Reports: Housing Market Showed Marked Improvement

After several challenging economic years, the sluggish housing market is said to be on the mend as the number of total home sales show a sales gain.

In fact, economists say they expect the housing industry will add to economic growth for the first time in six years, back when the housing bubble is said to have first burst.

More Home Sales

Financial analysts say the real estate market is currently seeing a marked improvement as home-buyers, who may have put off buying a home during the recession, now seek new investment opportunities.

According to the National Association of Realtors, home sales reached an annualized rate of 4.55 million sales in May, 2012, 9.6 percent above the 4.15 million from last year. The national median home price for existing houses of all types rose to $182,600 that same month, an increase of 7.9 percent. Affordability seems to be key, experts say, as moderately-priced homes are selling faster than luxury homes.

This positive change has also encouraged more home-builders to start new projects.

Fewer Foreclosures

The National Association of Realtors also confirmed a slight decrease in foreclosures and short sales which accounted for 25 percent of sales in May, down from 31 percent the previous year. Foreclosures, which comprised 15 percent of these sales, sold at an average 19 percent discount below market value while short sales were discounted 14 percent.

Changing Market

First-time buyers and investors are said to be leading the number of home buyers. People who would need to sell their own home in order to purchase a new one, such as with a downsize, are said to be on hold, waiting for their homes to regain their lost value.

This is especially true for those whose mortgage is under water. This trend, they say, may actually help increase home sale prices as it will limit the housing supply available to buyers.

Some cities are said to be experiencing the return of multiple bidding, which may help drive the prices up over time.

Today the market is being seen as more affordable to home-buyers, especially with mortgage rates at record lows. According to a survey of rates from Freddie Mac, interest on a 30-year, fixed mortgage fell to an average of 3.66 percent in June, 0.01 percent below the previous record set only a few weeks prior.

The 15-year mortgage fell to 2.95 percent. Such a drop can make a significant difference in a mortgage payment. A one percent drop in mortgage interest, for example, can save a buyer $60 dollars per month per $100,000 borrowed over 30 years.

Economists say the low rates will also help boost the economy as they may allow people to refinance at lower rates, freeing up more money to spend elsewhere. While it may take years to fully heal, analysts remain positive the market is headed in the right direction.

The only obstacle, experts say, may be obtaining credit and the high down payment currently required by many banks to secure a mortgage. Some buyers are finding it more challenging to qualify for a home loan, which may slow the housing market recovery process a bit.