Home values are on the rise, which may induce potential buyers and sellers to enter the market. Prices last quarter posted their first year-over-year gain since 2007, according to Zillow Inc., the Seattle-based operator of the largest real- estate information website.
Higher real estate values also helped more than 1.3 million homeowners regain equity in the first six months of 2012, according to CoreLogic. About 22.3 percent of homeowners with a mortgage owed more than their homes were worth at the end of June, down from 23.7 percent three months earlier.
Even with pricier real estate, homes remain affordable. The average rate on a 30-year fixed mortgage was at 3.55 percent in the week ended Sept. 13, near 3.49 percent, the lowest since records began in 1971, Freddie Mac data show.
Fed Commitment
The Federal Reserve has also committed to purchasing $40 billion of mortgage debt a month to lower borrowing costs, helping the housing market that Chairman Ben S. Bernanke called "one of the missing pistons in the engine."
"Our mortgage-backed securities purchases ought to drive down mortgage rates and put downward pressure on mortgage rates and create more demand for homes and more refinancing," Bernanke said in a Sept. 13 press conference after the central bank announced the debt-buying plans.
Construction companies too are noting better business conditions. The National Association of Home Builders/Wells Fargo index of builder confidence climbed in September to the highest level since June 2006.
"The housing market and the consumer, our customer, is really probably on a pretty good firm foundation," Rob Lynch, president and chief executive officer of Lumber Liquidators Holdings Inc., said during a Sept. 6 conference. "We see things probably maintaining and-or slightly improving."
Housing Starts
Work began on 5.5 percent more single-family houses in August, taking starts to a 535,000 annual rate, the fastest since April 2010, figures from the Commerce Department also showed today. Permits for the building of one-family homes increased 0.2 percent to a 512,000 annual pace, the highest since March 2010.
Total housing starts climbed 2.3 percent to a 750,000 annual rate, less than forecast and restrained by a drop in the building of apartments, the data showed.
At the same time, potential buyers may not find it easier make a purchase by securing a loan. Of the 60 senior loan officers surveyed by the Fed in July, only one said lending standards were easier for any type of mortgage compared with 2005.