Anyone who makes a living in residential real estate knows better than to crack open the champagne just because of some encouraging housing data.
Still, it's hard not to get cautiously upbeat over recent trends that point to an improving U.S. housing market and indicate some further strengthening in months to come.
National real estate analysts and local real estate agents sound encouraged by the state of housing as it enters the stretch drive of the spring home-selling season.
Foot traffic is up, prices are stabilizing by some measures and sales are trending higher. Recent housing statistics suggest the market is at its strongest point in years.
"Demand is up, and the psyche of the consumer is much better than it has been in years," said the National Association of Realtors' Ken Fears, manager of regional economics.
Agents See Change How much spring homebuying are real estate agents noticing right now? Nate Johnson, with Keller Williams Realty in northern Virginia, says his team is "seeing a lot of buyers out there" and getting multiple offers on short-sale properties. His work is concentrated in Fairfax County, just across the Potomac River from Washington, D.C.
Although down 2.6% monthly in March, the pace of U.S. existing home sales reached its highest level since 2007 in the first quarter, up 4.7% from the previous quarter and more than 5% from the prior year.
Prospects for new home sales are looking better too. Investor optimism has pushed IBD's Building — Residential/Commercial industry group to the top-ranked spot among 197 groups tracked, with Lennar (LEN - News), Standard Pacific (SPF - News), MI Homes (MHO - News), Ryland Group (RYL - News) and D.R. Horton (DHI - News) among highly rated stock market performers. Still, after an exuberant rise, several builder stocks gave up some gains Thursday ahead of April home sales numbers due out next week.
Near Washington, D.C., the main challenge now is finding homes people want to sell, Johnson says.
"The inventory is very low in some places," he said. "Many people are upside-down on their mortgages and can't sell.
Short sales occur when more is owed on a home than it sells for, when a lender does agree to a sale.
"A lot of our short-sale inventory are condos," Johnson said. "A lot of investors are snapping those up at inexpensive prices with the idea of renting them out.
Looking For Listings A lack of inventory is also a problem in certain Atlanta neighborhoods, says Thom Abbott, an associate broker at Thomas Ramon Realty at Palmer House Properties. His firm specializes in midtown condos at prices ranging from $80,000 to more than $600,000.
"People are out there and wanting to buy. The biggest challenge in Atlanta is a lack of inventory," Abbott said. "People are still looking for a deal, whether it's a short sale, foreclosure or traditional sale.
Atlanta's foreclosure rate ranked 11th in the U.S. for the first quarter, according to RealtyTrac. Some California cities, Las Vegas and Phoenix were the only major metro areas with a higher rate.
Abbott says some of his Atlanta buildings have only two or three listings right now compared with 20 or 30 a few months ago.
"You're actually starting to see construction again, including entirely new subdivisions," he said.
House Hunters On Prowl Foot traffic is up in most U.S. markets. The NAR's index of buyer traffic read 56.8 in March — the highest since it began in 2008. Over 50 indicates an expanding market.
Foot traffic has been brisk in much of Long Island, says Josh Evans, president of Josh Evans Homes/Village Properties. His company sells homes in New York's Nassau County, Suffolk County and parts of New York City.
"There's been the most people I've ever seen going out and looking for homes," he said. "The weather's been nice, which has helped. But the houses are priced right as well.
Although lending remains tight, "the buyers are out there," Evans said. "Many are working with smaller down payments. We're seeing a lot of FHA deals where they are putting 3.5% down or 5% down.
In Southern California, much action is in moderately priced neighborhoods, says Nevin Williams, regional manager at mortgage brokerage First Priority Financial. Licensed in California, Washington, Oregon and North Carolina, he has several Southern California clients.
"Long Beach has been really strong for buyer activity. So have Downey, Carson, and other affordable areas," he said. "Where the midprice is around $400,000, that's where you see most activity.
California as a whole is becoming a hot market for moderate homes, Williams says, with plenty of buying and cash investors in the Bay Area.
But activity "starts to fall off" with more expensive properties, he said.
Data on how well U.S. homes sold in April is due out from the NAR May 22. Its March pending home sales index, a forward-looking indicator based on contracts rather than closings, rose 4.1% from the prior quarter and 12.8% from a year ago. It's at its highest since April 2010.
"It would be a good indicator of likely sales in April and May," Fears said.
What About Prices? Mortgage rates are setting new lows. They now average 3.79% for a 30-year fixed-rate loan, Freddie Mac (FMCC.OB - News) said Thursday. That helps housing as long as buyers can qualify for a mortgage amid a still-tight lending environment.
Nationwide, the median sale price of an existing home fell 0.4% from a year ago in the first quarter, NAR data show. But in a good sign the median rose in over half of the 146 metro areas tracked, vs. just 20% a quarter earlier.
A slip in the median or midpoint price can mean lower-end homes are selling or that home prices are falling. A rising median can mean higher-end homes are selling or that home prices are rising. In data through February, the S&P Case-Shiller home price indexes suggested that U.S. home prices were still widely on the decline.
NAR data show the Miami metro area with a first-quarter median price rise of 9.6% year over year, Tampa 16.1%, Washington 5.7% and Minneapolis 4.8%. More modest increases were reported by Chicago, 1.4%, and Denver, 1.2%. New York fell 3.2% and Los Angeles 4.1%.
Those drops might be a good sign reflecting more sales of distressed homes, Fears says. Such homes, which are mostly foreclosures, amounted to 29% of U.S. sales in March, down from 40% a year ago, NAR says. Although some real estate agents in the field now say they're seeing a rise in sales of distressed properties.