Home prices continue to see gains

9/3/2013 3:24:19 PM

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Home prices are continuing to rise across the nation, despite increases in mortgage rates.

Data from CoreLogic's Home Price Index showed that home pricesincreased 1.8 percent nationally during July on a month-over-month basis.

Meanwhile, on a year-over-year basis, prices rose 12.4 percent, marking the 17th consecutive month that year-over-year home values increased on a national basis.

"Home prices continue to climb across the nation in July with markets hit hardest during the downturn leading the way," said Anand Nallathambi, president and CEO of CoreLogic. "Nationally, home prices are now within 18 percent of their peak levels reached in April of 2006."

States leading the way in home price appreciation on an annual basis include Nevada (27 percent), California (23.2 percent), Arizona (17 percent), Wyoming (16.4 percent) and Oregon (15 percent).

While price gains are expected to continue throughout the year, CoreLogic forecasts that the increases will slow down.

"Home prices continued to surge in July," said Dr. Mark Fleming, chief economist for CoreLogic. "Looking ahead to the second half of the year, price growth is expected to slow as seasonal demand wanes and higher mortgage rates have a marginal impact on home purchase demand."

While mortgage rates remain historically low, they have increased from all-time low levels in recent months. This has led some industry observers to forecast that demand for residential real estate would fall, putting a stop to price increases.

While home sales remain strong, rising rates have led to a decline in refinancing.

Refinance activity falls
According to the Federal Housing Finance Agency, the total number of home refinances decreased slightly during the second quarter of 2013. Still, based on historical data, refinances remain high, especially in terms of the Home Affordable Refinance Program (HARP).

"This marks the third straight quarter in which HARP refinances have declined, but refinances through the program remain well above average levels prior to program enhancements last
year," the FHFA reported. "To date, more than 2.7 million refinances have now been completed through HARP since the program began in April 2009."

Sales likely to increase before they fall
With mortgage rates on the rise, there's a good chance that many homebuyers currently on the sidelines will be hopping off the fence and entering the market while the opportunity for affordable mortgage loans remains.

U.S. veterans have even more options when it comes to obtaining affordable home financing, as VA home loans not only feature competitive interest rates, but often come with no down payment requirements, saving eligible veterans thousands of dollars.

Financial institutions like The Federal Savings Bank, which specializes in VA home loans, also offer programs intended to help eligible homebuyers in areas where home prices are high.

Additionally, veterans can take advantage of refinancing a currently owned home while enjoying VA streamline refinance rates.

Contact The Federal Savings Bank to discuss low-cost home financing options, as well as special programs available for U.S. veterans.