Mortgage News 6/3/09

By Bob Willis May 27 (Bloomberg) -- Home resales in the U.S. rose for thesecond time in three months in April as foreclosure auctions and cheaper prices spurred bargain hunters, buttressing the case foran end to the industry’s slump this year. Purchases increased 2.9 percent to an annual rate of 4.68 million, in line with forecasts, from 4.55 million in March, National Association of Realtors figures showed in Washington. The median price slumped 15 percent from a year earlier, the second-biggest drop on record. A separate report indicated that the slump in home values eased in the first quarter.

“There is some bottom-fishing going on,” said Ethan Harris, co-head of U.S. economic research at Barclays Capital Inc. in New York. Still, “we have a ways to go in the housing recession.” A pick-up in sales will help trim the glut of unsold homes and eventually stem the slump in property values. That will be critical to shoring up household finances and spurring a recovery in residential construction, helping the economy emerge from its deepest recession in half a century.

Lower mortgage costs are also helping to make buying more affordable. Rates on 30-year fixed loans fell to 4.78 percent in April, the lowest level since Freddie Mac began keeping records in 1972. Federal Reserve purchases of mortgage securities have contributed to bringing down rates, economists said.

“The housing market is beginning to stabilize,” Fed Chairman Ben S. Bernanke said in congressional testimony on May 5. “We continue to expect economic activity to bottom out, then to turn up later this year.”