In a mid-year check of the nation’s housing barometer, real estate database Trulia noted housing indicators were down in June. New construction starts, existing home sales and delinquency and foreclosure rates all shifted negatively during the month, pushing the recovery from 60% back to “normal” in May to 54% in June.
However, the trends overall for the first half of the year are more favorable, Trulia says, noting construction starts up 24% in the first half of the year versus the same period in 212, with delinquency rates down 14% and existing home sales up 32%.
“Prices climbed steeply, outpacing rents, but are far from bubble territory,” notes Trulia Chief Economist Jed Kolko. “…asking home prices were up 10.7% year-over-year in June. Prices rose year-over-year in 99 of the 100 largest metros, most sharply in California and elsewhere in the West. In contrast, rents rose just 2.8% year-over-year nationally. But this is a rebound, not a bubble: prices still look 7% undervalued compared with long-term fundamentals, and buying a home is still 37% cheaper than renting.”
The outlook for housing remains solid, but rapid price gains won’t last, Kolko says.
“Fading investor demand, rising mortgage rates, and more homes for sale should all slow down price gains and prevent us from getting back into a bubble,” he writes.
Uncertainty in Washington, D.C. also remains, leading to an indefinite future for those seeking new mortgages. Spanning the new Qualified Mortgage Rule as well as the futures of Fannie Mae and Freddie Mac, the outlook will become clearer once those issues are resolved, Trulia says.
Written by Elizabeth Ecker