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U.S. home prices rise 10.9% – most since 2006

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U.S. home prices jumped 10.9 percent in March compared with a year ago, the most since April 2006. A growing number of buyers are bidding on a tight supply of homes, driving prices higher and helping the housing market recover.

The Standard & Poor’s/Case-Shiller home price index released Tuesday also showed that all 20 cities measured by the report posted year-over-year gains for the third straight month.

And prices rose in 15 cities in March from February. That’s up from only 11 in the previous month. The monthly figures aren’t seasonally adjusted and may reflect the beginning of the spring buying season.

Prices rose in Phoenix by 22.5 percent over the past 12 months, the biggest gain among cities. It was followed by San Francisco (22.2 percent) and Las Vegas (20.6 percent).

New York City had the smallest year-over-year increase at 2.6 percent, followed by Cleveland at 4.8 percent.

“Rising home prices may begin to alleviate a lack of housing inventory … by encouraging more homeowners to put their properties on the market,” said Maninder Sibia, an economist with Economic Advisory Service, in a note to clients. “The housing market is clearly improving.”

The index covers roughly half of U.S. homes. It measures prices compared with those in January 2000 and creates a three-month moving average. The March figures are the latest available.

The U.S. housing market is steadily recovering, buoyed by solid job gains and near-record low mortgage rates. Sales of new homes rose in April to nearly a five-year high. And sales of previously occupied homes ticked up in April to the highest level in three and a half years.

Despite the gains, a limited number of homeowners are putting their houses on the market. That’s helped lift home prices. And it’s made builders more willing to ramp up construction. Applications for building permits rose in April to the highest level in nearly five years.

The supply of available homes jumped in April, but was still 14 percent below its level a year earlier.

Stan Humphries, chief economist at Zillow, a real estate data provider, said that the increase in the Case-Shiller index has been skewed higher by cities such as Phoenix and San Francisco. Fewer homes are available in those areas because many homeowners still owe more on their mortgages than their homes are worth. That makes it difficult to sell.

Fed bond buying has big impact on mortgage rates

The Federal Reserve is torn over when to slow its aggressive efforts to stimulate the economy.

Its uncertainty burst into view Wednesday, when Chairman Ben Bernanke testified to Congress in the morning and the Fed in the afternoon released the minutes of its last policy meeting.

Stock prices gyrated through the day as investors struggled to determine whether the Fed might soon pull back – even gradually – on its extraordinary efforts.

At one point, the Dow Jones industrial average had jumped more than 150 points after Bernanke’s testimony signaled his belief that it was too soon for the Fed to pull back on its support for the economy, including its $85 billion a month in Treasury and mortgage bond purchases.

But the Dow plunged and closed down 80 points after minutes from the Fed’s April 30-May 1 meeting showed that several members favored cutting the level of purchases, perhaps as early as June. Even that was hard to decipher because the minutes said members would have to agree that the economy had shown strong and sustained growth before the Fed would slow its bond purchases.

The Fed is buying the bonds to try to ease long-term borrowing costs, encourage borrowing and accelerate growth. And it’s said it will maintain its pace of bond purchases until the job market improves substantially.

Economists don’t expect the Fed to curtail the bond purchases next month. But Paul Ashworth, chief U.S. economist for Capital Economics, said the September meeting is a real possibility.

For one thing, Bernanke told lawmakers Wednesday that the Fed might reduce the purchases within the next few meetings if the job market showed “real and sustainable progress.” Bernanke is scheduled to hold a news conference after the September meeting, so Ashworth said it would allow him to directly explain the change then.

Still, whatever the Fed does is likely to be done gradually, Ashworth said.

“It could begin with a relatively trivial reduction to gauge market reaction,” he said.

Most of Bernanke’s testimony Wednesday to the Joint Economic Committee focused on the many risks the U.S. economy still faces and the help the Fed’s support programs have provided. His remarks suggested that the Fed isn’t ready to taper the bond purchases.

In recent weeks, the job market and the broader economy have shown renewed vigor. The unemployment rate has reached a four-year low of 7.5 percent. A resurgent housing market has helped lift consumer confidence. And a powerful stock market rally has made many consumers feel wealthier.

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International migration is projected to surpass natural increase (births minus deaths) as the principal driver of U.S. population growth by the middle of this century, according to three new series of population projections released by the U.S. Census Bureau.

If true, it will mark the first time that natural increase wasn’t the leading cause of population growth since at least 1850, when the census began collecting information about residents’ country of birth. The shift is projected to occur between 2027 and 2038, depending on the future level of international migration.

“This projected milestone reflects the mix of our nation’s declining fertility rates, the aging of the baby boomer population and continued immigration,” says Thomas Mesenbourg, the Census Bureau’s senior adviser.

A number of variables could impact an upswing in international immigration, however.

“Projections of international migration are challenging to produce, because it is difficult to anticipate future social, political and economic conditions and how they may influence migration into or out of the United States,” says Census Bureau demographer Jennifer Ortman. “Developing this range of alternative projections shows how differing levels of net international migration alter the pace at which the U.S. population grows, ages, and diversifies.”

To compensate for unanticipated changes, the Census Bureau developed three possible ways the population could grow, though in general, higher international migration would mean a faster-growing, more diverse and younger U.S. population.

The low estimate would increase annual levels of net international migration slightly from 702,000 in 2012, to 824,000 in 2060.

The high series would increase net international migration from 747,000 in 2012 to 1.6 million by 2060.

The final series projects a constant level of net international migration of 725,000 throughout the 2012-2060 period.

The high series projects that the minority population – all people except for those that are non-Hispanic, single-race white – would climb from 37 percent of the total in 2012 to 58.8 percent in 2060. In contrast, the U.S. minority population would reach 55.9 percent in the low series.

The Asian population, 5.1 percent of the total in 2012, would reach 7.3 percent in 2060 in the low series and 9 percent in the high series.

Similarly, the Hispanic population was 17 percent of the total in 2012 and is projected to reach 29.9 percent in 2060 in the low series and 31.3 percent in the high series.

 

Many buyers confused about mortgage process

Most homeowners, especially first-timers, borrow a large amount of money to buy a home. But how much do they know about the process? A survey conducted by Ipsos Ipsos for Zillow attempted to find out.

According to the Zillow Mortgage Marketplace survey of first-time homebuyers, they answered one-third (32.5 percent) of the questions about basic mortgage information incorrectly.

For example, one-third (34 percent) of first-time homebuyers don’t realize it’s possible to get a home loan with a downpayment less than 5 percent.

Many first-time buyers also don’t understand how to secure the best possible interest rate and loan terms. One-quarter (26 percent) incorrectly believe they’re obligated to close their loan with the lender that pre-approved it; and, separately, 24 percent incorrectly believe that the best interest rates and fees can always be found through the bank they currently use.

Additionally, one-third of buyers (34 percent) believe all lenders are required by law to charge the same fees for credit reports and appraisals, even though it’s best to shop multiple lenders to compare rates and fees.

Confusion also reigns after the home sale. Almost half (47 percent) of current homeowners believe they must wait at least one year between refinancing.

“All too often buyers focus on negotiating a lower home price and ignore the importance of finding the right loan,” says Erin Lantz, director of mortgages for Zillow. “If a homebuyer can lower their interest rate by even half a percentage point, they can not only increase their purchasing power, but save thousands of dollars over the life of the loan.”

Additional survey findings

• One-third (34 percent) of polled prospective homebuyers do not know what the term “annual percentage rate” (APR) means. The annual percentage rate (APR) is a yearly rate that reflects the true cost of a mortgage and is inclusive of the interest rate, points, mortgage insurance (when applicable), and other fees, including origination and underwriting fees. The APR will typically be higher than the interest rate quoted by lenders, and should be used as a starting point when comparing loan quotes between lenders.

• Half (50 percent) of prospective homebuyers do not understand that mortgage rates change throughout the day. In reality, much like the stock market, mortgage rates can change rapidly. To get the optimum rate, it is important to monitor rates and shop around.

• Nearly one-third (31 percent) of current homeowners incorrectly believe that you must wait seven years after a short sale or foreclosure to purchase again. In most cases, homebuyers%2

Many buyers confused about mortgage process

Most homeowners, especially first-timers, borrow a large amount of money to buy a home. But how much do they know about the process? A survey conducted by Ipsos Ipsos for Zillow attempted to find out.

According to the Zillow Mortgage Marketplace survey of first-time homebuyers, they answered one-third (32.5 percent) of the questions about basic mortgage information incorrectly.

For example, one-third (34 percent) of first-time homebuyers don’t realize it’s possible to get a home loan with a downpayment less than 5 percent.

Many first-time buyers also don’t understand how to secure the best possible interest rate and loan terms. One-quarter (26 percent) incorrectly believe they’re obligated to close their loan with the lender that pre-approved it; and, separately, 24 percent incorrectly believe that the best interest rates and fees can always be found through the bank they currently use.

Additionally, one-third of buyers (34 percent) believe all lenders are required by law to charge the same fees for credit reports and appraisals, even though it’s best to shop multiple lenders to compare rates and fees.

Confusion also reigns after the home sale. Almost half (47 percent) of current homeowners believe they must wait at least one year between refinancing.

“All too often buyers focus on negotiating a lower home price and ignore the importance of finding the right loan,” says Erin Lantz, director of mortgages for Zillow. “If a homebuyer can lower their interest rate by even half a percentage point, they can not only increase their purchasing power, but save thousands of dollars over the life of the loan.”

Additional survey findings

• One-third (34 percent) of polled prospective homebuyers do not know what the term “annual percentage rate” (APR) means. The annual percentage rate (APR) is a yearly rate that reflects the true cost of a mortgage and is inclusive of the interest rate, points, mortgage insurance (when applicable), and other fees, including origination and underwriting fees. The APR will typically be higher than the interest rate quoted by lenders, and should be used as a starting point when comparing loan quotes between lenders.

• Half (50 percent) of prospective homebuyers do not understand that mortgage rates change throughout the day. In reality, much like the stock market, mortgage rates can change rapidly. To get the optimum rate, it is important to monitor rates and shop around.

• Nearly one-third (31 percent) of current homeowners incorrectly believe that you must wait seven years after a short sale or foreclosure to purchase again. In most cases, homebuyers%2