by Tim McLaughlin, Sr. Vice President, Weichert Financial
On Monday, we received yet another positive housing price measure for 2013, learning from the National Association of Realtors that the national median existing single family home price was $178,000 in 4Q, up 10% from $162,000 in 4Q 2011, the strongest year over year price increase since the 4Q 2005. The median existing single family home price rose in 133 of 152 metropolitan statistical areas.
Lawrence Yun, NAR chief economist who in the past has commented about lending standards being too restrictive, said all the conditions for strong price growth are at play. “Home sales are on a sustained uptrend, mortgage interest rates are hovering near record lows and unsold inventory is at the lowest level in 12 years,” he said. “Home sales are being fueled by a pent-up demand and job creation, along with still favorable affordability conditions and rents rising at faster rates. Our population has been growing faster than overall housing stock, so supply and demand dynamics are very much at play.”
Yun added that more housing construction is needed to relieve some of the pressure in the market and keep home prices from overheating.
Update on the Market:
We continue to see the 10 year Treasury yield at the highest levels since early 2012 as the yield topped 2.00% again this morning.
Combined with that is continued MBS to Treasury widening (essentially, Mortgage Backed yields are trading even wider to Treasuries, exacerbating the rate issue).
We are seeing cash flow into Equities and the Dollar (the Dollar/Yen trade is a money maker right now), with the negative recipient of the trade being all classes of Fixed Income (particularly Mortgage Backed Securities).
With that said, we are still seeing 30 year Mortgages with a 3 handle, and 15 years still beginning with a 2 in most cases, as the spring market beings to get its legs.