"Buyers are motivated now because they feel we're at the bottom," he said in a telephone interview.
The improvement in construction has led to a run-up in homebuilder-stock prices that led analyst Wilkes Graham of Compass Point Research & Trading to downgrade KB Home, PulteGroup and D.R. Horton Inc. KB Home's shares are up 68 percent this year, the most of any U.S. homebuilder.
"While our updated 2012 and 2013 estimates assume a continued recovery in the market for new homes, we believe the equities have more than priced the growth that we expect to come in the next two years," Graham wrote in a Feb. 28 note to investors.
Owners of about 5 million homes have lost their properties to foreclosure since the housing crisis began in mid-2006, according to RealtyTrac Inc. A rout in real estate prices has stripped $7 trillion from home values, according to the Federal Reserve. As a result, more than 11 million owners have mortgages that are bigger than their property values, a figure that increased by about 400,000 in the fourth quarter, CoreLogic Inc. reported yesterday.
More Foreclosures Coming
About 8 million more homes will be lost to foreclosure or sold through distressed transactions in the next five years, according to a Feb. 16 report by analysts at Morgan Stanley. About half will be purchased by investors and converted to rentals, wrote Oliver Chang, Vishwanath Tirupattur, James Egan and Jose Cambronero.
A decline in prices from discounted foreclosure sales along with 30-year mortgage rates of less than 4 percent boosted U.S. housing affordability to a record in the fourth quarter.
"Affordability has increased dramatically as a result of the decline in house prices and historically low interest rates," Federal Reserve Chairman Ben S. Bernanke said in Feb. 29 testimony to the House Financial Services Committee. Many buyers, however, are "reluctant to buy a house now because of concerns about their income, employment prospects and the future path of home prices," he said.
Increases In Detroit
Detroit, where prices have fallen to 1995 levels, was the only metro area in the 20-city Case-Shiller index with year- over-year increases in 2011, rising almost 0.5 percent through December as U.S. prices fell almost 4 percent. Prices in the Warren-Troy-Farmington Hills area north of Detroit rose 3.5 percent last year, the most of the 25 largest U.S. metro areas, according to the Federal Housing Finance Agency's home-price index.
Andy Hargreaves of Coldwell Banker Preferred Realtors in Plymouth, Michigan, said 60 percent of his listings in Detroit's western suburbs have been getting multiple offers since December, driving up prices. Auto workers are using bonuses of as much as $7,000 for down payments on homes, as the Michigan- based industry rebounds, he said.
One home had 20 offers, Hargreaves said, and his inventory is half the size it was three years ago.