Mortgage market improvement bodes well for 2008 housing

Conditions in the mortgage market are improving for consumers, which should help to release some pent-up demand in early 2008, according to the latest forecast by the National Association of REALTORS®.

Lawrence Yun, NAR senior economist, notes that widening credit availability will help turn around home sales.

“Conforming loans are abundantly available at historically favorable mortgage rates. Pricing has steadily improved on jumbo mortgages since the August credit crunch, and FHA loans are replacing subprime mortgages.”

Yun said it is important to place the current housing market in perspective, and that 2007 will be the fifth-highest year on record for existing home sales.

“Although sales are off from an unsustainable peak in 2005, there is a historically high level of home sales taking place this year — a lot of people are in fact, buying homes. One out of 16 American households will be buying a home this year,” Yun said.

The speculative excesses have been removed from the market and home sales are returning to fundamentally healthy levels, while prices remain near record highs, reflecting favorable mortgage rates and positive job gains, he said.

Yun added, “A cutback in housing construction is a positive sign for the market because it will help lower inventory and firm up home prices. Housing starts, including multifamily units, are likely to total 1.37 million in 2007 and 1.24 million next year, down from 1.80 million in 2006.”