With recent fluxuations in interest rates, pricing and inventory, the housing market is on the rebound.
“I would expect the purchase market is going to improve. I think the reason why we’ve gone from a buyer’s market to a seller’s market is because we don’t have enough inventory,” said Marita Thomas, senior vice president and residential lending manager at Empire Bank. “If you look through the subdivisions, you’re starting to see new sticks in the ground to build new houses. With the limited supply, that’s why the sellers are able to get buyers more quickly.”
The National Association of Realtors’ forward-looking Pending Home Sales Index – measuring housing contract activity based on signed real estate contracts for existing single-family homes – rose 6.7 points in May to 112.5 compared to 105.2 in April. Existing home sales are projected to increase 8.5 to 9 percent, reaching about 5.07 million homes sold in 2013, the highest in seven years, according to the NAR.
The Midwest also showed an increase, up 10.2 points to 115.5 in May, compared to 104.8 in April and up 12.1 points during the same time last year.
“I think we’re starting to see some recovery in home values and the economy has improved. Labor numbers are getting stronger. I think that people are having more confidence and they’re ready to move up or make that first step into the home buyer’s market,” Thomas said. “We’ve started to see things move. When the housing market gets stronger, it’s a really strong indication that the overall economy is starting to strengthen.”
Thirty-year fixed-mortgage rates increased the week ending June 24 to 4.46 percent, moving up from 3.93 percent, the largest weekly jump in 26 years, according to Freddie Mac. Previously, rates had fallen as low as 3.35 percent in November and December 2012.
“The rates are still historically low,” said Cass Williams, Springfield Multilist Service president and real estate agent with Murney Associates, Realtors. “Right now, with the mortgage rates increasing, (it) adds a little bit of urgency to that buyer’s mentality. Buyers realize this is a historic opportunity.”Thomas said a statement from the U.S. Federal Reserve can cause interest rates to spike.
“Whenever Federal Reserve comments come out, we see a flux in our interest rates,” she said, noting recent comments caused interest rates to rise rapidly but drop by half in just a few days. “We’re seeing a stronger stock market, which is part of the bond market, and if those things change, we see a slight uptick in interest rates.”
Even with increasing interest rates, Springfield homes have been moving off the market more rapidly, according to the Greater Springfield Board of Realtors. A home spent an average of 77 days on the market in May, compared to 82 days in April and 95 days during the same month last year.
Foreclosure inventory also is down, as Springfield fell to 0.79 percent in April, from 1.24 percent during the same time last year. The Queen City tallied numbers lower than the Missouri’s May foreclosure inventory which indicated 1 percent of all homes with a mortgage in the state were in some stage of the foreclosure process and the national level of 2.6 percent in May, according to the latest data released by Santa Ana, Calif.-based real estate market tracker CoreLogic (NYSE: CLGX). For the 12-month period ending May 31, 16,367 foreclosures were completed in the state, compared to 18,069 foreclosures in the previous year ending May 2012.
Completed U.S. foreclosures decreased 27 percent to 52,000 in May compared to 71,000 in the same month of 2012, CoreLogic.
Roughly 1 million homes were in some stage of the foreclosure during May, down 29 percent from 1.4 million in May 2012.
U.S., foreclosures during the same one-year period ending in May totaled 706,349, down 14 percent compared to 819,327 during the previous 12-month period.
Local real estate agents say the mindset of Springfield area buyers keeps the city below national trends.
“It’s the conservative nature of folks who live here. We’ve always been a little more inclined to err on the side of caution,” said Williams, referring to Greene, Christian and Webster counties. “There were only 35 counties [nationwide] that caused the housing problem. We only had a couple, so we started out with a much lower rate to begin with.”
GSBOR data provided by Executive Jessica Hickok shows monthly home inventory has been on the decline since January, shrinking to 6 months in May, from 8.9 months of inventory at the start of the year.
“It has a great deal to do with the amount of inventory available. It’s really pretty much supply and demand,” Williams said. “We’re starting to flush out the foreclosure inventory, which has kind of impacted pricing.”
The average sale price of a home in the Springfield area increased to $146,000 in May from $136,000 in April. The average price a year ago was $135,000. Before the market decline, the 2007 average selling price was $147,000, Williams said, about $8,000 higher than the 2008 average of $139,000.
Even with decreasing inventory, many homes are still on the marker. Homes for sale in the Springfield area, comprising Greene, Christian and Webster counties, totaled 3,937 in May, up from 3,717 in April, but down from 4,269 during the same month last year, according to the GSBOR. However, the new figures represent the highest monthly total since October 2012. Home sales in May also are up 10 percent to 651 from 592 in April.
“When inventory goes down, you’re going to see people a little more inclined to commit,” Williams said.
“We’re starting to see something that’s more what we are accustomed to seeing in the real estate market.”
Web Editor Geoff Pickle contributed to this article.
