Recent housing indexes have shown single-family home prices are on the rise, providing more evidence that the â€œbottomâ€ of the market is already behind.
"Weâ€™re wiping out just about all of the decline,â€ Joel Naroff, chief economist at Naroff Economic Advisors, told NBC.com about recent housing data showing home prices inching up. â€œIt indicates the market has turned the corner on the pricing side.â€
Some recent housing indexes suggest that the â€œbottomâ€ of the market was reached in January 2012. Since that time, housing prices have been picking up in many housing markets.
But "the turnaround in home prices was unexpected," says Patrick Newport, an economist with IHS Global Insight. "The conventional wisdom in February, following that landmark agreement [of the $26 billion mortgage settlement with the nationâ€™s five largest banks], was that we would see a surge in foreclosures of some size that would lead to lower home prices. This surge never materialized and home prices have turned.â€
Newport points to several signs of a housing market on the mend. For one, housing starts are up, after reaching a low in the fourth quarter of 2011. Also, he says the FHFA monthly House Price Index shows a 3.7 percent increase in May year-over-year, which he notes is higher than inflation and â€œmeans that real housing wealth, a consumer spending driver, was also up.â€
The increase in home prices is also leading to a fewer number of home owners who are underwater on their mortgages, owing more on their mortgage than their home is currently worth. The number of underwater home owners fell from 12.1 million at the end of 2011 to 11.4 million at the end of the first quarter this year, according to CoreLogic data.
Source: â€œEvidence Mounts that Home Prices Hit Bottom Last Winter,â€ NBC News (July 31, 2012)