The U.S. housing market is heading to 2013 with momentum.
Single-Family Housing Starts slipped in November, posting 565,000 units on a seasonally-adjusted annualized basis. The down reading still marks the third-highest tally of 2012, however, and represents a 105,000 unit increase over just one year ago.
As the housing market continues to improve, home buyers should expect higher home prices.
Housing Starts : 23% Increase In 2012
According to the U.S. Department of Commerce, single-family housing starts fell 4 percent in November where “housing start” is defined as a home on which construction has started.
On a 3-month rolling average, housing starts are happening at their fastest pace in more than 4 years — a period which includes the 2010 federal home buyer tax credit and which predates the mortgage market issues of 2009.
It’s yet one more signal to that today’s housing market is off its bottom.
The nation’s homebuilders appear to agree.
Earlier this week, the National Association of Homebuilders reported home builder confidence up for a ninth consecutive month and at a 6-year high. Builder confidence has been buoyed by high volume buyer foot traffic through model units, which has pushed sales of new units to multi-year highs as well.
Builders expect sales volume to remain high for the next six months, at least. Low mortgage rates may help.
As compared to last year, today’s home buyers have greater purchasing power for new and existing homes. For example, assuming a 20 percent downpayment and a conforming-sized home loan :
- December 2011 : A $1,750 mortgage payment afforded a purchase price of $460,000
- December 2012 : A $1,750 mortgage payment afforded a purchase price of $495,000
Purchasing power has increased 7.6% since last year and, when combined with today’s rising rents, buyer demand for newly-built homes remains high.
Builders have noticed. Buyers should, too.
Make Your Mortgage Payment Budget
If you’re planning to buy a home in 2013, it’s appears that home prices will move higher. Mortgage rates are likely to move higher, too — by an entire percentage point, according to a mortgage banker trade group. Therefore, homes should be more costly overall in 2013.
The good news is that low-downpayment programs such as the FHA 96.5% home loan and the VA’s 100% home loan remain accessible and inexpensive.
Make your mortgage payment budget using today’s mortgage rates. See how much home you can afford.