Monday, January 16, 2012 / by Justin Hoffmann
Applications were up 4.5 percent from the week earlier. And refinance activity decreased by over one percent, dropping to an 80.8 percent share of the market.
Additionally, the latest NAHB First American Improving Markets Index (IMI) shows that 76 markets are meeting their criteria for six straight months of improvements in housing permits, employment, and housing prices. This is almost double the amount of markets seen on the list for December (41).
"The fact that the list of improving housing markets nearly doubled this month shows that a significant, positive trend is developing, and is even more relevant when you consider the expanding geographic distribution of the list which now includes 31 states and the District of Columbia," noted NAHB Chairman Bob Nielsen, a home builder from Reno, Nev. "This trend could be even stronger if not for the numerous impediments that continue to slow a housing and economic recovery, including overly restrictive lending policies and the growing inventory of distressed properties in certain markets."
It isnt just one region boasting improvement either. Thirty-one states and the District of Columbia were represented on this growing list.
Some states do continue to do better than others, thanks in part of strong energy markets. This includes the state of Texas, which had three cities listed for the month of January. Florida, Michigan, Tennessee, Iowa, Indiana, also had three areas on the list this month. You can find the complete list and look for your city by visiting nahb.org/imi.
"The substantial gain in the number of improving housing markets in January shows that more consumers are looking favorably at a home purchase in light of todays historically low interest rates and attractive prices, particularly in areas where job growth has picked up," added Kurt Pfotenhauer, vice chairman of First American Title Insurance Company.
These improving markets should ready themselves for what could be a series of hits in the coming year. Realty Trac is reporting that while foreclosure activity was down every month last year through November (one out of every 579 households is in foreclosure, down 30 percent from 2010), these numbers could have been artificially low due to delays in processing.
The Federal Reserves Sarah Bloom Raskin recently addressed these issues to the Association of American Law Schools at their annual meeting. She touched on the dramatic impact of foreclosures and how "the longer it takes for mortgage servicers to make the operational adjustments necessary to fix their sloppy and deceptive practices, the costlier and more difficult it becomes for them to sort them out and correct them."
She noted that "this wave of foreclosures is one of the factors hindering a rapid recovery in the economy. Traditionally, the housing sector, buoyed by low interest rates and pent-up demand, has played an important role in propelling economic recoveries. The increase in housing sales and construction often is accompanied by purchases of complementary goods, like furniture and appliances, which magnify the effect of the housing recovery."
While delays in foreclosed homes hitting the market will continue to affect pricing and sellers, Realty Trac points out that they will mean lots of opportunity for investors.
By Carla Hill