Positive signs for housing overshadowed by tighter regulations

by Kelli Rogers10 Jun 2013

Good news for the housing market is being overshadowed by new regulations, industry figures have said.

The number of U.S. housing markets on the mend rose by five to a total of 263 in June, according to the Improving Markets Index (IMI).

The number of improving markets is now more than three times what it was in June 2012, said National Association of Home Builders (NAHB) Chief Economist David Crowe.

"The continued strength of the IMI is an indicator of the ongoing, positive momentum in housing markets nationwide as consumers move to take advantage of historically favorable interest rates and affordable home prices," said Kurt Pfotenhauer, vice chairman of First American Title Insurance Company.

But other industry professionals wonder whether these recovery signs will last.

"This is the fifth consecutive month in which the IMI has designated more than 70% of U.S. metros as improving," observed NAHB Chairman Rick Judson, a home builder from Charlotte, N.C. "While that's a good sign that the housing recovery is on solid footing, we know that various challenges are slowing its progress – including continuing issues with credit availability for builders and buyers, as well as appraisals that aren't keeping up with the rising cost of construction."

Marc Savitt, president of National Association of Independent Housing Professionals (NAIHP) echoed these concerns to MPA.

“While this is certainly good news, I’m concerned about what the housing market will look like in January 2014, when the qualified mortgage rule kicks in,” Savitt said. “QM will further tighten credit, disqualifying large numbers of consumers who currently qualify under today’s regulations.”
The IMI from the NAHB/First American identifies metropolitan areas that have shown improvement from their respective troughs in housing permits, employment and house prices for at least six consecutive months.

Twenty-nine new markets were added to the list while 24 others were dropped from it this month. New entrants included such geographically diverse metros as Salinas, Calif.; Sioux City, Iowa; Chicago, Ill.; Topeka, Kan.; Baton Rouge, La.; Laredo, Texas; and Philadelphia, Pa.