“More jobs means more potential home buyers,” said Lawrence Yun, chief economist at the National Association of Realtors. “It’s a counteracting force to rising mortgage rates.”
What’s more, credit markets are “modestly” thawing, according to Fannie Mae’s forecast, and the Fed’s survey of senior loan officers published this month showed domestic banks mostly easing their standards over the past three months. Demand was stronger in most loan categories, the Fed reported.
Qualification standards for mortgages went from one extreme during the end of the housing boom -- much too loose -- to the other during the beginning of the housing recovery, Yun said.
“The recovery has been held back by underwriting standards that have been overly stringent,” Yun said. “Loans have been performing so well during the last three years, and the values of homes that collateralize the loans have been rising, so we expect to see lenders dialing back.”
The housing market hasn’t returned to pre-crisis levels because a whole class of “dangerous” adjustable-rate mortgages was eliminated and underwriting standards are tougher, said James Grosfeld, former chief executive officer at the homebuilder now known as PulteGroup Inc. Fannie Mae and Freddie Mac “are probably writing the best mortgages, the safest mortgages that they’ve ever written right now,” Grosfeld said in an interview with Tom Keene on Bloomberg Television’s “Surveillance.”
Growing demand and a lack of supply propelled the median price 14% higher in June, the biggest year-over-year gain since the record 17% in October 2005, according to Yun.
Median prices for single-family homes gained in about nine out of every 10 U.S. cities in the second quarter as buyers competed for a limited supply of properties, according to Yun. About 2.2 million homes were available for sale in June, 7.6% less than a year earlier, he said.
“We had a market that overshot its bottom on the way down, and we’re struggling to keep up with demand as it makes its way up,” said Bank of America’s Hanson.