A housing recovery that was
expected to accelerate this year is instead sputtering. And no, you can't just
blame the weather.
Sharp
increases in home prices in much of the USA, along with higher mortgage rates,
have discouraged many house-hunters. Home inventories are at historically low
levels. First-time home buyers, who traditionally drive home sales, remain
saddled with student debt and face still-stringent lending standards.
After
bouncing back smartly in 2012 and most of 2013 following the 2006-09 real
estate crash, the housing market began slowing last fall. Although an unusually
cold and snowy winter hindered activity early this year, home sales and starts
were disappointing again in March, even in the West and South.
First-time
buyers Bill and Lauren Mensinger, who rent a one-bedroom loft in Hanover,
Mass., have been looking for a three-bedroom house for about a year — a mission
made more urgent by the recent birth of their daughter. With homes for sale in
short supply in the Boston area, they've been outbid several times, Bill says,
even for houses that needed extensive repairs.
"It's
draining," says Bill, 37, an architect.
Thirty-year
fixed mortgage rates have risen from 3.4% to 4.33% since the Mensingers began
looking. That's forced them to drop their price limit to $315,000 from
$330,000. They've also grudgingly agreed to widen their search beyond the reach
of Boston's commuter rail line.
Others
aren't even looking.
Lending
standards, despite some easing in recent months, remain tough, especially for
"people who don't have good credit scores," says economist Patrick
Newport of IHS Global Insight.
Economists
still expect the housing market to gain momentum this year as job and wage
growth lead to more new households, credit conditions continue to ease, and
builders ramp up production. Pending home sales increased in March for the
first time in nine months, and real estate brokers in several regions say sales
have been picking up.
But
many analysts now say the housing recovery will take longer than they had
projected. "It hasn't come back as quickly," Newport says.
He
expects housing starts to finally reach 1 million this year for the first time
since 2007 — almost double 2009's level. But he doesn't forecast a return to a
normal annual rate of 1.5 million until the fourth quarter of 2015, several
months later than he had estimated.
Click here
for the full article in USA Today. Also see our related posts, “Why
the Housing Market is Still Stalling the Economy” and
“Homeownership
Rate Slips to 19-year Low.”