At Toll Brothers Inc., the largest U.S. luxury-home builder, benefits from the uptick in the housing market are evident.
“We’re in recovery, it’s early, but it certainly feels like it’s real and it feels like it will be sustained,” Douglas C. Yearley, Toll Brother’s chief executive officer, said in a March 4 presentation. “We had a really good spring 2012 selling season. And now we’re having an even better spring 2013 selling season. We are beginning to have some real pricing power.”
Increasing property values are helping the market heal. The share of U.S. homeowners who owe more on their properties than the real estate is worth dropped by about 200,000 in the fourth quarter, CoreLogic Inc. said on March 19, down to 10.4 million homes. Home prices jumped 9.7% in the 12 months through January, the biggest gain since April 2006, according to Irvine, California-based CoreLogic.
At the same time, near record-low borrowing costs are helping keep properties affordable. The average rate on a 30- year, fixed-rate purchase loan was 3.63% last week, compared with 3.92% a year ago, according to McLean, Virginia-based Freddie Mac. The 30-year rate reached a record- low 3.31% in November.
“One of the most powerful tools we have is bringing down mortgage rates and stimulating home-buying, construction, and related industries,” Fed Chairman Ben S. Bernanke said yesterday in a press conference. Financial institutions may have “gone too far” in setting requirements to obtain financing amid concerns about new regulations, he said. Banks “may have tightened the mortgage credit box more than would be desirable in a long-run, healthy economy,” Bernanke said.