to buy in a serious way.’’
The NAHB survey shows builders are more positive about the early 2013 market than they are about conditions now, association president Jerry Howard said.
“Confidence and customer traffic – the precursors to capital spending – are very good,’’ he said.
Housing starts will reach almost 1.1 million next year, up from 780,000 this year, enough to boost overall economic growth by 0.8 percent, Chen said. Barclays economist Michael Gapen said a 1.5 million-unit market would be healthy.
“We’re about halfway back,’’ Gapen said.
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