Concurrent with the weather, the Atlanta residential real estate index is heating up – just not quite as quickly. Slight improvements in home prices, home sales and the U.S. economy, coupled with outstanding news regarding mortgage originations, caused the Cal-Culator to increase just 0.1 bringing the index to a 6.7, the fourth consecutive month that the index has shown improvement.
Mortgages
The best housing news that emerged during June was the dramatic increase in mortgages year over year. Mortgage originations increased nearly 75 percent from last year, according to Equifax’s National Consumer Credit Trends Report. Equifax attributes the mortgage increase to historically low rates, despite tight lending conditions.
“While rates have recently reversed that trend and are back up to about 4 percent, they remain extremely low historically. These rates, coupled with a housing market that is showing signs of vigor, should carry the mortgage business over the summer,” said Amy Crews Cutts, chief economist at Equifax.
Home Prices and Sales
S&P Dow Jones released two data points, home sales and home prices, that indicate continued strength in the housing recovery. According to Chairman of the Index Committee David Blitzer, existing home sales were up 5.1 percent to 5.35 million, the highest figure since 2009, and single family homes were up 5.6 percent from the previous month, according to the most recent data from S&P Dow Jones Indices.
While the S&P/Case-Shiller Home Price Index shows that the double-digit growth in home prices was indeed unsustainable, the prices “may be leveling off with annual increase of about 4 percent,” according to Blitzer.Four percent is still more than double the rate of inflation, thus a positive sign for the housing industry.
The U.S. Economy
S&P Dow Jones Indices also released a “State of the Union” type economic roundup that shows the economy is rebounding “fairly well from its contract in the first quarter of the year, giving financial-market participants … reason to be somewhat optimistic.” Job gains have accelerated, wages are rising, housing activity has strengthened, consumer spending is on the rise, manufacturing is up and more businesses are optimistic about economic conditions, though the U.S. GDP is down 0.1% in June from May.
The next Cal-Culator will be released August 11. Check back to see if the Atlanta housing market has continued to “level off” or if the summer housing market continues to sizzle.
