Continued good news for the housing market?

Frank Nothaft, Freddie Mae vice president and chief economist said in a press release from Freddie Mac, "Long-term mortgage rates were barely changed this week, remaining historically low, which is helping to sustain a high level of affordability in the home-purchase market. Low rates contributed to existing home sales rising for the fourth consecutive month to an annual pace of 5.24 million in July, the most since August 2007, according to the National Association of Realtors®.

"Similarly, new home sales rose for the fourth month in a row to 0.4 million, the strongest pace since September 2008, the Commerce Department reported. The sales gain helped to reduce the number of new unsold houses on the market to the lowest amount since March 1993. In addition, house prices in June rose nationally for the second consecutive month, according to the Federal Housing Finance Agency's purchase-only house price index."

(courtesy of Mortgage News Daily)

It seems to me that we had possibly hit the bottom of this housing slump in January 2009 - but are current housing reports giving us the full picture? Even allowing for the usual springtime-summertime activity increases, news reports have shown that overall activity is increasing, mortgage rates remain low, investors are returning to the market, and inventory is going down.

There has been plenty of good and welcome news but our industry's real problem right now is two fold:

(1) Unemployment, Unemployment, Unemployment! With rates up to 10% (a real figure of closer to 16%), consumer sentiment will remain weak.

(2) Personal savings at historical lows (although they are beginning to climb) together with very tight lending standards. With consumers still recovering from spending both their equity and savings on new cars and big screen TV's, no one is left with enough cash for the down payments now required for qualification - regardless of their credit histories.

Then there is what will happen to the market when mortgage rates begin to climb and the first time home buyer tax credit expires?

But it does seem that we are at least at the beginning of a rebound. Hang in there everybody. Remain diligent, monitor your expenses and ride this slump out. Before you know it we will all be seeing a return to normalized activity... hopefully along with mature and stable lending policies structured toward long term health of the housing markets.