June 2012  Market Update

Signs of recovery continue in the housing market, demonstrated by improvements in the number of homes sold and national home prices. For the first time since June 2011, the median home price has exceeded $175,000. Continued strength in economic indicators, employment, and consumer confidence could help to bring full recovery to the housing market. Relaxation in financial institution’s tight lending standards will also significantly help the recovery.

“With the tight lending environment it’s a good idea to consult with a Realtor about mortgages and program options in the area, and tips for boosting credit scores well in advance of making an offer on a home,” National Association of Realtors President Moe Veissi advises.  “It helps to go into the process knowing what it takes to succeed.”

With rents on the rise, buying has become an increasingly attractive option due to home affordability, or the percentage income it takes to pay the mortgage, is the most favorable in market history. Current record interest rates, which factor into affordability, will not last forever, so buyers wanting to take advantage of this unique time in history will want to act before rates rise. 


Home Sales

In Millions

Home sales increased 10% from a year ago to 4.62 million units, which is also up 3.4% from the previous month. A strengthening economy is improving consumer confidence and drawing an increasing number of people into the market. Some local markets are experiencing a shift back into a seller’s market, leading to a shortage of homes available for sale, multiple offers, and higher prices. As more markets follow suit, national home sales could continue to increase. 




Home Price

In Thousands

Thanks to a decline in distressed properties (which includes short sales and foreclosures that traditionally sell for 15%–20% less on average compared to non-distressed homes), the median home price rose 10% year-over-year to $177,400. This is the first consecutive month-to-month increase in home prices since June and July of 2010. NAR Chief Economist Lawrence Yun said “For the year, we’re looking at a modest overall price gain of 1%–2%, with stronger improvements in 2013.”


Inventory- Month's Supply

In Months

Housing inventory increased to 6.6 months supply, which is 28% below year-ago levels. This marks the fifth consecutive month of inventory near a six-month supply, which is the threshold of a balanced market. It is also significantly below the previous three years, in which year-end month’s supply ranged from 8.2–9.5. This indicates movement out of this deeply entrenched buyer’s market and is an important step toward a full-scale housing market recovery.



Source: National Association of Realtors

Interest Rates

Mortgage rates continue to boost home affordability by remaining below 4%—some of the lowest rates on record since 1971. These rates may come as close to bottom as they can get, adding to the urgency to buy a home now while these record lows hold.


This Month's Video

Topics For Home Owners, Buyers & Sellers

Thinking about buying? Wondering what pushes others to jump off the fence and buy now?  Here is some insight into the top 3 reasons that impact a buyer’s sense of urgency:

  • Excellent Market Conditions.  Interest rates are at record lows and home prices are bouncing along what experts believe to be the bottom – there has never been a more affordable time to buy a home.  With some local markets slipping into a seller’s market and reports of more following, the chance to cash in on this historic time may be narrowing.
  • Having the Freedom to Move.  First time homebuyers often wait for their lease to expire, not realizing that buying sooner is an option. Repeat buyers wait to sell their house when leasing maybe an option, giving them freedom to move up sooner.
  • A Major Life Event.  Often a major milestone or development spurs on the need to purchase at a specific time.  Getting married and having children are two of the top events creating the need to buy now. 



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The opinions expressed in This Month in Real Estate are intended to supplement opinions on real estate expressed by local and national media, local real estate agents and other expert sources.  You should not treat any opinion expressed in This Month in Real Estate as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of opinion.  Keller Williams Realty, Inc., does not guarantee and is not responsible for the accuracy or completeness of information, and provides said information without warranties of any kind.  All information presented herein is intended and should be used for educational purposes only.  Nothing herein should be construed as investment advice.  You should always conduct your own research and due diligence and obtain professional advice before making any investment decision.  All investments involve some degree of risk.  Keller Williams Realty, Inc., will not be liable for any loss or damage caused by your reliance on information contained in This Month in Real Estate.