Real estate data firm CoreLogic says recent employment growth, low mortgage rates and home affordability are signs of a breakthrough in the American economy.
CoreLogic released its latest MarketPulse report, showing new mortgage originations rose to $108 billion in October compared to $60 billion in May. Refinancings rose, as well, and represented 74% of all mortgage origination activity.
The Northeast provided the fewest regions to the list of top 50 housing markets. According to study co-author Sam Khater, this is due to the backlog of distressed properties on the market, adding that recovery will be slow until this "foreclosure clogging" is rectified.
CoreLogic listed the number of foreclosures per REO in 10 housing markets in the Northeast (chart below):
CoreLogic said consumers face a confluence of negative factors that hurt housing, including weak demand, a decline in home prices over the past five years and the broader economic recession.
The good news, according to the company, is consumer confidence should improve with 253,000 new jobs in January, as the unemployment rate dropped to 8.3%.
"Since a home is usually a family's largest durable good purchase, uncertainty tends to lead to inaction," said Mark Fleming, chief economist at CoreLogic. "In fact, many potential buyers, including first-time buyers, are voluntarily not participating in the housing market."
Fleming said productivity grew substantially after the recession, and forecasts now call for gross domestic product growth at a rate of 2% soon, despite headwinds from the European debt crisis and fiscal policy constraints in the United States.
He also noted real estate sales are trending upward in some markets and a nice supply of homes are available for purchase.
"The mortgage market, while still small by recent historic standards, is slowly growing on the strength of refinance activity," Fleming said. "While this activity may fade as we move through 2012 if interest rates rise, it may well be replaced by purchase loan volume from increased sales."