As mortgage rates continue to be at all-time lows, the present day is a better time than ever before for a prospective homebuyer to purchase any type of property.
Mark Fleming, chief economist for CoreLogic, said many “key housing metrics are holding steady through the typically slow winter season.”
Over the last 12 months ended in February 2012, there were 3.9 million homes sold, slightly higher than the pace experienced last year. Distressed sales represented 26.1% of the monthly total, which is 2% less than the properties sold in January.
Housing affordability, a ratio of the typical household income relative to the annual income necessary to buy a median priced home at prevailing mortgages rates, is at levels not seen since prior to the early 1990s and is almost twice the level that it was in April 2006 when housing was the least affordable it had been in two decades.
Meanwhile, housing starts fell to an annualized rate of 698,000 in February 2012, down from 702,000 in January.
“This is not entirely bad news as housing starts have been essentially flat since January 2010 and will only slowly increase until the excess inventory and flow of completed foreclosures recede,” Fleming said.
However, there are concerns that a rise in mortgage rates this year will lead to a decrease in market activity. CoreLogic does not project any drop in mortgage rates by the middle of the summer, but rather a 25, 50 or 100 basis-point increase.
“Even under the unlikely scenario of a full percentage point increase in the mortgage rate, affordability is only reduced to the level of May 2011,” Fleming added. “The most likely scenario is moderately higher interest rates that return housing affordability to where it was late last year, hardly a draconian impact.”
