The housing sector is experiencing an uneven recovery as home sales increase while home prices drop and mortgage lending tighten.
Home sales rose to 3.7 percent for the sixth time in the past eight months in March this year but was 6.3 percent lower compared to the increase last year. Forty percent of the figure came from distressed homes while 35 percent came from cash sales from the past month.
Home prices, on the other hand, dropped to 5.9 percent to $159,000 compared to prices last year. The year-over-year average dropped to 8.2 percent according to the ReMax monthly metro index of home sales.
In addition, mortgage borrowers are still finding it hard to get a loan as lenders continue to tighten their credit policies. The average credit score required to get a conventional mortgage rose from 720 in 2007 to 760 this year.
National Association of Realtors Chief Economist Lawrence Yun thinks that it would have been notably stronger if mortgage lending returned to normal and safe standards ten years ago in time with the increase in home sales today.
On the bright side, the rise in home sales was faster than normally expected by analysts. The dynamic increase is said to show an improving pattern that will continue to develop despite the decline in home values and mortgage lending activity.
If unemployment eases and affordability conditions emerge, moderate improvements are projected for 2012 but with no expected growth to happen every month because of buyers having difficulty in obtaining mortgages.