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Until recently the one bright spot in the housing market has been low mortgage rates. Current mortgage rates are near record lows and have been near lows for the past year. Conforming 30 year mortgage rates have been under 5.00% and are averaging 4.50% right now. Jumbo 30 year mortgage rates are also very low, currently around 5.00%. These how rates are helping housing recover from the worst bust on record. New home sales and pending home sales both increased sharply last month which was a surprise. New homes sales last month rose 7.3 percent according to the Commerce Department. It was the second straight month that new-home sales were up. This is good news, with new home builders still pulling back on building the supply of homes for sale will eventually go down to a level that is sustainable for home price increases. New-home sales increased to a seasonally adjusted annual rate of 323,000 homes in April, which is its highest level since December. With mortgage rates today on 30 year mortgage loans as low as 4.00% many people are finally stepping up to the plate and buying again. New home builders are keeping inventories low which is a positive, a new low of only 175,000 new homes were available for sale last month. As hopeful as things are overall sales for the year are still below what economists consider a healthy building pace. That number is almost double at 700,000 annually for new-homes. The new homes market as been depressed for a long time now since it's competing against a glut of foreclosures across the country and short sales. Both are driving home prices down. This is making homes more and more affordable for buyers. Thankfully most housing markets are mature and there isn't land to build vast new housing complexes like builders did out west. Many of these developments are ghost towns full of empty homes. Pending home sales were up 8.2 percent to 88.8 in May from an upwardly revised 82.1 in April and is 13.4 percent higher than the 78.3 reading in May 2010. The data reflects contracts but not closings, which normally occur with a lag time of one or two months according to the National Association of Realtors (NAR). This is the biggest increase in a year. The pending home sales index is a forward looking indicator on contacts signed but not closed yet. Home prices have a long way to go until they get back to their 2006 highs. We might not see prices that high again in our lifetime. Another indicator isn't so bright about the future of housing. The Case-Shiller Index continues to show declines in housing prices and one of the creators of the index, Shiller, predicts housing prices will continue to decline unitl 2014. If Shiller is correct this doesn't bode well for the future in home prices. If you're thinking about buying a home and haven't done so because prices continue to decline you might want to rethink not buying a home. Home prices are more affordable than they have been in a generation and mortgage rates are so low right now. Owning a home is once again more affordable than renting in many parts of the country. The last time this was the case was in the 1990s, before the housing boom of the 2000s.
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