The housing market has its momentum.
Single-Family Housing Starts topped 600,000 for the fifth consecutive month in April, showing 610,000 units on a seasonally-adjusted annualized basis. The reading marks a two percentage point decrease from the month prior, and represents a 105,000-unit increase over just one year ago.
Builders are building, but demand continues to outstrip supply. Higher home prices are ahead.
According to the U.S. Department of Commerce, single-family housing starts slipped by thirteen thousand units April 2013 as compared to the month prior, where “housing start” is defined as a home on which construction has started.
On a 3-month rolling average, housing starts are happening at their fastest pace since Spring 2008, a period which predates both the 2009 and 2010 federal home buyer tax credit programs. Today's market is demand-driven -- not tax-break driven.
It's one more signal that today's housing market is improving and the nation's homebuilders appear to agree.
Earlier this week, the National Association of Homebuilders reported home builder confidence near a 7-year high. Confidence has been buoyed by a large number of home buyers and in-model foot traffic, which continues to stay high. Builders expect the next 6 months of home sales to be the strongest since 2006.
Low mortgage rates play a role, too.
As compared to last year, today’s home buyers have greater purchasing power for new and existing homes. For example, assuming a 20 percent downpayment and a conforming home loan :
Purchasing power has increased 4% since last year. When combined with today’s rising rents nationwide, it's easy to see why demand for newly-built homes is high. Builders have noticed.
Home buyers should, too. Home costs are expected to move higher through 2013 and into 2014.
For home buyers with a plan to purchase later this year, consider that home prices are rising in nearly all U.S. markets and that mortgage rates are off to their worst annual start since 1996. The overall cost of homeownership is rising.
The good news for buyers, though, is that low-downpayment programs such as the Conventional 97 program and the FHA's 3.5% downpayment home loan, as well as the VA's 100% home loan remain available and inexpensive.
Make your mortgage payment budget using today's mortgage rates. See how much home you can afford.
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.
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2015 Conforming, FHA, & VA Loan Limits
Mortgage loan limits for every U.S. county, as published by Fannie Mae & Freddie Mac, the Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA)