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Jeff Horwich: Bunch of housing market data out this morning. The research firm CoreLogic says U.S. home prices rose 6 percent last quarter, over the same time last year. Mortgage giant Freddie Mac runs its own numbers and got 5 percent. Either way, these are big jumps.
The number of Americans behind on their mortgages has fallen to a three-year low — that’s according to the credit reporting agency Transunion.
Mark Fleming is chief economist at CoreLogic, the firm behind some of these encouraging home price numbers. Thanks for taking a few minutes for us.
Mark Fleming: Thank you for having me.
Horwich: So explain this to me: Why are home prices going up?
Fleming: Home prices are rising at the moment in part because we have our typical seasonal improvements. They’ve actually happened over the last couple of years. But fundamentally, we’re in a marketplace where there’s a better balance between supply and demand. There’s low inventories relative to the demand today, and so house prices are responding positively.
Horwich: What’s going on with all those foreclosures we keep hearing about, that banks have been dumping onto the market?
Fleming: Well actually, that’s the thing — I don’t think they’ve been really getting dumped onto the market. The pressure that those distressed assets is placing on the housing market is reducing at the moment, and again, that’s another good sign for improvement in prices.
Horwich: It’s interesting to me that we’re seeing fewer people falling behind on their mortgages, and yet we’re seeing these signs of a housing market rebound before other parts of the economy — like hiring — have really picked up.
Fleming: That’s right. There’s a significant improvement in new delinquency starts falling dramatically, so the pipeline of distressed assets is slowly beginning to decrease; that’s a good sign. And housing, a lot of people — there’s been pent-up demand, if you will. People have been on the sidelines, waiting for a time to buy. Low interest rates, high levels of affordability — these are all reasons to get out there and buy homes. That being said, not a lot of people are buying, but even so, that trend is on the rise, ever so slowly from a very low bottom. And that combined with better economic health or continued improvements in the economy point to good times for the housing market relative to the last couple of years.
Horwich: Are we in a position to be able to declare a housing rebound at this point?
Fleming: You can never be 100 percent certain, but I think relative to the last few years, the fundamentals in the housing market are much better, and so the likelihood that house prices slide back dramatically over the fall and winter months — which has happened in the last couple of years — I think that likelihood is lower this time around because of fundamental improvements that are there this year that weren’t there in years past.
Horwich: Chief economist Mark Fleming of CoreLogic, thanks a lot.
Fleming: Thank you for having me.