The light at the end of the tunnel is so bright it's almost blinding. Home sales are in an upward trend, and mortgage financing is easier to obtain. Progress is slow but clearly positive.
After months of stagnant activity, pending home sales rose in March, marking the first gain in the past nine months, according to the National Association of Realtors.
The Pending Home Sales Index, an indicator based on contract signings, rose 3.4 percent to 97.4 from an upwardly revised 94.2 in February, but is 7.9 percent below March 2013 when it was 105.7. Lawrence Yun, NAR's chief economist, said a gain was inevitable.
"After a dismal winter, more buyers got an opportunity to look at homes last month and are beginning to make contract offers," he said. "Sales activity is expected to steadily pick up as more inventory reaches the market, and from ongoing job creation in the economy."
The index in the Northeast increased 1.4 percent to 78.8 in March, but is 5.9 percent below a year ago. In the Midwest, the index slipped 0.8 percent to 94.5 in March, and is 10.1 percent below March 2013. Pending home sales in the South rose 5.6 percent to an index of 112.7 in March, but are 5.3 percent below a year ago.
The index in the West increased 5.7 percent in March to 91.0, but is 11.1 percent below March 2013. Home sales are expected to trend up over the course of the year and into 2015, NAR reported.
Q: Are mortgage rates finally going up?
A: Not yet. In fact, they recently lowered to the lowest rate of this year. Freddie Mac released the results of its Primary Mortgage Market Survey showing average fixed mortgage rates moving down further.
This follows the decline in Treasury yields as the economic growth for the first quarter came in well below market expectations. At 4.21 percent, the 30-year fixed-rate mortgage is at its lowest since the week of Nov. 7, 2013.
Q: Are there mandatory changes in reverse mortgage contracts?
A. Yes, one important change is now in effect. Borrowers' spouses will no longer automatically be required to repay the mortgage when the person listed on the loan dies.
However, the policy change does not help borrowers already in foreclosure.
Q: Is it better to buy or rent a home in today's market?
A: In most cases, it's best to buy a home. But there are exceptions. Zillow's break-even horizon analysis came to an interesting conclusion:
In half of metros, buying a home is a better financial decision than renting for buyers intending to stay in their home at least two years. The company's analysis includes all costs associated with buying versus renting, including upfront payments, closing costs, anticipated monthly rent and mortgage payments.
Q: What is the current trend in home prices?
A: Prices are rising at a slow but steady pace. The S&P/Case-Shiller Home Price Indices, considered one of the preeminent measures among home price indicators, shows prices among 20 of the nation's biggest markets grew 0.8 percent on a seasonally adjusted basis in February.
This matches January's rate of growth. Unadjusted, the index was unchanged month over month, though even that was an improvement over a 0.1 percent drop to start the year.
Q: What do housing industry leaders think about the proposed changes in the "qualified mortgage" rule?
A: Generally, they have a positive view of it. For example, David Stevens, president and CEO of the Mortgage Bankers Association, issued the following statement regarding the Consumer Financial Protection Bureau's proposed changes to the "qualified mortgage"/"ability-to-repay" rule.
"This proposal is a positive development for consumers because it would allow lenders to extend safe, sustainable Qualified Mortgage loans to considerably more qualified borrowers. As is being considered, if a lender believes it has offered a QM loan but later discovers the points and fees exceeded 3 percent of the loan amount, the excess could be refunded to the borrower and the loan could still meet QM requirements."
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