Housing market picks up speed for 2012: Record Low Interest Rates, Good Time to Buy!
By Ilyce Glink /MoneyWatch/CBS News
It's only January, but already the latest real estate news indicate that the housing market is looking up.
CoreLogic's latest MarketPulse report, released Wednesday, suggests 2012 could be the year of the housing turnaround. Improved unemployment figures, low mortgage interest rates and inexpensive homes could be just the kick the housing market needs to begin a recovery.
Home sales are expected to rise between 2 and 5 percent year-over-year, according to Freddie Mac's U.S. Economic and Housing Market Outlook survey, also released Wednesday. That's not as much - or as quickly - as some people would like to see, but at least it didn't forecast home prices to fall further than they already have.
This optimistic outlook is due largely to all the good economic news we're hearing about the end of 2011: Existing home sales increased in November, while the inventory of unsold homes decreased to a six-to-seven month supply. Nearly 80 percent of American households believe now is a great time to buy, and if that optimism translates to sales, the inventory could dwindle even further.
It's not just buyers who are feeling good about the 2012 real estate market. Homebuilder confidence is the highest it's been since 2007, due once again to the economic news we're hearing about the latter part of 2011.
Housing starts began to climb last year, rising to around 600,000 in 2011 from 587,000 in 2010. The latest National Association of Homebuilders (NAHB) index rose four points from December 2011, reaching 25 on the 100-point scale. The optimal score is 50 and, while we're not there yet, we could be on our way: According to the NAHB, confidence has risen four months in a row, with the latest uptick measured across each region.
"Builders are seeing greater interest among potential buyers as employment and consumer confidence slowly improve in a growing number of markets, and this has helped to move the confidence gauge up from near-historic lows in the first half of 2011," said NAHB Chief Economist David Crowe. Crowe knows many builders are still cautious due to tightened credit markets and the threat of more foreclosures, but "homebuilders are still more optimistic about sales over the next six months than they have been since September 2009."