Foot Traffic Up as Home Buying Becomes More Affordable

April 16, 2009 – (RealEstateRama) — Thanks to record low mortgage rates and declining home prices, 55 million families — or half of all U.S. households — can afford today’s $200,000 median-priced new home, according to figures released by NAHB.<!–

more–>

“That’s an increase of 17 million households from conditions just two years ago and the best housing affordability number we have seen in years,” said NAHB Chairman Joe Robson. “We are now seeing the first signs that buyers are returning to the marketplace.”

Based on data from the U.S. Census Bureau comparing home prices, mortgage rates and the minimum income needed to purchase a median-priced home in February 2007 and February 2009, a typical family today can purchase a house with $20,000 less in household income and save nearly $500 per month on their principal, interest, taxes and insurance.

About 55.4 million households can afford to purchase a home today, compared with 38.4 million two years ago, according to figures compiled by NAHB.

“With affordability up dramatically, reports from our builders in the field indicate that foot traffic in new homes is on the rise and consumer interest is increasing with each passing day. These are encouraging signs that the housing market may be finally reaching a bottom,” said Robson.

Entering the crucial spring home buying season, there are other signs that buyers are starting to return to the market.

Single-family permits were up 11% in February, new and existing home sales also posted gains and the huge inventory backlog is being slowly whittled down.

In a survey for Century 21 Real Estate last month among prospective first-time home buyers who indicated they were likely to purchase a home in the next two years, a majority — 78% — said that now is a good time to buy a home. Of those responding to the online poll, 68% said that now is a better time to buy than six months ago.

Another sign that consumers are considering jumping back into the housing market is the growing interest in the $8,000 first-time home buyer tax credit included in the recently enacted economic stimulus package. During February and March, 1.5 million visitors logged on to NAHB’s consumer Web site, www.federalhousingtaxcredit.com, to learn more about the tax credit.

Further, a new survey commissioned by Move, Inc. found that nearly 20% of those who plan to purchase a home this year are doing so to take advantage of the tax credit, which expires at the end of November.

“With home values in many markets at the lowest level since 2003, an $8,000 tax credit available to first-time home buyers, fixed-rate mortgages under 5% and an outstanding selection of homes to choose from, buyers are starting to recognize that this has the makings for a one-time opportunity to break into the market,” said Robson.

Housing is a critical component of the U.S. economy, accounting for about 15 cents of every dollar spent in this country, so any upturn in the housing market should be viewed as good news for the overall economy, said Robson.

Construction of an additional 500,000 single-family homes — the difference between today’s anemic construction rate and one that would move closer to meeting the underlying demand for housing — would generate 734,000 jobs and $35 billion in wages in the construction industry and another 790,000 jobs and $37.7 billion wages in manufacturing, trade and service sector jobs, he noted.

Additionally, another half-million housing starts would bolster the tax base for government, generating $45 billion in federal, state and local tax revenues. And the benefits go well beyond the completion of each home. Within the first year after buying a home, those half million households will spend about $2.5 billion more on appliances, furnishings and property alterations.

“Clearly, housing will be central to any economic recovery we experience in the months ahead,” said Robson.

For more details on how lower prices and interest rates during the past two years have spurred a significant uptick in affordability, click here.

Source: NBAA

SHARE

The Home Builders Association of Alabama (HBAA) is a federation and by joining the local homebuilders association in your area, you automatically become a member of the HBAA and the National Association of Home Builders (NAHB). For more information about membership or to find the local in your area, please contact the HBAA at (800) 745-4222. You can also find your local homebuilders association by visiting our

Contact:

Home Builders Association of Alabama
7515 Halcyon Summit Dr., Suite 200
Montgomery, AL 36117

P.O. Box 241305
Montgomery, AL 36124-1305

Voice: 334-834-3006
Toll Free: 1-800-745-4222

Previous articlePlanning for Aging-in-Place Remodeling on the Rise
Next articleRegister Now for Golf Classic