The latest Home Price Index may give prospective home buyers more confidence. Is the market hitting bottom?
A federal Home Price Index released today shows that prices for single-family homes rose by 0.8 percent across the nation in the month of July. The report provides the second consecutive day of positive news for the troubled housing market.
Home prices may show signs of stabilizing, after falling 0.9 percent in June, but they remain 3.3 percent below prices recorded a year ago and are more than 18 percent below prices recorded at an April 2007 peak, the Federal Housing Finance Authority, which produces the Home Price Index, said today.
Yesterday, the National Association of Realtors reported a 7.7 percent increase in existing home sales in the month of August for a year-over-year increase of 18.6 percent. The association attributes the increase to the increasing affordability of homes in an era of record low interest rates and deeply discounted prices.
The investment opportunity is not lost on investors surveyed by Millionaire Corner this month. More than half of the 1,100 participants agreed with the statement, “I think now is a good time to buy real estate.”
Real estate appeals most to investors with investable assets of $99,000 or less, compared to 51 percent of Millionaires. More than 60 percent look favorably on real estate as an investment. Investors with an entrepreneurial streak are also more likely to see potential in the real estate market. More than 62 percent of business owners say they think now is a good time to buy real estate. Investment opportunities are also affected by the regional differences in real estate markets.
The federal Home Price Index, which is intended to serve as a broad measure of movements of single-family homes, shows significant variation in markets across the country. The West North Central region stands out as the only region to show a 12-month increase in home values. Prices in the region - which contains North Dakota, South Dakota, Minnesota, Nebraska, Iowa, Kansas and Missouri - rose a scant 0.2 percent year-over-year.
Hardest hit were the Pacific region, with a 6.7 percent year-over-year decline, the Mountain region, with a 6.9 percent drop and the South Atlantic region with a 5.4 percent drop.
Though the market for existing home is starting to show signs of life, due in large part to investors snatching up bargains, sentiment in the construction industry remains bearish, and new home construction continues to decline, dropping by 5 percent in August, according to Commerce Department data released this week.