The home loan mortgage and residential real estate market has been in a trough for the last two years. The housing market has seen the most dramatic changes, going from a sellers’ to a buyers’ market. Last month, homes posted the biggest gains in the last two years. This was fortunate news for an industry that has found it challenging to find buyers in the current economic conditions.
According to the Commerce Department, housing construction increased by 8.2 percent in April with growth mainly attributable to apartment construction. Experts predict that the rebound will be difficult to manage; especially when homebuyers have enormous choice in home inventory. It is debatable whether the housing or mortgage loan arena will stabilize this year.
The protracted housing-mortgage troughs have negatively impacted the overall economy, raising concerns for homebuilders, home sellers, mortgage lenders and mortgage brokers. It is quite a feat to see a rise in the housing market in April, in an atmosphere of high food and gas prices.
The main strength in housing construction came mostly from a rise in new apartment construction which had soared by 36 percent to a seasonally adjusted yearly rate of 340,000 units. Applications for home building permits, seen as excellent indicators of future construction activity, also showed increases in April, jumping by 4.9 percent to 978,000 units. This was the first expansion in building permits since December of last year.
A new Home Loan Mortgage Bill that is meant to bring certain homeowners mortgage loan relief has gotten congressional committee approval. In a rare display of backbone courage, the Democrats rejected inestimable Republican challenges to the bill. The bill authorizes the Federal Housing Administration to guarantee up to $300 billion in new mortgage loans given by government-approved mortgage lenders.
It is an encouraging sign from the House Financial Services Committee that the bill passed by a vote of 42 to 21. Committee chairman Rep. Barney Frank, the main sponsor of the bill, hopes that the bill will protect the homes of millions of Americans from foreclosures.
The current measure should help homebuilders tangentially; in far as, not adding more homes to the burgeoning unsold home inventory. But this doesn’t guarantee that housing construction will receive respite from the pressure of reducing an immense backlog of unsold homes.
Multi-pronged efforts from private and governmental sectors are in play to increase housing demand. This in turn will prod mortgages to follow suit.