Sharga: Economics Now Drive Housing Recovery

IRVINE, CA—Growth in the residential market has nowaligned more closelywith economic fundamentals, says Auction.com's Rick Sharga.The online real estate marketplace issued its report on the nation's hottest single-family markets Wednesday as the National Association of Home Builders reported a four-point increase in the Housing Market Index it produces in partnership with Wells Fargo.

“As the US housing market has continued to recover from the Great Recession, we've seen significant regional variances in terms of both price appreciation and sales volume,” says Sharga, EVP at Auction.com. “Earlier in the recovery, most of the growth came from markets that had suffered the biggest declines during the housing bust, but what we're seeing today is more in line with fundamental economic trends: markets with the best job growth and population growth are recovering most quickly.”

Auction.com's ranking of the top housing markets dovetails with Coldwell Banker Commercial's recent ranking of the nation's best commercial real estate cities. Denver, which tops both rankings, is followed in the Auction.com roster by San Antonio, Nashville, Fort Lauderdale, FL and Dallas. What all have in common are rising home prices, favorable affordability, strong housing demand and excellent economic and demographic conditions pointing to future demand, the company says.

The Southwest continues to be the strongest region overall, says Auction.com, thanks to strength in both local economies and population growth. The Southeast and West also show promise, with rapid improvement seen even in markets that were hard-hit by the downturn. Peter Muoio, Auction.com's chief economist, says the firm pays close attention to economic and demographic trends in each of the nation's top 49 housing markets, “as single-family housing markets are naturally intertwined with the overall health of the local economy.”

Headquartered in Washington, DC, NAHB says all three HMI components registered gains in April. The component charting sales expectations in the next six months jumped five points to 64, while the index that measures buyer traffic increased four points to 41 and the component gauging current sales conditions rose three points to 61.

The future sales component reached “its highest level of the year,” says David Crowe, NAHB's chief economist. “This uptick shows builders are feeling optimistic that the housing market will continue to strengthen throughout 2015.”

In related news, CoreLogic on Tuesday reported declines in both inventory of foreclosed homes and foreclosure activity. The analytics firm, also headquartered in Irvine, said inventory was down 27.3% year over year in February, while the number of completed foreclosures fell 15.7% in that time frame. The number of completed foreclosures in February is down 67% from the September 2010 peak.

Also down from a year ago was the number of serious residential mortgage delinquencies, which declined 19.3% from February 2014. At 4%, the delinquency rate is the lowest since June 2008, CoreLogic says.