The home selling market is in a state of transition. For months, economists have been saying the housing market was about to change course from a sellers market to a buyers market, and possibly from a value bubble to a bust. However, statistics and indicators do not currently point to a definitive direction to be taken by the market, according to a report issued by Freddie Mac, one of the nations primary buyers of existing home mortgages.
The Home Price Index for the fourth quarter of last year, released in March, showed an annual growth in home value at about 13 percent. Housing starts in January reached 2.28 million units, the highest pace since 1973. There are no signals of a cooling housing market here, the report stated. However, sales of both new and existing for-sale homes fell significantly in January, and inventories of existing single-family homes and condos rose to their highest levels since 1999. These contradictory statistics are signs of a probable slow-down.
It may be some time before we see definite trends in the national housing market, especially as measured by changes in home prices, the Freddie Mac report stated. Prices tend to be `sticky on the way down as sellers will leave a home on the market longer or offer non-price concessions to buyers. The prevalence and types of seller concessions are difficult to measure. But we believe the housing market crested during the third quarter of last year and that single-digit growth in home values will occur nationally as this year progresses.
The report pointed out that fixed-rate mortgage rates are still historically low and a wide variety of mortgage products are available. That means the capital market is well positioned to support homebuyers. When the smoke clears, we expect to find that the housing market has decelerated to a more normal level of active, but certainly not crashed, the report concluded. |
