1st Quarter Data Shows Encouraging Signs for Housing Market
Freddie Mac’s U.S. Economic and Housing Market report for the first quarter shows some encouraging signs for the U.S. economy and the housing market.
Positive economic data for first months of 2012
The report notes the economy grew 2.2 percent, as measured by real GDP. This was a slight increase from the previous quarter, but the highest increase of the four previous quarters.
The unemployment rate also declined in the first quarter, falling from 8.7 percent in Q4 2011 to 8.3 percent in Q1 2012. In turn, consumer expenditures gained with the decreased unemployment rate, the outlook indicates, improving 15.3 percent, as consumers increased their purchases of big-ticket items, such as cars and home appliances.
Additionally, Freddie Mac’s report found residential fixed income (RFI) increases were consistent with the economy’s growth. RFI increased 0.4 percent for the first quarter reflecting positive growth in new home construction and remodeling. Housing starts and home sales were the two bright spots for the market in the first quarter, the government-sponsored enterprise noted. Starts increased to a seasonally adjusted annual rate of 690,000 per month from 670,000 in the previous quarter. Total home sales increased from a per month average of 4,220,000 in the fourth quarter to a 4,380,000 monthly average in the first quarter of 2012.
Foreclosures remain a factor in housing market
Foreclosures still continue to put downward pressure on the markets, reports Freddie Mac. More than 2 million homes still remain in foreclosure. Further, the quarter’s homeownership rate decreased 0.5 percent for the quarter dropping to 65.5 percent. This statistic is also expected to decrease further as the market foreclosures continue to work their way through the market.
Decreased foreclosures would likely help improve market prices given the deep discounts they are sold at in comparison to standard listed homes. The downward pressure from foreclosures could be one reason for the decreases in housing prices. The Freddie Mac House Price Index fell 0.3 percent for the first quarter. This index has been consecutively decreasing but is expected to turn up slightly in the second quarter of 2012.
With home prices and mortgage market rates continuing to remain low, now may be the best time for many interested buyers to capitalize on the housing market’s value.