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Each week, it seems, more evidence emerges of a strong housing market. The "buyers market" is ending. Home prices are rising. It's time to make that offer.
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Each month, to gauge their confidence in the U.S. housing market, the National Association of Homebuilders surveys its members. This month, for the third straight month, builders from Washington State to Florida said, "Yes, we believe".
It's the first 3-month win streak for the index in three years. This suggests a slow, steady recovery in housing -- the anti-thesis of a housing bubble.
December's Housing Market Index climbed 2 points to 21 after a downward revision to last month's results. The index is now up seven points since September 2011.
Builders haven't felt this good about housing since May 2010 -- the month after last year's $8,000 home buyer tax credit expired. That said, confidence is relative. When homebuilder confidence reads 50 or better, it reflects favorable conditions new construction market. Readings below 50 reflect unfavorable conditions.
The Housing Market Index has been below 50 going on six year.
As a housing market indicator, the Housing Market Index is actually a composite reading; the result of three separate builder surveys.
The National Association of Homebuilders asks its members about their current single-family home sales volume; their projected single-family home sales volume for the next 6 months; and their current buyer "foot traffic". The results are then compiled into the single Housing Market Index tally.
In December's survey, builder responses indicated strength in all 3 areas :
Most notable is that builders report old-fashioned buyer foot traffic to be at its highest level since May 2008. These are not people that "shop online" for homes -- these are people that physically visit a property.
Low mortgage rates and great deals are bringing new buyers into the market, results are supported by recent New Home Sales and Housing Starts data, both of which show an increase in single-family sales, and a decrease in new home housing supply.
Projecting forward, we should expect strong new construction data for early-2012, too. Home builder confidence has a high correlation with the monthly Housing Starts figures. Again, a sign of strength of housing.
Home prices are already rising.
Traditionally, the last two weeks of the year are the "slow season". This year, however, it's anything but. With low mortgage rates still available and home prices still lagging the economy, there are "great deals" out for the astute buyer. 45 days forward, though, once the mythical Spring Buying Season starts, it will likely be too late.
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Dan Green (NMLS #227607) is an active loan officer with Waterstone Mortgage. Email Dan ator click to get a free, no-obligation rate quote.
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