There were mixed headlines regarding the house market today. Sales of new homes in the United States climbed to an annualized rate of 454,000 in April. This was the second highest monthly figure since July 2008. Year-over-year, the median selling price increased 14.9% to $271,600, which is the highest on record. Partially fueling the rising demand are the low interest rates. This week the average 30-year fixed mortgage rate was 3.59%.
Despite these news, limitation on home supply is put by the lack of equity to sell homes. In a report released by Zillow (NASDAQ: Z), a real estate information provider with a "database of more than 110 million U.S. homes," keeping the property listing tight are the "about 22 million Americans ... [who] lack enough home equity to move." The report stated that 44% of homeowners with mortgages had less than 20% equity in their home, and 20% is usually required to purchase a new home. This figure includes 13 million Americans, or a quarter of homeowners with mortgages, who were underwater, or owed more than what their homes are worth. Zillow projects that by Q1-2014, only about 1.4 million homeowners will regain positive equity.
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