Buying a home is more affordable than renting in nearly two-thirds of metros after three years of paying for a mortgage, according to Zillow. For its calculation, Zillow considered costs associated with buying and renting, such as upfront payments, closing costs, insurance, utilities, and maintenance. Then, the online marketplace looked at historic and anticipated home value appreciation rates, rental prices, and rental appreciation rates to determine how many years would need to pass before buying becomes less expensive than renting. According to Zillow, in 64 percent of U.S. metros, buying is more affordable than renting if homebuyers plan to stay in their home for at least three years. “Locally high home value appreciation in many areas, combined with historically low mortgage rates and low home prices relative to recent peaks, has made buying a home a more advantageous financial decision than renting for many would-be buyers,” said Dr. Stan Humphries, Zillow’s chief economist. [Read this article]

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Consumer sentiment rebounded in early May to the highest level in nearly six years, an encouraging sign after recent data that has suggested economic growth is cooling. A gauge of future economic activity released on Friday also suggested the expected slowdown would be temporary, with the index rising to a near five-year high in April. Economists expect growth will likely slow in the second quarter from the 2.5 percent pace at the beginning of the year as tighter fiscal policy starts to bite. But recent stronger than expected improvement in several areas, including the labor market and retail sales, has suggested the recovery remains resilient. “We’re still definitely on the recovery path. We expect that this is going to be a very long and gradual recovery,” said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida. “Most economists are looking for stronger growth in the second half of the year and into next year.” [Read this article]

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The index of U.S. leading indicators climbed in April, a rebound from March that suggests the world’s largest economy will accelerate later this year. The Conference Board’s gauge of the outlook for the next three to six months climbed 0.6 percent in April after falling a revised 0.2 percent in March that was steeper than previously reported. Advancing stock prices and a recovering housing market may be propping up household spending, which accounts for about 70 percent of the economy. “We’re still definitely on the recovery path, but we anticipated all along that this is going to be a very gradual recovery,” said Scott Brown, chief economist at Raymond James & Associates Inc. He said multiple factors could drive economic improvement going forward. “It’s typically a lot of little things getting better at the same time. You get a little more job growth, a little more consumer spending, bank credit eases up a little more,” according to Brown. [Read this article]

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Solid hiring helped lower unemployment rates in 40 U.S. states last month, the most since November. The declines show the job market is improving throughout most of the country. The Labor Department said that unemployment rates increased in only three states: Louisiana, Tennessee and North Dakota. Rates were unchanged in seven states. California, New York and South Carolina all reported the largest unemployment rate declines in April. Each state’s rate fell by 0.4 percentage points. The report said 30 states added jobs in April, while 18 reported fewer jobs. Nationwide, employers added 165,000 jobs in April and the unemployment rate fell to a four-year low of 7.5 percent. The economy has added an average of 208,000 jobs a month since November. The housing recovery is creating jobs in many states. Texas has created 41,500 construction jobs in the past year. That’s helped the state be the nation’s leader in job growth over the past year and in April. The state added 33,100 jobs last month and 326,100 jobs over the past 12 months. [Read this article]

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The “juice” that will fuel the economic recovery is housing, or more specifically, new home sales, Freddie Mac stated in its economic and housing market outlook report for May. Although the unemployment rate has been decreasing, falling to 6.5 percent in April, the GSE explained the reduction is due to a decline in the labor force participation rate, not an increase in employment. According to Freddie Mac, the labor force participation rate, which remained at 63 percent in April, was at the lowest level since 1980. However, as the building of new homes adds to the availability of jobs, the unemployment rate should inch down. “Based on historical correlations, every additional 100 thousand housing units started brings down the unemployment rate for construction workers by about three-fourths of a percentage point,” the report stated. For 2013, Freddie Mac forecasts housing starts will increase by 200,000 units, which would support over 100,000 new jobs in construction. Adding to this are the additional households that will form. [Read this article]

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Many housing observers agree that Generation Y – people from 18 to 34 years of age – largely prefers downtown living, often in rental apartments with easy access to walkable neighborhoods and public transportation. The real question is whether they’ll outgrow those tastes once they earn higher salaries and have kids. The Urban Land Institute, or ULI, the land-use association that long has championed dense development over sprawl, this week plans to release the results of a survey of generational housing preferences, highlighting those of Generation Y. ULI heralds Generation Y, with nearly 80 million members, as a potential “game changer” in the U.S. real estate market (they are also known as “Millennials”). Of survey respondents in that age range, 59% said they prefer their neighborhood to have a variety of housing types; 62% favor mixed-use developments with shops, restaurants and offices; and 52% like pedestrian-friendly neighborhoods. [Read this article]

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Ever since the recovery began in 2009, a weak housing market has held back the U.S. economy. The first rebound in home prices was lackluster and after only a year was followed by another dip. But the recent upturn in home prices looks like the real thing. One clear sign of a turning point: In March, homeownership hit a 17-year low, while the 12-month gain in home prices was the biggest in seven years. Those two extremes suggest that the market has hit bottom. The people who are least well financed have been squeezed out, while demand is growing among people who can afford to pay higher home prices. If that trend continues – and there are good reasons to believe it will – a substantial burden will be lifted from the U.S. economy. In the first quarter, home prices were higher (compared with a year earlier) in 133 of 150 metropolitan areas, according to the National Association of Realtors. On a national basis, the median home price gained 11.3%, the biggest yearly gain since 2005. [Read this article]

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Confidence among U.S. homebuilders improved in May for the first time in five months as buyers rush to take advantage of near record-low mortgage rates. The National Association of Home Builders/Wells Fargo index of builder confidence rose to 44 from a revised 41 in April. “Builders are noting an increased sense of urgency among potential buyers as a result of thinning inventories of homes for sale, continuing affordable mortgage rates and strengthening local economies,” said Rick Judson, chairman of the trade group. “This is definitely an encouraging sign.” Low mortgage rates, a strengthening job market and limited inventories are benefiting builders as the housing market contributes to growth this year after emerging as a bright spot in 2012. All three components of the homebuilder survey showed improvement: sales outlook for the next six months, prospective buyer traffic and current single-family home sales. [Read this article]

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It’s shaping up to be a hot summer for the U.S. housing market. An index that measures prices received by real-estate agents and brokers posted its largest year-over-year jump in April in nearly eight years. Home price indexes such as the S&P/Case-Shiller series report prices with a two-month delay. The producer price index, on the other hand, provides an early snapshot at how the spring housing season is shaping up. The index showed a 9.1% gain in prices from a year ago. While it isn’t seasonally adjusted, economists at Credit Suisse note that the March-to-April jump of 2.7% was the largest March-to-April gain in the 17-year history of the series. The monthly gain “blew away all other past Aprils,” wrote Jonathan Basile, an economist at Credit Suisse. Home prices have been on a tear over the past year as buyers return to a market where the number of properties is in short supply. [Read this article]

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Consider this one more sign that the housing market is heating up: Appraisers are putting higher values on homes again, allowing for more deals to go through. During the housing bust, sales were often derailed by low-ball appraisals that fell far shy of a home’s selling price. For example, if a home cost $500,000 and required a 20% down payment of $100,000, the buyer would need to finance $400,000. But if the appraiser valued the home at $450,000, the buyer would only be eligible for a $360,000 loan – making the home too costly for some buyers. But now, as home prices climb and housing inventories shrink, appraisers are valuing homes at or above their selling prices, according to Lawrence Yun, chief economist for the National Association of Realtors. And in some of the hottest markets, appraisals are coming in well above the selling price. [Read this article]

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