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Housing Market Reports May Confuse Prospective Buyers About Home Prices
|For homebuyers, keeping up with current housing market information can be helpful when applying for a mortgage and purchasing a home that will remain valuable.
Some recent reports may have prospective homeowners confused, as some indicate home prices are improving while others show declines, as data can rely on different variables.
Thursday, June 28th, 2012
For homebuyers, keeping up with current housing market information can be helpful when applying for a mortgage and purchasing a home that will remain valuable. Some recent reports may have prospective homeowners confused, as some indicate home prices are improving while others show declines, as data can rely on different variables.
The National Association of Realtors Home Price Index for the month of May revealed that national home prices were up 8 percent when compared to prices from a year ago. It is crucial that potential buyers consider that NAR uses a median home price, so improvements and declines are often a reflection of what type of home is selling best during that particular month. According to CNBC, sales of homes priced below $100,000 fell two percent from last year, while sales of homes priced between $250,000 and $500,000 were up 29 percent. The jump in the sales of more expensive homes is credited for the higher average home price, and a lower inventory of delinquent properties means only higher priced homes are available.
Reports of higher home prices may have potential buyers straying from making the investment of purchasing a house, but record-low mortgage rates continue to provide high affordability throughout the country. While the state of the national market can be helpful to look at, it is important to also narrow down research to local housing markets, as these can provide contradicting information. CoreLogic, an analytics firm also reported that home prices saw slight year-over-year gains, even when including distressed sales. Prices rose 1.1 percent in April when counting foreclosures and short sales, and were up 2.6 percent when excluding delinquent homes. Home prices reportedly rose most in states that were hit hardest by foreclosures, including Florida and Arizona. The smaller inventory of foreclosures has helped boost home prices by 5.5 percent compared to values reported a year ago.
Contrary to the NAR index and CoreLogic analytics, Lender Processing Services latest report suggests home prices are virtually flat, but this is likely because the data firm does not include the sales of distressed homes in its research. CNBC notes that LPS also uses repeat sales to help gauge prices instead of finding and reporting a median. Home prices are also separated into five different price tiers, which can be helpful for buyers choosing a price range for their investment.
"There may be reason to be cautiously optimistic, since we've now seen three consecutive months of minor appreciation," said Kyle Lundstedt, managing director of LPS. "LPS tracks 130 million properties in its data, and over the last several months we've seen a very typical seasonal change in the mix of the houses selling towards the higher end of the price spectrum."