Experts say that the increase in existing home sales last month is yet another sign that the housing market is stabilizing and will soon improve. Purchases of existing homes increased by 3.4 percent in April.
Industry analysts say that improvements in the job market and historically low interest rates on mortgages have combined to help put home ownership back within the reach of many Americans who have been unable to afford it during the recession. Overall confidence about long term employment and the eventual increase in home prices may also be contributing to the rise in home sales.
Another good sign in the market is that foreclosure rates have decreased. Foreclosures are now at a five-year low point. Some lenders have changed their practices for foreclosures as the priority shifts to keeping people in their homes for longer. Analysts had been predicting a rise in foreclosure rates as several mortgage companies resolved regulatory issues and lawsuits around their foreclosure practices.
Another factor in the improvement is the increase in the median price of homes over the last year. Last April, the median home price was $161,100. This year, it has increased to $177,400, which experts say is a significant development.
There are also fewer distressed properties on the market, as a result of the lower foreclosure rate. This means that the transactions are simpler for both buyers and sellers, and the existing home are likely in good condition. The numbers improved for every region in the country, including the Midwest. The biggest improvement in existing home sale rates was in the Northeast, where they saw a 5 percent gain.
Source: Bloomberg, “Sales of U.S. Existing Homes Increase as Market Stabilizes,” Shobhana Chandra, May 22, 2012.
