Housing Sector Key to Growth

According to Fannie Mae’s Economic and Strategic Research Group the trend of gradual but below-potential economic growth seen in 2012 is expected to carry over through 2013 and into 2014. The overall growth rate forecasted for 2013 is 2% similar to the

According to Fannie Mae’s Economic and Strategic Research Group the trend of gradual but below-potential economic growth seen in 2012 is expected to carry over through 2013 and into 2014. The overall growth rate forecasted for 2013 is 2% similar to the rate in 2012.  This is a continuation of the recovery’s modest growth since 2009. This is despite the fact that the housing sector, which has become a bright spot in the economy since home prices began to rebound in 2012, is expected to provide a rising contribution to GDP in 2013 and in coming years.

Recent data indicate that the housing recovery has transitioned to a faster upward track, boosted by an improving labor market and low mortgage rates. Overall, home sales, home prices, and home building activity as well as home builder confidence appear to be on the upswing, having risen to multi-year highs.

FNMA’s Chief Economist said, “In the longer term, the gradual return of manufacturing to the U.S. and increasing domestic energy production will work together to accelerate economic growth. However, we anticipate overall growth in 2013 will remain below its potential, extending what has been a slow recovery.”

Souce: Fannie Mae

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Existing-Home Sales Finish 2012 Strong

Nationally, existing-home sales eased in December but were well above a year ago, while limited inventory maintained the upward momentum in home prices, according to the National Association of Realtors®.

Nationally, existing-home sales eased in December but were well above a year ago, while limited inventory maintained the upward momentum in home prices, according to the National Association of Realtors®. Total sales in 2012 were the highest in five years. The preliminary annual sales total for existing-home  in 2012 was 4.65 million, up 9.2 percent from 4.26 million in 2011. It was the highest volume since 2007 when it reached 5.03 million and the strongest increase since 2004.

Maine home sales were robust this December compare to December of last year increasing 15.6% with Penobscot County’s increase exceeding 37%.  Preliminary annual totals for the State show a 17.2% increase in home sales with Penobscot County increasing by 13.4% to 2,326 homes sold, the best sales level in four years.

Lawrence Yun, NAR chief economist, said pent-up demand is sustaining the market. “Record low mortgage interest rates clearly are helping many home buyers, but tight inventory and restrictive mortgage underwriting standards are limiting sales,” he said. “The number of potential buyers who stayed on the sidelines accumulated during the recession, but they started entering the market early last year as their financial ability and confidence steadily grew, along with home prices. Likely job creation and household formation will continue to fuel that growth. Both sales and prices will again be higher in 2013.”

According to Freddie Mac, the national average commitment rate  for a 30-year, conventional, fixed-rate mortgage was a record low 3.35 percent in December, the same in November; it was 3.96 percent in December 2011.

First-time buyers accounted for 30 percent of purchases in December, unchanged from November; they were 31 percent in December 2011.

Pending Home Sales Up

The Pending Home Sale Index, a forward looking National indicator rose in November for the third straight month and reached the highest level in two and a half years according to the National Association of Realtors (NAR).

The Pending Home Sale Index, a forward looking National indicator rose in November for the third straight month and reached the highest level in two and a half years according to the National Association of Realtors (NAR). The index is 9.8% above November of last year. The data reflects homes under contract waiting to close. Except for several months affected by the incentive tax stimulus programs of 2010 this level is the highest since February of 2007. Lawrence Yun, NAR chief economist said home sales are on a sustained uptrend. “Even with market frictions related to the mortgage process, home contracts activity continues to improve. Home sales are recovering now based solely on fundamental demand and favorable affordability conditions.” The momentum means, nationally, existing home sales should rise 8-9% in 2012 following a 10% gain expected for all of 2012. The medium home price is projected to rise just over 4% in 2013 after rising more than 7% in 2012. November single family home sales for Penobscot County rose an unprecedented 47% to 210 sales with an average selling price of $133,300.