Recent reports of an increase in housing affordability was further reinforced during the week ending March 8 as mortgage rates remained near all-time lows.
According to the most recent Primary Mortgage Market Survey from Freddie Mac, the rate for a 30-year fixed-rate mortgage during the week averaged 3.88 percent, from 3.9 percent. Last year at this time the rate averaged 4.88 percent. In addition, the rate for a 15-year FRM reached a historic low of 3.13 percent after a notable decline from 3.17 percent.
"With these historically low rates and declining house prices, the typical family had more than double the income needed to purchase a median-priced home in January, according to the National Association of Realtors Housing Affordability Index which registered the highest reading since records began in 1970," said Freddie Mac vice president and chief economist Frank Nothaft.
Additionally, Nothaft also referenced the CoreLogic National Home Price Index after it trended lower for the sixth consecutive month at the beginning of 2012. The index showed that home prices are now at the lowest level seen since January 2003.
Meanwhile, a recent property value report from Lender Processing Services agreed that overall home prices declined in January, but focused on improvement in some key local housing markets.
"Despite the broad picture of home price declines following the bubble, prices have not been consistently declining for all MSAs in the country," said LPS applied analytics vice president Raj Dosaj. "About one-fifth of all the MSAs that LPS covers has seen average home prices increase since December 2008."
Between June 2006 and December 2008 – the period of the quickest home price depreciation – prices declined at an annual rate of 13.8 percent. However, the rapid decline was short-lived and quickly leveled out. Since then prices have fallen at an annual rate of 4.4 percent.
Some notable states in the company's report that have a higher percentage of areas experiencing home price appreciation are primarily in the West North Central region of the country, including Minnesota, Missouri and Nebraska. In addition, states in the Middle Atlantic area, such as New York and Pennsylvania, have also had notable gains.
As home prices approach their bottom, a number of key economic and housing market fears shared by American consumers have started to subside.
A recent survey conducted by Fannie Mae found that 28 percent of consumers anticipate home prices to improve during the next 12 months, while 55 percent say they will stay the same. On average, Americans who believe home prices will improve say they will rise 0.8 percent.
Meanwhile, other economic indicators were probably factors behind the improvement in positive housing market sentiment.
"The pickup in the pace of hiring over the past few months has helped soothe consumer concerns, lifting their moods regarding their personal finances, the direction of the economy, and their views on the housing market," said Fannie Mae vice president and chief economist Doug Duncan. "As a result, we've seen more potential for economic upside, creating a more balanced near-term outlook."
As a result, the percentage of Americans who feel now is a good time to sell their property improved to 13 percent, marking the highest level in more than a year. However, experts from the government-sponsored enterprise said that despite the improvement, this is still notably low.
In contrast, it was found that 70 percent of consumers feel that the conditions for purchasing property are right, and would make the transition to homeownership as soon as their personal financial condition improves.