There has never been a better time to buy a home this year. And yet despite three major advantages for homebuyers, sales so far have been slow. Buying is cheaper than renting in most markets. And with mortgage activity down, originators, one would think, would be bending over backwards for applicants.
More people want to be homeowners, even younger buyers. A recent Fannie Mae survey of younger renters and buyers finds that though most younger renters prefer owning, many of them may stay renters longer due to insufficient financial capability and/or preparation. They don’t want to be renters – 90% would prefer to be homeowners.
Additionally, according to the latest quarterly report from the Federal Housing Finance Agency, both Fannie Mae and Freddie Mac are reducing the money set aside to cushion any blow to their business, making it fair to say this is the result of the government-sponsored enterprises betting on a continued housing recovery.
There are three reasons this may be the best time to buy a home.
1) Mortgage rates are at six-month lows
Mortgage rates in the first week of May fell once again and this time to the lowest level since Nov. 7, 2013.
The latest Freddie Mac Primary Mortgage Market Survey recorded an average 30-year, fixed-rate mortgage of 4.21% for the week ending May 8, continuing to fall from 4.29% a week ago, but up from 3.42% a year earlier.
“Mortgage rates continued moving down following the decline in 10-year Treasury yields after a dismal report on real GDP growth in the first quarter,” Frank Nothaft, vice president and chief economist with Freddie Mac, said.
2) Home price growth is slowing
According to CoreLogic’s (CLGX) March HPI index, home prices rose year-over-year for 25 months straight in March.
Also, existing home inventory is increasing. Home prices nationwide, including distressed sales, grew 11.1% in March from one year prior.
Looking ahead, the CoreLogic HPI forecast indicates that home prices, including distressed sales, are projected to increase 0.8% month over month from March 2014 to April 2014 and by 6.7% from March 2014 to March 2015.
3) Most housing markets have recovered
Fifty-nine metros have fully recovered from the last housing market crash, and 300 saw year-over-year gains, according to an index of markets put together by the National Association of Home Builders/First American.
The nationwide economic score rose slightly to 0.88 from a revised April reading of 0.87. This means that based on current permit, price and employment data, the nationwide average is running at 88% of normal economic and housing activity. The index showed an overall reading of 0.82 a year ago.