As in weeks past, the real estate market's latest figures remain tepid. This lukewarm environment has resulted in decreased builder confidence, as well as a decline in median existing-home prices. The National Association of Realtors reported earlier this month that the median home price in the second quarter was $171,900, down 2.8 percent from $176,800 in the second quarter of 2010.
Lawrence Yun, NAR chief economist, said home prices have been moderating, but that foreclosure pricing is also skewing results. "The level of foreclosures, which can artificially depress median prices, can vary notably in given markets," he said. "The annual price gauge smooths out the quarterly swings and has shown fairly stable price trends in most markets."
Yet, foreclosures aren't going anywhere anytime and do have a direct affect on market values. In fact, some experts worry that foreclosures may be in a temporary slump due to procedural reviews and adjustments being made.
James J. Saccacio, chief executive officer of RealtyTrac, reports, "July foreclosure activity dropped 35 percent from a year ago, marking the 10th straight month of year-over-year decreases in foreclosure activity and the lowest monthly total since November 2007. This string of decreases was initially triggered by the robo-signing controversy back in October 2010, which forced lenders to substantially slow the pace of foreclosing, but the downward trend in foreclosure activity has now taken on a life of its own. It appears that the foreclosure processing delays, combined with the smorgasbord of national and state-level foreclosure prevention efforts - including loan modifications, lender-borrower mediations and mortgage payment assistance for the unemployed - may be allowing more distressed homeowners to stave off foreclosure."
"Unfortunately, the falloff in foreclosures is not based on a robust recovery in the housing market but on short-term interventions and delays that will extend the current housing market woes into 2012 and beyond," Saccacio continued. "A stabilizing economy and improving job market are the long-term keys to a housing market recovery."
Housing starts were also down in July, according to the U.S. Commerce Department. Single-family housing starts were down 4.9 percent for the month.
The National Association of Home Builders' chairman, Bob Nielsen, put a positive spin on the decline, saying, "Although single-family housing production slid a few notches in July, the number was right in line with the second quarter average, so we view this report as an indication of relative stability," said Bob Nielsen, chairman of the National Association of Home Builders (NAHB). "This is in keeping with the fact that not much has changed over the past several months with regard to the outlook for new-home sales and production. Both builders and buyers continue to exercise a great deal of caution due to uncertainty about the current economic climate, the large number of foreclosed homes on the market, and concerns about access to credit."
"Overall housing production held relatively steady in July, with construction of new multifamily projects showing greater strength due to higher demand for rental units," noted NAHB Chief Economist David Crowe. "Going forward, we expect housing production to show modest improvement through the end of this year, particularly in select markets that do not have large inventories of distressed homes and where economic stability is more apparent."
Harsher lending standards have continued to keep many buyers at bay, despite there being historically low interest rates. The Federal Reserve recently pledged to keep interest rates low until at least 2013, but how did this decision set with other experts? Philadelphia Fed President, Charles Plosser, was in disagreement with this decision, citing the economy, not a timeline should be the deciding factor on where rates are set.
For now, both mortgage and refinance applications are up. The Mortgage Bankers Association (MBA) reports that mortgage applications increased 4.1 percent from one week earlier.
"Unprecedented volatility in the stock market last week amid additional signs that the economy has slowed led to further drops in mortgage rates, with the 15-year rate reaching a new low for the MBA survey," said Mike Fratantoni, MBA's Vice President.
Fratantoni continued, "Refinance application volume increased substantially for the week, although there was substantial variation across the market." The refinance share of mortgage activity was the highest its been in November 2010 and was 78.8 percent of total applications.