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Best Economic Growth in Six Years

Friday, January 29, 2010

The U.S. economy grew at the fastest pace in more than six years during the fourth quarter of 2009, according to a government report Friday.

The nation's gross domestic product, the broadest measure of economic activity, rose at a 5.7% annual rate in the fourth quarter. That was much stronger than expected and provides another sign that a recovery in the economy is taking hold.

Economists surveyed by Briefing.com had forecast growth of 4.7%.

Source: CNN Money

New-Home Sales Decline in December

Wednesday, January 27, 2010

Sales of newly built, single-family homes fell 7.6 percent in December to a seasonally adjusted annual rate of 342,000 units, according to figures released by the U.S. Commerce Department today.

"As expected, the road to a housing recovery is proving to be a very bumpy ride," said Bob Jones, a home builder from Bloomfield Hills, Mich., and newly elected chairman of the National Association of Home Builders (NAHB). "Although purchasing conditions for new homes are extremely favorable thanks to the expanded home buyer tax credit and historically low interest rates, the sobering realities of a weak economy and job market continued to drag on consumers' willingness to go forward with a purchase near the end of 2009. We do, however, expect more buyers to begin taking advantage of the new tax credit in the coming months."

"December's shortfall in new-home sales is not that surprising, given the fact that it was still too early for most consumers to know about and act upon the newly extended home buyer tax credit," noted NAHB Chief Economist David Crowe. "It is also likely that some sales that might otherwise have taken place at the end of the year were pulled forward to earlier months to take advantage of the previous tax credit that expired at the end of November, thereby exacerbating the December decline. That said, we are looking forward to the newly extended and expanded home buyer tax credit beginning to have a positive impact on buyer demand going forward."

Regionally, sales of new single-family homes were quite mixed in December. Displaying typical month-to-month volatility, the Northeast posted a 42.9 percent gain, the Midwest registered a 41.1 percent decline, the South posted a 7.3 percent decline and the West generated a 5.2 percent gain.

Meanwhile, the number of newly built homes on the market dropped from November's 235,000 units to 231,000 units in December. This is the lowest inventory number in nearly 40 years. Because of December's slower sales pace, the months' supply rose from 7.6 in November to 8.1 in December.

On an annual basis, year-end figures from the Commerce Department revealed that an estimated 374,000 new homes were sold in 2009. This was down nearly 23 percent from the previous year and was the lowest number of new-home sales since the government started keeping track in 1963.

Source: NAHB

Existing Home Sales Sink 16.7%

Monday, January 25, 2010

Existing home sales fell in December, the month after a federal tax credit was slated to expire, according to a real estate industry report issued Monday.

The National Association of Realtors reported that existing home sales plunged 16.7% last month to a seasonally adjusted annual rate of 5.45 million units, down from the revised rate of 6.54 million in November. Still, sales year-over-year were up 15%.

Analysts surveyed by Briefing.com had expected the December sales rate to hit 5.9 million annual units.

It was expected that sales would decline from November to December, because November was slated to be the last month in which sales to first-time homebuyers could qualify for a federal tax credit of up to $8,000. Lawmakers have since extended that deadline through April 30, adding a new credit of up to $6,500 for some existing home owners who move.

" This is a huge blow, much bigger than we expected," said PNC senior economist Craig Thomas. "Unfortunately, we'll continue to see this kind of volatility as economic supports like the tax credit are taken away."

Homebuyers rushing to get the credit made for a tough month-to-month comparison for December, Thomas said, and the month also suffers from seasonal issues like bad weather and holidays.

For all of 2009 there were 5,156,000 existing-home sales, which was 4.9% higher than 2008's total. That was the first annual sales gain since 2005.

In November, the planned tax credit expiration helped existing home sales gain 7.4% -- and that followed a 10% surge the previous month.

Despite December's disappointment, PNC's Thomas thinks the tax credit will help recharge the housing market the way Cash for Clunkers boosted auto sales in the longer term. That market saw an artificial jump, then dipped when the policy was dropped and then eventually got stronger.

" Since Cash for Clunkers has been over, autos have seen stronger and more sustainable sales -- and that's a function of a better economy," Thomas said. "That means home sales are likely to follow."

Source: CNN Money

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North Carolina Builder Elected to Leadership of NAHB

Friday, January 22, 2010

Rick Judson, a Charlotte, N.C.-based home builder with more than 35 years of experience in the building industry, was elected yesterday as the 2010 third vice chairman of the National Association of Home Builders (NAHB) during the association's International Builders' Show in Las Vegas.

Judson is owner of Evergreen Development Group.

"The housing industry still faces many challenges as it slowly emerges from its worst downturn in decades," Judson said. "This year, our top priorities will be to work with Congress, the Administration and federal regulators to open up lines of credit for new housing production and resolve problems with appropriate appraisal values on newly built homes. As we work to stabilize housing prices, this will revitalize the home building industry and help restore confidence in the American economy."

Judson has been active in the NAHB leadership structure at the local, state and national levels throughout his career. He has served on NAHB's board of directors since 1979 and has been a member of the NAHB executive board since 2002. He has twice served as NAHB state representative from North Carolina and is a two-time NAHB national area chairman representing North Carolina, South Carolina and Georgia. He has chaired some of NAHB's most important and influential committees, subcommittees and task forces, including Budget and Finance, Investment and Public Affairs. In 2008, he chaired the NAHB Housing Finance Task Force, which developed association policy relating to Fannie Mae and Freddie Mac.

Judson served as 2004 president of the North Carolina Home Builders Association and was named its associate of the year in 1988. During his business career, he has founded and successfully operated several businesses, including entities that have developed land for and built numerous single-family, multifamily and commercial projects.

NAHB's newly elected senior officers serve on a multi-year leadership ladder. Judson will become chairman of NAHB's board of directors in 2013.

Source: NAHB

Michigan Builder Elected Chairman of the Board of NAHB

Friday, January 22, 2010

Bob Jones, a home builder and developer from Bloomfield Hills, Mich., yesterday was elected as the 2009 chairman of the Board of the National Association of Home Builders (NAHB). As president of Robert R. Jones Homes, he specializes in land development and the design and construction of single-family luxury homes throughout metropolitan Detroit.

During Jones's 35-year career, he has earned a reputation for excellence and established a continuing commitment to the home building industry at the local, state and national levels. He assumes the leadership at NAHB amidst signs that the housing industry may be emerging from the worst economic crisis since the Great Depression.

"This has been an extraordinarily difficult time for builders across the country," Jones said. "I believe it is my responsibility to serve NAHB's members as we work to get the housing industry back on its feet. I want to see residential construction regain its place as the nation's engine of job growth."

Key issues on the agenda for Jones and NAHB include the availability of financing for acquisition, development and construction (AD&C), as well as concerns about housing appraisals that often compare new homes to foreclosed or distressed properties. NAHB is also working with federal policy makers as they consider an overhaul of the nation's home mortgage finance system.

Jones has been a member of the NAHB board of directors since 1979. He was chairman of the Single Family Small Volume Builders Committee in 2006, chairman of the Resolutions Committee in 2005, and vice chairman of the National Council of the Housing Industry in 2004. He served as an NAHB national vice president representing Illinois, Indiana and Michigan in 2000 and 2001.

Representing his home state of Michigan, Jones was named NAHB State Representative of the Year in 1999. He served on the Federal Government Affairs Committee in 2003 and 2004, and on the NAHB Budget and Finance Committee in 2005. He received the National Sales and Marketing Council's Friend of the Institute Award in 2009. Jones is also a Certified Green Professional (CGP).

At the state and local levels, Jones serves on the board of directors of the Michigan Association of Home Builders (MAHB) and was the association's president in 1999. He received the MAHB Housing Achievement Award in 2001. He is a member of the board of directors of the Building Industry Association of Southeastern Michigan, served as the association's president in 1994, and was inducted into its Hall of Fame in 2000.

Jones is involved in a number of civic and business organizations. He currently serves on the Michigan Chamber of Commerce board of directors. He has chaired the board of trustees at St. Bonaventure University in New York and the board of directors at St. Joseph Mercy Hospital-Oakland, Mich. Michigan Gov. Jennifer Granholm appointed Jones to the Michigan Land Use Leadership Council. Former Gov. John Engler appointed him to the Michigan Residential Builders & Maintenance and Alteration Contractors Licensing Board.

Source: NAHB

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Crowds More Optimistic at the 2010 International Builders' Show. Says NAHB

Friday, January 22, 2010

Approximately 55,000 builders, remodelers and other members of the home building industry crowded the aisles of the National Association of Home Builders' International Builders' Show, which ended its four-day run Friday at the Las Vegas Convention Center.

The mood? "I'd call it cautious optimism," said Ron Cook of Tamko Building Products in Joplin, Mo., one of more than 1,100 exhibitors at this year's event. "It's certainly different than it was last year because we didn't quite know what we were in for," as the country was still in the midst of the biggest recession since the 1930s. Members lined up at the Partnership Pavilion, a new NAHB initiative on the show floor designed to match builders with financing sources. The program was launched to help serve an industry still stymied by a lack of available credit for new housing developments - as well as tighter restrictions on home buyer mortgages.

Builders and remodelers also attended educational presentations on design trends, energy retrofitting, marketing, low-income housing tax credits and more than 175 other topics.

"We came here to network," said Clint Wilson of Hybrid Core Homes in Santa Rosa, Calif. The show seemed livelier than last year's event, he said, although he and his colleagues were disappointed that The New American Home, the much-anticipated demonstration home that usually draws huge crowds, was unavailable for touring this year because of financing issues - a problem plaguing other builders throughout the industry.

A company manufacturing geothermal heating systems saw steady traffic at its booth, according to Steve Smith, managing partner at Enertech Manufacturing, LLC of Greenville, Ill., who said builders are particularly interested in learning more about the tax credits available for installing geothermal and other renewable energy heating and cooling systems.

"It's been a good, upbeat crowd," Smith said. "I think we all have a more positive attitude for 2010. I've already talked to our marketing folks about getting a bigger booth at next year's show."
The next International Builders' Show takes place Jan. 12-15 at the Orange County Convention Center in Orlando, Fla.

Source: NAHB

Housing Starts Fall, Producer Prices Rise

Wednesday, January 20, 2010

New U.S. housing starts unexpectedly fell in December, likely the result of unusually cold weather, while producer prices rose for a third straight month.

The Commerce Department said on Wednesday housing starts fell 4 percent to a seasonally adjusted annual rate of 557,000 units, pulled down by a drop in groundbreaking activity for single-family dwellings. Analysts polled by Reuters had expected housing starts to rise to 580,000 units.
Building permits, however, soared in December.

" At first glance housing starts were disappointing. But, they were offset by a huge jump in building permits. The data is suggestive of a continued gain in housing construction over the next several months," said Michelle Meyer, economist at Barclays Capital in New York.

November's housing starts were revised upwards to 580,000 units from the previously reported 574,000 units.

A separate report from the Labor Department showed producer prices rose 0.2 percent last month as food prices surged, and recorded their largest year-on-year gain since October 2008.

U.S. stock index futures held losses, while government bond prices were steady at higher prices. The U.S. dollar was firmer against the euro.

Groundbreaking activity dropped a record 38.8 percent to an all-time low of 553,000 units for the whole of 2009.

Starts for single-family homes fell 6.9 percent last month to an annual rate of 456,000 units after rising 4.0 percent in November. Groundbreaking for the volatile multifamily segment rose 12.2 percent to a 101,000 unit annual pace, after surging 69.8 percent in November.

Housing is on the mend after a three-year slump and new home construction contributed to economic growth in the third quarter of 2009 for the first time since 2005.

However data such as pending home sales and homebuilder sentiment have hinted at potential weakness in a sector whose collapse triggered the most brutal U.S. recession since the Great Depression of the 1930s.

Even though producer prices rose for a third straight month, inflation pressures remain tame.

Muted inflation pressures and the unsettled housing market should allow the Federal Reserve to honor its pledge to keep overnight lending low for "an extended period." Officials next meet on January 26-27 to deliberate on monetary policy.

New building permits, which give a sense of future home construction, rose 10.9 percent to 653,000 units last month, the highest since October 2008.

That compared to analysts' forecasts for 590,000 units. For the whole of 2009, permits dropped 36.9 percent, the department said.

The inventory of total houses under construction dropped 3.8 percent to a record low of 511,000 units last month, while the total number of buildings authorized but not yet started rose 8.4 percent to 95,800 units.

In a separate report, the Mortgage Bankers Association said demand for U.S. home loans rose last week for the third straight week as a drop in mortgage rates to a one-month low stoked refinancing.

The Mortgage Bankers Association's index of total home loan applications rose 9.1 percent to a seasonally adjusted 575.9. The increase was driven by a 10.7 percent jump in the refinancing index, while home purchase loan demand rose 4.4 percent to 223.0.

Average 30-year mortgage rates dropped to 5 percent last week, the group said.

Source: Reuters

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Statement from NAHB Chairman Joe Robson on FHA Policy Changes

Wednesday, January 20, 2010

Joe Robson, chairman of the National Association of Home Builders (NAHB) and a home builder from Tulsa, Okla., issued the following statement on the new Federal Housing Administration (FHA) policy changes announced today:

"NAHB understands the need for the FHA to respond to developments in its portfolio that will enable the agency to continue to operate on a sound financial footing. At the same time, the FHA is an indispensable source of financing for America's home buyers and must fulfill this vital mission at this fragile juncture. NAHB looks forward to working with the agency to ensure that it maintains its central role in the nation's housing finance system and provides homeownership opportunities for millions of creditworthy borrowers."

Source: NAHB

Harder to Get an Uncle Sam Mortgage

Tuesday, January 19, 2010

It's going to be harder to get a government-backed mortgage from now on.

Looking to shore up its weakening finances, the Federal Housing Administration is set to announce stricter standards on Wednesday.

The agency, which insured nearly a third of new mortgages in 2009, will increase the premium it charges for its mortgage insurance and require those with weaker credit scores to come up with larger downpayments.

The FHA will also reduce the amount of money a seller can provide a homebuyer for closing costs, as well as tighten its enforcement of lenders.

" Striking the right balance between managing the FHA's risk, continuing to provide access to underserved communities, and supporting the nation's economic recovery is critically important," FHA Commissioner David Stevens said in a statement. "Importantly, FHA will remain the largest source of home purchase financing for underserved communities."

FHA loans have skyrocketed in popularity during the mortgage crisis since the agency backstops banks if borrowers stop paying. But housing experts are growing increasingly concerned about the agency's ability to handle rising numbers of defaults. (Cash cushion shrivels for FHA.)

In November, the agency reported that its reserve fund has dropped to .53% of its insurance guarantees, well below the 2% ratio mandated by Congress and the 3% ratio it had last fall. The fund covers losses on the mortgages the agency insures.

Federal housing officials, who took several steps to shore up the agency's finances last year, promised to do more. The new announcement is the latest set of changes to FHA policies.

Source: CNNMoney

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High Unemployment Levels Put Housing on Slow Growth Track

Tuesday, January 19, 2010

The end of the economic recession along with the continuation of low mortgage interest rates and stabilizing housing prices will result in growth in the nation's housing market this year, according to economists speaking at the International Builders' Show in Las Vegas today. But improvements will come slowly, they said, as high unemployment levels continue to discourage consumers and push home foreclosures higher.

"The stage is set for the consumer to return," said David Crowe, chief economist of the National Association of Home Builders (NAHB), and because of the slow pace of the recovery home builders will profit from generally low inflation in building materials prices and wages.

The economists said they expect the extension and expansion of the home buyer tax credit to generate some sales activity in the early months of the year as economic growth gradually kicks in and bolsters an increase in housing activity.

However, Crowe warned that this remains "a cautionary period" for housing, largely because of the discouraging level of joblessness, which he forecast will peak at 10.2 percent in the first quarter and remain elevated, exceeding 8 percent at the end of 2011.

The inability of builders to obtain financing for new residential development is also "a significant retardant to recovery," Crowe said.

NAHB is forecasting 697,000 total housing starts in 2010, up 25.6 percent from an estimated 555,000 units last year. However, this year's recovery will occur entirely in the single-family sector, where starts are forecast to rise 37.7 percent from 443,000 last year to 610,000, he said. Suffering from an acute shortage of available financing, multifamily starts are expected to lose further ground in 2010, slumping to 87,000 units, down 22.3 percent from last year's 112,000 level. In 2008, 285,000 multifamily units were started, which is near the level that is needed to keep the supply in balance with demand.

Just as it was following the recession of 2001, David Berson, chief economist and strategist for the PMI Group, predicted that the performance of the job market will be disappointing, with small businesses, a key engine of economic growth, not showing strong signs of expanding or hiring. Normally, steep downturns are followed by a period of vigorous growth, he said, but "it's different this time."

The anemic economic recovery and job market will hold down housing, he said, but they will delay a decision by the Federal Reserve to begin raising interest rates. "It's unlikely that the Fed will raise the federal funds rate until the job market gets stronger," he said.

The consensus of the economists was that mortgage interest rates were headed higher, but were unlikely to exceed six percent in the next year or two.

Berson noted that home prices have stabilized over the past six to nine months, but he said they are likely to register more declines this year as foreclosures, a lagging economic indicator, continue to rise. However, the extent of the price decline will depend on how many foreclosed homes come immediately back onto the market. To avoid depressing home prices, the servicers who own these properties have delayed returning them to the market.

"A big price decline could happen," he said, "but servicers probably will behave as they have in the past, not dumping new foreclosures on the market." However, this means that it will take longer for housing to start showing price gains again. Normally, housing should be appreciating by 4 percent annually, he said, but it could take a few years to reach that point.

Frank Nothaft, chief economist at Freddie Mac, said that a gradual upward drift in mortgage rates, especially during the second half of 2010, would reduce the refinancing of single-family mortgages by about 10 percent this year over last. Home purchase originations, on the other hand, are headed up, he said, thanks to a 10 percent to 15 percent increase in home sales.

Nothaft said that FHA and VA financing are headed for an even larger market share than last year's, accounting for 25 percent of originations in 2010, or maybe a bit higher.

Mortgage delinquencies haven't peaked yet, he added, and are unlikely to do so until several months after unemployment hits its peak. The number of mortgages on which home owners are behind by 90 days or more will probably continue to grow into the second half of 2010.

With fixed-rate mortgages at the end of last year at their lowest levels in 50 years, adjustable rate mortgages haven't been much in use, Nothaft said, commanding a measly five percent market share in 2009. However, there will be some gradual pickup in the number of home buyers using ARM s this year, with their share rising into the five percent to 10 percent range.

Panelists noted that there will be large regional differences in the pace of the housing recovery that is now beginning. With lower unemployment than elsewhere and no major overhangs in the housing inventory, the Great Plains down through Texas, and the Southeast, with the exception of Florida and Atlanta, will be doing better than the country as a whole, said Berson.

Berson forecast 675,000 housing starts for 2010; Nothaft put them in the 770,000 to 780,000 range.

Source: NAHB

Builder Confidence Declines in January

Tuesday, January 19, 2010

Builder confidence in the market for newly built, single-family homes declined one point to 15 in January on continuing concerns about the poor job market and large number of foreclosed homes for sale, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today.

"At this point, home builders have done everything we possibly can to set the stage for a housing recovery - we've thinned our inventories, we've kept new construction to a minimum, and we've fought for and achieved a great new buying incentive with the extension and expansion of the home buyer tax credit," said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla.

"We stand poised and ready to deliver new homes as soon as our customers are ready to take advantage of the tax credit and other historically good buying conditions in terms of interest rates, selection, and prices. Yet builders also realize that factors beyond our control - including consumer concerns about job security and competition from foreclosed homes on the market - are still impeding demand for new homes at this time."

"Home buying conditions have rarely been as good as they are right now, but consumers are still waiting to see significant positive signs of improvement in employment and confidence, and this is slowing buyers' return to the market," agreed NAHB Chief Economist David Crowe. "Meanwhile, competition from foreclosed homes is also severely impacting new-home sales. That said, expected improvement in the job market this spring will help propel the housing recovery as we head into the prime home buying season."

Source: NAHB

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Apartments Will Be in Short Supply in Coming Years According to Building Industry Leaders

Tuesday, January 19, 2010

A severe shortage of apartments is likely to result from the anemic pace of multifamily rental property construction, according to industry experts speaking at a press conference today at the National Association of Home Builders' International Builders' Show® in Las Vegas. New multifamily construction has been crippled by the credit crisis, leaving the industry unable to gear up for the increased need for market-rate and affordable apartments that is expected to accompany economic recovery beginning next year. "We desperately need lenders to begin financing apartment communities again," said NAHB Chief Economist David Crowe. "The vacancy rate for apartments is elevated now, but as the economy recovers and jobs return, the people who've been doubling up with relatives and friends will want a place of their own - and there may not be one available."

Industry leaders predict that with the two- to three-year timeline required to build apartment communities, there will be a severe shortage of apartments in the near future - at the same time that there will likely be a huge need for them, according to demographers. A large number of Generation Y professionals and newly formed households -for whom multifamily is often the most attractive option - are expected to enter the housing market soon. They are likely to find fewer market-rate and affordable rental units to choose from, and higher rents due to increased demand.

Source: NAHB

2010 International Builders' Show to Showcase the Industry's Largest Product Display

Tuesday, January 19, 2010

Housing professionals from across the country and abroad will convene at the Las Vegas Convention Center in Las Vegas, Jan 19-22, for the 2010 International Builders' Show (IBS), the housing industry's largest annual trade show and exhibition. The National Association of Home Builders (NAHB) event, held in one of the largest convention centers in the country, will feature the most cutting-edge designs, technologies, and products for all segments of the industry.

Source: NAHB

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First Multifamily Buildings Achieve National Green Building Certification

Monday, January 18, 2010

Two Tennessee condominium buildings have become the first recipients of green multifamily certification under the National Green Building Standard, the National Association of Home Builders announced Monday.

The buildings were certified by the NAHB Research Center, a subsidiary of NAHB.

The bronze-level certification was awarded to the first two buildings completed in the Park Run community at McKay's Mill in Franklin, Tenn. When completed, the development will comprise 23 buildings for a total of 92 condominium homes. The Jones Company, a top-100 single-family builder, also has certified dozens of single-family green homes.

"Green certification has value to all home owners, both single-family and multifamily," said NAHB Chairman Joe Robson, a builder and developers from Tulsa, Okla. "Growing numbers of today's home buyers want the benefits of a home that's built with sustainability and energy efficiency in mind."

The National Green Building Standard is a scoring tool and certification protocol that assures projects have met stringent benchmarks in energy, water and resource efficiency, indoor environmental quality and lot and site design. In addition, the builder must provide education and a manual for home owners to help ensure the home is operated and maintained to retain its green advantages.

The standard was developed by NAHB and the International Code Council and is the first such system to be approved by the American National Standards Institute. It covers single-family homes, apartments and condos, residential land development and home remodeling projects, and is administered by the NAHB Research Center, which also accredits local verifiers around the country.

"The National Green Building Standard provides a rigorous definition of residential green construction, whether it be for single-family homes or multi-story apartment buildings," said Michael Luzier, president of the NAHB Research Center. "As the first and only existing national green building rating system that can be used for every type of residential project, the standard allows the Research Center to be a 'one-stop shop' for builders, remodelers and developers who want third-party validation for their green projects."

Source: NAHB

Record 3 Million Households Hit With Foreclosure in 2009

Thursday, January 14, 2010

Almost 3 million homeowners received at least one foreclosure filing during 2009, setting a new record for the number of people falling behind on their mortgage payments.

RealtyTrac, the online marketer of foreclosed homes, reported that one in 45 households -- or 2,824,674 properties nationwide -- were in default last year. That's 21% more than in 2008, and more than double 2007's total.

The dramatic, sustained increase occurred despite efforts, such as President Obama's Home Affordable Modification Program, to reduce foreclosure filings.

" As bad as the 2009 numbers are, they probably would have been worse if not for legislative and industry-related delays in processing delinquent loans," said RealtyTrac CEO James Saccacio in a prepared statement.

There was at least one bright spot in the report: In spite of a 21% increase in filings, the number of homes actually repossessed was 871,086 -- up just 1.1% above 2008's total.

" That was driven primarily by short-term factors: trial loan modifications, state legislation extending the foreclosure process and an overwhelming volume of inventory clogging the foreclosure pipeline," said Saccacio.

Filings peaked in July with more than 361,000 homes receiving notices. After that, filings dropped four straight months.

Much of that is attributable to the government-led efforts to modify loans to make them affordable, though it is still uncertain whether the efforts have forestalled -- or just delayed -- foreclosure.
By early December more than 680,000 borrowers had gotten temporary workouts but only a few thousand had been permanently modified.

That leaves Saccacio a bit pessimistic about the future. "In the long term, a massive supply of delinquent loans continues to loom over the housing market," said Saccacio. "And many of those delinquencies will end up in the foreclosure process in 2010."

Source: CNNMoney

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Rates on 30-Year Home Loans Fall To 5.06 PCT

Thursday January 14, 2010

Rates for 30-year home loans edged lower for the second straight week, a report said Thursday, but remained above last month's record lows.

The average rate on a 30-year fixed mortgage was 5.06 percent this week, down from 5.09 percent a week earlier, mortgage company Freddie Mac said.

Rates dropped to a record low of 4.71 percent in early December, pushed down by an aggressive government campaign to reduce consumers' borrowing costs, but then rose steadily for the rest of the month.

Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day, often in line with long-term Treasury bonds.

The Federal Reserve is pumping $1.25 trillion into mortgage-backed securities to try to bring down mortgage rates, but that money is set to run out next spring. The goal of the program is to make home buying more affordable and prop up the housing market.

While it's possible that the program could be extended, analysts believe the Fed is reluctant to do so. "We believe that the bar for the Fed's program extension is high," Credit Suisse mortgage strategist Mahesh Swaminathan wrote Thursday.

The average rate on a 15-year fixed-rate mortgages fell to 4.45 percent, down from 4.50 percent last week, according to Freddie Mac.

Rates on five-year, adjustable-rate mortgages averaged 4.32 percent, down from 4.44 percent a week earlier. Rates on one-year, adjustable-rate mortgages rose to 4.39 percent from 4.31 percent.

The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount.

The nationwide fee for loans in Freddie Mac's survey averaged 0.7 point for 30-year loans, 0.6 point for 15-year and five-year loans and 0.5 point for one-year loans.

Source: Associated Press

Mortgage Applications Rise in First Week of 2010

Wednesday, January 13, 2010

U.S. mortgage applications rose in the first week of 2010, reflecting surging demand for home refinancing loans as interest rates dropped, industry data showed on Wednesday.

Demand for loans to purchase a home, however, only rose marginally. A continuation of this trend would not bode well for the U.S. housing market, which has been showing signs of stabilization but remains highly vulnerable to setbacks.

The Mortgage Bankers Association (MBA) said its seasonally adjusted index of mortgage applications, including both purchase and refinance loans, rose 14.3 percent to 528.1 for the week of January 8. A year ago, the index was at 1,324.8.

The four-week moving average, which smooths out volatile weekly figures, was down 6.4 percent.
" What makes the (applications) increase interesting is that nothing exceptional occurred to prompt people to return to the market," said Bob Walters, chief economist at Quicken Loans in Livonia, Michigan.

" In fact, this may be indicative of the ebb and flow we can expect to see as the market continues to try and find its footing," he said.

The MBA said borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 5.13 percent, down 0.05 percentage point from the previous week which was the highest rate since late August.

Interest rates were above the year-ago level of 4.89 percent and an all-time low of 4.61 percent set in March. The survey has been conducted weekly since 1990.

The lowest mortgage rates in decades and high affordability helped the market find some footing after a three-year slump.

Anthony Hsieh, founder and chief executive of loanDepot.com, a mortgage lender licensed in 18 states, said tight lending standards are one of the biggest obstacles now.
" I have been in the mortgage business for the past 25 years, and I have never seen the industry as tight as it is today."

" Once a borrower leaps over one hurdle in the loan application process they face yet another hurdle. So it is as if they are participating in some sort of triathlon," he said.

The MBA's seasonally adjusted purchase index, a tentative early indicator of home sales, rose 0.8 percent to 213.7. The index of refinancing applications increased 21.8 percent to 2,407.2.

The refinance share of mortgage activity increased to 71.5 percent of total applications from 68.2 percent.

Cameron Findlay, chief economist at LendingTree.com in Charlotte, North Carolina, said mortgage rates should rise sharply, reaching 6.20 percent in the fourth quarter.

" A rate at or over 6 pct is above my tolerance level."

" The housing market cannot afford to go beyond that level, and I am convinced the Fed will take action to bring rates back down if they do," he said.

Interest rates are expected to rise when the Federal Reserve stops at the end of March its purchase of mortgage-related securities, which is aimed at lowering borrowing costs.

U.S. residential mortgage originations will plunge 40 percent this year to the lowest in a decade as home refinancing demand sinks with rising mortgage rates, the MBA said in its annual forecast on Tuesday.

The MBA said fixed 15-year mortgage rates averaged 4.45 percent, down from 4.62 percent the previous week. Rates on one-year ARMs increased to 6.83 percent from 6.42 percent.

Source: Reuters

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Job Picture Gets a Little Bit Brighter

Wednesday, January 6, 2010

In some welcome news on the job front, the pace of U.S. job losses eased in December, according to two reports released Wednesday.

Automatic Data Processing (ADP, Fortune 500), a payroll-processing firm, said private-sector employers cut 84,000 jobs in December, the fewest since March 2008.

It was the ninth straight month that job losses narrowed from the previous month. The number of cuts in November was revised down to 145,000 from the previously reported 169,000.

Economists surveyed by Briefing.com had forecast a loss of 75,000 jobs in December.

" We're moving in the right direction, and I think we're only a month or two away from reporting a positive top line number," said Joel Prakken, chairman of Macroeconomic Advisers, in a conference call.

The service sector reported job growth for the first time in 21 months, with an increase of 12,000 jobs in December, though Prakken said the uptick could be because of an expansion in temporary employment.

The figure was offset by a loss of 96,000 in the goods-producing sector and a drop of 43,000 manufacturing jobs.

" We're still a little ways away from seeing an upturn in employment at the country's plants and on construction sites," Prakken said.

He added that he expects the jobless rate to edge higher to about 10.25% during the first quarter of this year and linger for the next two years, hovering above 9% by the end of 2010 and higher than 8% at the end of 2011.

Source: CNNMoney

Uptick in Consumer Confidence

Tuesday, December 29, 2009

The Conference Board Consumer Confidence Index increased for the second straight month to 52.9, up from 50.6 in November. A baseline index of 100 was set in 1985.

While confidence increased, the Conference Board's Present Situation Index, however, declined to 18.8 from 21.2 in November -- a 26-year low.

" A more optimistic outlook for business and labor market conditions was the driving force behind the increase in the Expectations Index," said Lynn Franco, director of the Conference Board Consumer Research Center. Franco pointed out that expectations for the short-term future increased to the highest level in two years.

" Regarding income, however, consumers remain rather pessimistic about their short-term prospects, and this will likely continue to play a key role in spending decisions in early 2010."

The closely watched Consumer Confidence Survey is based on a sample of 5,000 U.S. households for the New York-based Conference Board by research firm TNS.

Source: Home Channel News

New Home Sales Decline

Wednesday, December 23, 2009

(Dec. 23) Sales of new single-family homes declined to a seasonally adjusted annual rate of 355,000 in November, according to a report released Wednesday by the U.S. Commerce Department. The November pace is down 11.3% from October, and down 9.0% from November 2008.

The report follows by a single day the glowing existing-home sales report from the National Association of Realtors (NAR). The rate of existing-home sales in November was up 44.1% from a year ago, and up 7.4% from October, according to the NAR.

In today's report, the Commerce Department pointed to the median sales price of new houses sold in November 2009 as $217,400, up from $209,400 in October but down from $221,600 in November 2008.The seasonally adjusted estimate of new houses for sale at the end of November was 235,000. This represents a supply of 7.9 months at the current sales rate.

Source: Home Channel News

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Big Gain for Existing-Home Sales

Tuesday, December 22, 2009

Existing-home sales rose 7.4% to a seasonally adjusted annual rate of 6.54 million units for November, according to a report released today by the National Association of Realtors (NAR).

The figure is 44.1% higher than the 4.54 million-unit pace from November last year and shows existing-home sales are at the highest level since February 2007 when they hit 6.55 million.

The NAR’s chief economist, Lawrence Yun, said that the rise was expected.

“ This clearly is a rush of first-time buyers not wanting to miss out on the tax credit, but there are many more potential buyers who can enter the market in the months ahead,” he said. “We expect a temporary sales drop while buying activity ramps up for another surge in the spring when buyers take advantage of the expanded tax credit, which hopefully will take us into a self-sustaining market in the second half of 2010. In all, 4.4 million households are expected to claim the tax credit before it expires, and balance should be restored to the housing sector with inventories continuing to decline.”

The NAR also reported the national median existing-home price for all housing types was down 4.3% from November 2008 to $172,600. The price was up slightly over October's average of $172,200.

The total housing inventory fell 1.3% to 3.52 million existing homes available for sale. That figure represents a 6.5-month supply at the current sales pace, down from a 7-month supply in October. Raw unsold inventory is down 15.5% from last year, representing the lowest supply of homes on the market since April 2006 when it was at a 6.1-month supply.

“ Nearly all markets experienced a solid sales gain from one year ago,” Yun said. “The only markets with measurably lower sales were in San Diego, Riverside and Sacramento, where inventory shortages for lower priced homes are limiting sales.”

Regionally, existing-home sales in the Northeast rose 6.6% in November to an annual level of 1.13 million, up 52.7% from last year. Sales in the Midwest rose 8.4% to 1.55 million, up 53.5% from last year. In the South, sales rose 4.8% to 2.39 million, up 44.8 % from last year, and the West saw sales up 10.6% to 1.46 million, up 4.1% from November 2008.

Source: Home Channel News

Business Spending Holds Back Economic Growth

Tuesday, December 22, 2009

The economy grew at a much slower pace than previously thought in the third quarter, restrained by weak business investment and a slightly more aggressive liquidation of inventories, data showed on Tuesday.

The Commerce Department's final estimate showed gross domestic product grew at a 2.2 percent annual rate instead of the 2.8 percent pace it reported last month. Analysts polled by Reuters had forecast the report to show GDP, which measures total goods and services output within U.S. borders, unrevised at a 2.8 percent growth rate in the third quarter.

It was still the fastest pace since the third quarter of 2007 and ended four straight quarters of decline in output. The resumption of growth in the July-September period probably ended the most brutal recession since the 1930s.

Growth was boosted by government stimulus programs, including the popular cash for clunkers and tax credit for first-time home buyers, and debate continues to rage over the sustainability of the recovery once government support wanes.

U.S. financial markets were little moved by the report.

Data such as retail sales, business inventories and the trade balance strongly indicate the economic growth pace picked up speed in the fourth quarter.

Economists' forecasts for fourth-quarter GDP growth have ranged from 4.0 percent to 4.5 percent. Last week, the Federal Reserve gave a cautiously upbeat assessment of the economy and promised to hold overnight lending rates near zero for an "extended period" to aid the economic recovery.

" I expect the fourth quarter (GDP) will still be strong with retail sales better-than-expected, but business spending is still a wildcard. There is a lot of cash, but I'm not sure if the business spending is there yet," said Christopher Low, chief economist with FTN Financial in New York.

Business spending in the third quarter was weaker than the government had estimated last month. Business investment fell at a 5.9 percent rate instead of 4.1 percent, the department said.

Source: Reuters

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November Home Sales Soar 7.4 Percent

Tuesday, December 22, 2009

Home resales surged last month to the highest level in nearly three years, reflecting an extraordinary level of federal support that has pulled the housing market back from the worst downturn since the Great Depression.

Buyers were racing to complete their sales before the original expiration date of a tax credit for first-time buyers that was scheduled to expire Nov. 30. Last month, Congress decided to extend and expand the credit to ensure the housing market could sustain its recovery.

The Realtors estimated that about 2 million homebuyers have taken advantage of the credit so far and forecasts that another 2.4 million will use it by the middle of next year. First-time buyers made up about half of all transactions last month, driving sales up 44 percent above last year's levels, a record jump.

Sales are now up 46 percent from the bottom in January, but down 10 percent from the peak more than four years ago.

The median sales price was $172,600, down 4.3 percent from a year earlier, and up 0.2 percent from October.
" Things are stabilizing," said Pete Flint, chief executive of real estate Web site Trulia.com. "There is a significant amount of buyer interest out there."

November sales rose 7.4 percent to a seasonally adjusted annual rate of 6.54 million, from a downwardly revised pace of 6.09 million in October.

Sales had been expected to rise to an annual pace of 6.25 million, according to economists surveyed by Thomson Reuters.

The inventory of unsold homes on the market fell about 1 percent to 3.5 million. That's a healthy 6.5 month supply at the current sales pace, the lowest level in three years.

Besides the existing tax credit of up to $8,000 for first-time buyers, homeowners who have lived in their current properties for at least five years can now claim a tax credit of up to $6,500 if they relocate. To qualify, buyers must sign a purchase agreement by April 30.

Postponing the deadline could mean sales will drop during the winter months and recover in the spring.

" Buyers have no sense of urgency now," said Gary DeRosa, an agent with ZipRealty Inc. in Seattle.

Source: Associated Press

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Senate Health Care Bill Threatens Home Building Industry

Monday, December 21, 2009

In a rush to pass a massive health care overhaul before Christmas, Senate Democrats have included a last-minute provision targeting the construction industry that is certain to derail the fragile housing recovery and threaten the solvency of countless small home building firms.

In order to find the 60 votes needed to pass health care reform, a provision was slipped into the health care bill that unfairly targets small construction industry firms by mandating that they provide health insurance if they employ more than five workers. That is the same mandate required for big businesses. Meanwhile, all other small businesses - with the exception of the construction industry -- would be exempt from providing mandatory health coverage if they employ 50 workers or less.

"This narrow provision is an unprecedented assault on the construction industry and unjustly targets an industry trying to keep its doors open during the worst housing downturn since the Great Depression," said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. "If this provision were to be enacted into law, it would prove to be catastrophic for the home building industry. In short, this is a true jobs killer. Thousands of small builder firms struggling to stay afloat could go under. We strongly urge the Senate to reconsider and pull this onerous provision that threatens the viability of small home builders across the nation."

Source: Business Wire

Jobless Claims Up, But Leading Indicators Improve

Thursday, December 17, 2009

The number of U.S. workers filing new applications for jobless insurance unexpectedly rose last week, but a gauge of future economic activity increased for the eighth month in a row, pointing to a slow economic recovery where employment looms as the dominant concern.

A separate report from the Philadelphia Federal Reserve Bank also gave hints of future strength, showing that factory activity accelerated rapidly in the U.S. Mid-Atlantic region in December, beating markets forecasts for growth to slow slightly.

Initial claims for U.S. state unemployment benefits climbed 7,000 to a seasonally adjusted 480,000 in the week ended December 12 from a slightly downwardly revised 473,000 in the prior week, the Labor Department said on Thursday. It was the second straight week initial claims rose.

Analysts polled by Reuters had forecast jobless claims falling to 465,000 from a previously reported 474,000. The weekly claims data covers the December payrolls survey week.

Meanwhile, the U.S. Conference Board's Leading Economic Index increased 0.9 percent in November to 104.9 after rising an unrevised 0.3 percent in October, boosted by improving financial conditions, employment and housing, the private research group said.

Conference Board Economist Ken Goldstein said the employment level held steady in November, marking the first month since December 2007 when the country's labor conditions did not drag on the index.

U.S. stock indexes trimmed losses after the index was released, but remained close to session lows, while U.S. Treasury debt prices pared gains slightly and the U.S. dollar was little changed after a sharp overnight rise.

The Federal Reserve on Wednesday left overnight lending rates unchanged near zero and renewed its promise to hold them low for an "extended period." The U.S. central bank noted that the labor market deterioration was abating, though companies remained reluctant to add to payrolls.

Source: Reuters

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Home Construction Rebounds from 6-Month Llow

Wednesday, December 16, 2009

Home building rebounded from a six-month low in November, with improvement in new home construction in all sections of the nation, according to a government report issued Wednesday.

Construction of new homes rose to an annual rate of 574,000 during the month, 8.9% above the revised October rate of 527,000. The rate was still 12.4% below the 655,000 rate during November 2008.

A consensus estimate of economists surveyed by Briefing.com expected 574,000 housing starts during the month.

New construction jumped the most in the Northeast, with a 16.4% rise from the previous month. Housing starts rose 12.3% in the South, 3% in the Midwest and 1.9% in the West.

The number of building permits issued during November rose to a seasonally adjusted annual rate of 584,000. That was 6% above the revised October rate of 551,000, and 7.3% below the November 2008 estimate of 630,000.

One reason for the October downturn was concern that an $8,000 homebuyer's tax credit -- part of the Obama administration's economic stimulus -- was going to expire on Dec. 1.

At the start of November, the credit was extended through the end of June and expanded to apply to more buyers. But David Crowe, chief economist at National Association of Homebuilders, said the bill hasn't had a chance to impact the housing market.

" This is a recovery from the prior month," said. "But we're still seeing a tapering off toward the end of the year. During the middle of this year, we saw a nice buildup through the late summer as a result of the homebuyer's tax credit."

Housing starts peaked this year in July with an annual rate of 593,000.
" We're in a bit of a lull, but the new (extended) credit will have an impact as we move into 2010 and consumers plan for that credit availability, and builders begin to answer expected demand in the spring," he said.

Crowe added that the tight credit market has also made it difficult for builders to borrow money to start building projects.

" Builders are ready to begin restocking their inventories to prepare for the selling season, but they can't get production credit from the banks," Crowe said. "Banks are effectively making carte blanche decisions without recognizing projects that are in decent markets with viable futures."

Source: CNNMoney.com

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New Home Energy-Efficiency Incentive Could Boost Recover, Says NAHB

Tuesday, December 15, 2009

The National Association of Home Builders today commended President Barack Obama as he proposed a new initiative to create jobs and make today's homes more energy efficient.

In a speech Tuesday morning at a Home Depot in the suburban Washington, D.C. area, the president called on Congress to extend energy-efficiency tax credits for home owners as part of an $8 billion effort to reduce energy use.

"This is the kind of thinking that is going to get America back to work - and make a big difference in many home owners' monthly utility bills," said NAHB Chairman Joe Robson, a builder and developer in Tulsa, Okla.

NAHB estimates that 11,000 jobs, $527 million in wages and salaries, and $300 million in business income are generated by every $1 billion in new remodeling and home improvement activity. "That's a huge impact just in the short run. And in the long run, the energy savings for participating home owners can be quite significant," Robson said.

" This also bolsters a very important message and something we have been saying for years: If we really want to make an impact on the nation's energy use, we need to take significant steps to make the existing housing stock more efficient," Robson said.

He pointed out that state and local home builder associations affiliated with NAHB can be instrumental in the effort to weatherize older homes and make them more energy efficient.

For example, the Builders Association of Minnesota served as the conduit for federal stimulus program funds provided to the state for its energy-efficiency programs. The association trained nearly 1,000 remodelers and other residential contractors and funneled the money to 1,300 Minnesota home owners to help them make needed improvements.

Minnesota home owners got extra incentives for choosing projects like attic insulation, which some consumers don't do because it's something that's not immediately visible, but when combined with incentives can bring a payback on utility bills within a year or two, depending on the climate.

"President Obama is right that these kinds of projects don't seem 'sexy,' but saving money is very attractive, and so is providing jobs," Robson said.

"These are efforts that the Administration should consider on a much larger scale," he continued. "They provide employment, stimulate the economy and help us reduce our dependence on fossil fuels - that's three great outcomes. NAHB can help make this happen all over the country."

Last month, the White House Council on Environmental Quality invited NAHB to explain how home builders, product manufacturers and remodelers can be part of the Administration's "Recovery Through Retrofit" solution with programs like Minnesota's.

"We're anxious to help with these efforts," Robson said. "It's what our members do, and do well - and they all want to get back to work."

Source: NAHB

Builder Confidence Edges Down in December

Tuesday, December 15, 2009

Builder confidence in the market for newly built, single-family homes receded one point to 16 in December as continued weakness in the economy and job markets weighed on consumers' potential home buying plans, according to the latest NAHB/Wells Fargo Housing Market Index (HMI), released today.

"From an affordability standpoint, rarely has there been a better time in history to purchase a home, thanks to record low interest rates, attractive prices, and of course the recent extension and expansion of the home buyer tax credit," said Joe Robson, Chairman of the National Association of Home Builders (NAHB) and a home builder from Tulsa, Okla. "However, builders are not seeing the full impact of these conditions on buyer demand, partly because awareness of the latest incentives is still building, and partly because of concerns about job security and other economic woes."

"As we anticipated, this is shaping up to be a bumpy recovery period for the housing market," noted NAHB Chief Economist David Crowe. "While some families may be just starting to factor the expanded tax credit into their potential home buying plans, many are hesitating because of the poor economy. At the same time, tight lending conditions for both consumers and home builders continue to pose considerable obstacles on the road to a sustained housing and economic recovery."

Source: NAHB

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Foreclosure Plague Slowing: Filings Fall 8%

December 10, 2009

Foreclosure filings fell by 8% in November, making it the fourth consecutive month of improvement in the housing market.

There were 306,627 filings last month, according to RealtyTrac, an online marketer of foreclosed properties. That decline follows a 3% drop in October, 4% in September and 1% in August.

" Loan modifications and other foreclosure prevention efforts, along with the recently extended and expanded homebuyer tax credit, are keeping a lid on the most visible symptoms of the nation's ailing housing market -- foreclosures and home value depreciation," RealtyTrac CEO James Saccacio said in a prepared statement.

However, while there are signs of improvement, the industry has yet to turn around: Foreclosure filings were still a lofty 18% above November 2008's levels.

Source: CNNMoney.com

Bernanke Says Economy Improving

Monday, December 7, 2009

Federal Reserve Chairman Ben Bernanke on Monday said the U.S. economy's recovery remained fragile and unemployment may be high for some time, cooling anticipation of an early increase in U.S. interest rates. Three days after news of a surprise fall in the jobless rate prompted investors to speculate the Fed might move more quickly to raise rates than had been expected, Bernanke said the Fed -- the U.S. central bank -- was sticking to its pledge to hold benchmark borrowing costs at exceptionally low levels for an "extended period."

" We still have some ways to go before we can be assured that the recovery will be self-sustaining," he told the Economic Club of Washington. "Also at issue is whether the recovery will create the large number of jobs that will be needed to materially bring down the unemployment rate."

A report on Friday showed the U.S. labor market last month turned in its best performance since the economy fell into recession two years ago as the unemployment rate receded slightly from a 26-1/2-year high and job losses slowed sharply.

The data led investors to ramp up bets benchmark U.S. rates would rise by the middle of next year, lifting the dollar to its biggest gain in nearly a year.

However, Bernanke on Monday suggested the Fed's policy-setting Federal Open Market Committee (FOMC), which meets next week to debate policy, would bide its time to let the recovery gather strength. His comments drove the dollar and prices for U.S. government bonds lower, while offering temporary support to stocks.

" Right now we are still looking at the extended period given that conditions remain -- low rates of (resource) utilization, subdued inflation trends, and stable long term inflation expectations," he said. "That remains where we are."

This view was echoed by another top Fed official, New York Federal Reserve Bank President William Dudley, speaking at Columbia University in New York on Monday evening.

" The recession now appears to be over, but the economy is still weak and the unemployment rate is much too high," Dudley said.

" These circumstances underpin the FOMC's commitment to keeping short-term rates exceptionally low for an extended period."

Source: Reuters

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Unexpected Drop in Jobless Rate Sparks Optimism

Friday, December 4, 2009

A surprising drop in the unemployment rate and far fewer job losses last month cheered investors Friday and raised hopes for a sustained economic recovery.

The rate unexpectedly fell to 10 percent, from 10.2 percent in October, as employers cut the fewest number of jobs since the recession began. The government also said 159,000 fewer jobs were lost in September and October than first reported.

If part-time workers who want full time jobs and laid-off workers who have given up looking for jobs are included, the so-called underemployment rate also fell, to 17.2 percent from 17.5 percent in October.

The better-than-expected figures provided a rare dose of good news for a labor market that's lost 7.2 million jobs in two years. Still, the respite may be temporary.

Job creation is expected to remain far too weak in coming months to absorb the 15.4 million unemployed people who are seeking work -- and the 11.5 million others who are underemployed. As more people begin seeking work, the jobless rate is likely to resume rising.

The report offered evidence of how hard it remains to find a job: The number of people unemployed for at least six months rose last month to 5.9 million. And the average length of unemployment has risen to more than 28 weeks, the longest on records dating from 1948.

Even counting last month's decline, the unemployment rate has more than doubled since the recession began in December 2007, when it stood at 4.9 percent. And the underemployment rate has jumped to 17.2 percent from 8.7 percent.

" We will need very substantial job growth to get unemployment lower, especially when the labor force ... starts growing again," said Lawrence Mishel, president of the Economic Policy Institute, a liberal think tank.

Still, economists and investors drew hope from the Labor Department report. It said the economy shed 11,000 jobs last month -- a sharp improvement from October's revised total of 111,000. And it was much better than the 130,000 Wall Street economists had expected.

Source: Associated Press

Mortgage Applications Edge Higher, Rates Hit 6 Month Low

Wednesday, December 2, 2009

U.S. mortgage applications nudged higher last week, data from an industry group reported on Wednesday, as consumers showed a subdued reaction to the lowest interest rates in six months.

The Mortgage Bankers Association said interest rates on 30-year fixed-rate mortgages, the most widely used loan, fell for a sixth straight week, remaining below the 5 percent level, widely viewed as a psychological tipping point.

Attractive rates coupled with high affordability have been positives for the U.S. housing market, which has been showing signs of stabilization. Sales have surged in recent months as buyers scrambled to take advantage of the government's first-time home buyer tax credit.

Source: Reuters

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Job Picture: Signs of Improvement

Wednesday, December 2, 2009

The pace of U.S. job losses slowed in November, according to two reports released Wednesday.
Automatic Data Processing (ADP, Fortune 500), a payroll-processing firm, said private-sector employers cut 169,000 jobs in November.

It was the eighth month in a row that the number of job cuts fell from the month before. The number of cuts in October was revised down to 195,000 from the previously reported 203,000.

Economists surveyed by Briefing.com had forecast a loss of 150,000 jobs last month.

" Looking forward, we expect several months of declines," said Joel Prakken, chairman of Macroeconomic Advisers, in a conference call. "But the losses will get smaller and we should see the first positive number in February's data."

The U.S. economy will not return to "full employment," defined as 5% unemployment, until as late as 2014, Prakken said.

Prakken also addressed the jobs forum slated for Thursday, in which President Obama will meet with labor representatives, financial experts and other business leaders to discuss the continued problems with unemployment.

" There are two ways you can go: hope more government spending translates to employment, or give tax incentives for hiring," Prakken said.

Both options are tricky, Prakken said, and "he's not a huge fan" of either avenue because to improve the labor market most of the hiring will have to be in the private sector.

" Sadly, I don't think much can be done to keep unemployment from peaking at 10.4% or 10.5%," Prakken said.

Source: CNNMoney.com

Pending Home Sales Rise Again

Wednesday, December 2, 2009

The National Association of Realtors reported that the Pending Home Sales Index came in at 114.1 for the month of October, up 31.8% from the October 2008 reading.

That's the biggest year-over-year increase since the NAR launched the index back in 2001. The October number scored another record: nine months in a row of month-over-month increases. The Index rose from 110.0 in September.

The record high remains 115.2, recorded in March 2006.

It's too early to celebrate, according to the economists at the NAR. The weak job market continues to slow the recovery process, according to Lawrence Yun, chief economist for the NAR.

“ Still, as inventories continue to decline and balance is gradually restored between buyers and sellers, we should reach self-sustaining housing conditions and firming home prices in most areas around the middle of 2010," he said. "That would mean broad wealth stabilization for the vast number of middle-class families."

The Pending Home Sales Index is a forward-looking indicator based on contracts signed in October.

Source: Home Channel News

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Housing Affordability Hovers Newar Record-High Level for Third Consecutive Quarter

Thursday, November 19, 2009

Nationwide housing affordability, bolstered by affordable interest rates and low house prices, hovered for the third consecutive quarter near its highest level since the series was first compiled 18 years ago, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) released today.

The HOI showed that 70.1 percent of all new and existing homes sold in the third quarter of 2009 were affordable to families earning the national median income of $64,000, down slightly from a near-record 72.3 percent during the previous quarter and up from 56.1 percent during the third quarter of 2008.

"At a time when housing is at its most affordable, we applaud the recent actions taken by Congress and President Obama to stimulate housing by extending the federal tax credit beyond its Nov. 30 deadline and expanding it to a wider group of eligible home buyers," said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. "With interest rates now lower than last quarter, the tax credit will encourage even more home buyers to enter the market and help stabilize housing and the economy by creating new jobs, stimulating home sales, reducing foreclosures, cutting excess inventories and stabilizing home prices."

Indianapolis was the most affordable major housing market in the country during the third quarter, a position the metro area now has held for 17 consecutive quarters. Almost 95 percent of all homes sold were affordable to households earning the area's median family income of $68,100.

Also near the top of the list of the most affordable major metro housing markets were Youngstown-Warren-Boardman, Ohio-Pa., and three Michigan metropolitan areas, Detroit-Livonia-Dearborn; Warren-Troy-Farmington Hills; and Grand Rapids-Wyoming.

Five smaller housing markets posted even higher affordability scores than Indianapolis, with Kokomo, Ind. outscoring all others. There, 96.7 percent of homes sold during the third quarter of 2009 were affordable to median-income earners. Other smaller housing markets near the top of the index included Springfield, Ohio; Bay City, Mich.; Mansfield, Ohio; and Elkhart-Goshen, Ind.

New York-White Plains-Wayne, N.Y.-N.J., was the nation's least affordable major housing market during the third quarter of 2009, the New York metro area's sixth consecutive appearance at the bottom of the list. Slightly more than 19 percent of all homes sold during the third quarter were affordable to those earning the New York area's median income of $64,800.

The other major metro areas near the bottom of the affordability scale included San Francisco; Honolulu; Santa Ana-Anaheim-Irvine, Calif.; and Nassau-Suffolk, N.Y.

San Luis Obispo-Paso Robles, Calif. was the least affordable of the smaller metro housing markets in the country during the third quarter. Others near the bottom of the chart included Ocean City, N.J.; Santa Cruz-Watsonville, Calif.; Santa Barbara-Santa Maria-Goleta, Calif.; and Brownsville-Harlingen, Texas.

Source: NAHB

One in 7 U.S. Mortgages Foreclosing or Delinquent

Thusday, November 19, 2009

A record one in seven U.S. mortgages were in foreclosure or at least one payment past due in the third quarter, according to fresh data signaling the recovery in the housing market will be tepid at best.

U.S. mortgage delinquency rates and the percentage of loans that entered the foreclosure process also jumped to records from July to September, the Mortgage Bankers Association said on Thursday.

Rising job losses were behind the increasingly bleak portrait of the housing market in a trend that will continue into next year, the group said in data that adds to recent evidence of a still-struggling housing market.

Housing and related business account for about 20 percent of the economy and recovery is essential to bring unemployment down from a 26-1/2-year high and kick-start economic growth.

Yet record foreclosures will add to the growing supply of unsold homes, sapping the housing market as it attempts to recover from the worst slump since the Great Depression.

The MBA said the percentage of loans in foreclosure rose to 1.42 percent, from 1.36 percent in the second quarter and 1.07 percent in the third quarter of 2008.

" Foreclosures remain the biggest hurdle to the housing recovery," said Michelle Meyer, economist at Barclays Capital in New York.

" Foreclosures will be worse in the first part of 2010 and we do not see a peak in foreclosures until the middle of next year."

Source: Reuters

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NAHB Connections Builders with New Financing Sources at the 2010 Internation Builders Show®

Thursday, November 19, 2009

Wall Street and Main Street will come together at the International Builders' Show® (IBS) this January, thanks to an exciting new offering called the Partnership Pavilion that is being developed by the National Association of Home Builders (NAHB).

"The severe lack of available credit for acquisition, development and construction (AD&C) financing constitutes a significant threat to thousands of home building and development companies, as well as to the immediate and long-term future of the housing industry," said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. "Given the current situation, an innovative approach was called for to help our members find new sources of debt and equity financing while reinvigorating the traditional sources of housing credit, and that is the aim of the Partnership Pavilion.

"NAHB members build roughly 80 percent of all new housing in this country every year, and about 95 percent of them are the key decision-makers within their business - including presidents, CEOs, owners and managing partners," Robson continued. "Many of them are already planning to travel to the International Builders' Show (IBS), which is the largest and best-attended annual building industry tradeshow in this country. It just makes sense to provide a confidential setting within that venue for such professionals to meet one-on-one with potential new backers for their projects."

Source: NAHB

Weak Home Building a Drag on Economic Recovery

Wednesday, November 18, 2009

The budding economic recovery is getting little help from the home building industry, which normally creates jobs and boosts growth as a recession ends.

Construction of homes unexpectedly plunged last month to its lowest point since April, the Commerce Department said Wednesday. The weak figures show that builders still lack confidence that buyers can soak up the glut of unsold homes already on the market -- a supply magnified by a record number of home foreclosures.

The figures also illustrate how much the fledgling recovery depends on government support. Builders broke ground on fewer homes in part because of uncertainty in October about whether Congress would extend a tax credit for homebuyers. Earlier this month, lawmakers renewed the credit and extended it to more buyers.

Even with government aid, the weakness of the housing sector is dragging on the recovery.

" It will take a while before residential construction begins to contribute meaningfully to growth," Jennifer Lee, an economist at BMO Capital Markets, wrote in a research note.

The sluggish recovery is also holding down inflation. While consumer prices edged up faster than expected in October, they remain lower than they were a year ago. And inflation is expected to remain subdued.

The Labor Department said consumer prices rose 0.3 percent in October, a bit more than the 0.2 percent economists had expected. Core inflation, which excludes energy and food, rose 0.2 percent, compared with analysts' expectation for a 0.1 percent rise.

The higher figure was driven by another increase in energy prices and the biggest jump in new car prices in 28 years.

The report on home construction said building of homes and apartments fell 10.6 percent in October to a seasonally adjusted annual rate of 529,000, from an upwardly revised 592,000 in September. Economists polled by Thomson Reuters had expected a pace of 600,000.

Applications for building permits, a gauge of future activity, fell 4 percent to an annual rate of 552,000 units. That was the lowest since May and missed analysts' expectations of 580,000. But permits for single-family homes fell only 0.2 percent.

The National Association of Home Builders said this week that its housing market index remained unchanged in November, reflecting a cautious outlook from residential developers as they waited to learn the credit's fate

Source: Associated Press

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U.S. Inflation Edges Up, Housing Starts Fall Sharply

Wednesday, November 18, 2009

Construction of new homes in the United States fell sharply last month, showing potential weakness in the economy's recovery, while consumer prices rose slightly more than expected.

The Commerce Department said on Wednesday housing starts dropped 10.6 percent to a seasonally adjusted annual rate of 529,000 units, the lowest level since April and the percentage drop was the biggest since January.

Financial markets had expected starts to rise to 600,000 units. September's housing starts were revised upwards to a 592,000 unit rate from the previously reported 590,000 units.

" The trickle-down effect of the housing number is going to be amazing," said Dan Cook, senior market analyst at IG Markets, Chicago. "It's likely that more construction crews will get cut after this, and the supplier who supply those crews will be hurt as well. This is not good news at all."

A separate report from the Labor Department showed the Consumer Price Index rose 0.3 percent, a touch above market expectations for a 0.2 percent increase, after rising an unrevised 0.2 percent in September.

U.S. stock index futures turned negative after the data, while U.S. Treasury debt prices extended losses on the higher than expected inflation data. The U.S. dollar rose against the euro, and New York gold futures held gains near record highs.

Groundbreaking for single-family homes fell 6.8 percent last month to an annual rate of 476,000 units, the lowest since May. Starts for the volatile multifamily segment tumbled 34.6 percent to a 53,000 annual pace, extending the previous month's slide.

Compared to October last year, housing starts dropped 30.7 percent. The latest data will be a blow to the housing market, which had shown signs of stabilization after a three-year slump. Residential investment contributed to economic growth in the July-September period for the first time since 2005.

The U.S. economy expanded in the last quarter after four straight quarters of decline. The recovery in the housing market has been led by the popular $8,000 tax credit for first-time buyers, which has since been extended and expanded by the government.

Source: Reuters

Tax Credit Expands Home Buyer, Economic Opportunites

Tuesday, November 17, 2009

The National Association of Home Builders (NAHB) is spreading the word to consumers about an important new law that extends and expands an attractive tax incentive for potential home buyers. The Worker, Homeownership, and Business Assistance Act of 2009, signed into law by President Obama on Nov. 6, extends the deadline for the first-time home buyer tax credit and gives a larger group of home buyers the chance to take advantage of this government program.

"The tax credit has already proven to be an effective means of boosting economic activity," said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. "We hope that the government's action to enhance it will have the intended additional stimulative effect that will help get housing and the economy back on solid ground."

The new law extends the $8,000 first-time home buyer credit through April 30, 2010, giving buyers who have signed a sales contract by that deadline until June 30 to close their deal. A new credit of up to $6,500 was created for repeat home buyers who buy a principle residence if they have been residing in the home they currently own (or previously owned) for five consecutive years out of the eight years preceding the purchase of the new home.

"It's not just a first-time buyer tax credit anymore," Robson said. "Move-up buyers, move-down buyers, and others who have previously owned a home can now qualify as well. In fact, close to 70 percent of all potential home buyers should now qualify for some form of the credit."

Income limits for eligible buyers have also been increased to allow more consumers to qualify, particularly those in markets with a higher cost of living. Now single taxpayers with incomes up to $125,000 and married couples earning up to $225,000 may be eligible. Partial credits are available to home buyers who earn up to $20,000 more than the limits.

A leading source of consumer information on the tax credit is NAHB's Web site at www.federalhousingtaxcredit.com, which saw a huge increase in visits in the days after the new law was signed. It provides basic information about the first-time and repeat buyer credits, detailed question and answer sections, and links to additional home-buying resources for consumers.

"The federalhousingtaxcredit.com Web site had more than 70,000 visits on the Monday after the President enacted the law," said Robson. "Since the site was established in mid-2008, there have been more than 6 million visits by people seeking information about the home buyer tax credits. That tells you how hungry consumers are for easy-to-understand information on this great opportunity that has been opened to them."

Source: NAHB

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Builder Confidence Unchanged in November

Tuesday, November 17, 2009

In a survey in which most responses were received prior to congressional action to keep an important home buyer incentive alive, builder confidence in the market for newly built, single-family homes remained unchanged at a low level this November, the National Association of Home Builders (NAHB) reported today. The NAHB/Wells Fargo Housing Market Index (HMI) held flat at 17 while its component gauging sales expectations for the next six months rose two points from the previous month, to 28.

"When the HMI survey was conducted at the beginning of this month, home builders were facing the imminent expiration of the $8,000 first-time home buyer tax credit at the end of November, with no guarantee that this valuable buyer incentive would be extended," said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. "Now that Congress has done its job by both extending the tax credit into next year and expanding eligibility for it among potential buyers, we are very hopeful that this will have the intended stimulative effect on sales activity going forward."

"Today's report confirms that home builders and buyers were in something of a holding pattern in early November as the anticipated expiration of the tax credit drew near and congressional action had not yet taken place to address this," confirmed NAHB Chief Economist David Crowe. "Meanwhile, the challenges that builders are facing in obtaining credit for new housing production and appropriate appraisal values for their homes continued to worsen. These issues still present a very worrisome problem that is weighing down prospects for a sustained housing market recovery."

In a special questions section of the HMI survey, fully one-third of respondents indicated that they have recently lost sales due to low appraisal values. This is up from a quarter of respondents who indicated as much in a survey taken in July. Builders report that low appraisal values are often tied to the use of foreclosed and distressed properties as "comps" in the appraisal process.

Derived from a monthly survey that NAHB has been conducting for nearly 20 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as "high to very high," "average" or "low to very low." Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor.

The November HMI was unchanged from October's downwardly revised level of 17. The component gauging current sales conditions and the component gauging traffic of prospective buyers also remained unchanged, at 17 and 13, respectively, while the component gauging sales expectations for the next six months edged up two points, to 28.

On a regional basis, HMI results were somewhat mixed in November. The South recorded no change, at 17, while the Midwest posted a three-point decline to 14, the Northeast registered a six-point decline to 19 and the West bounced back five points from a big dip in October to finish at 19.

Source: NAHB

Home Builder Sentiment Steady in November

Tuesday, November 17, 2009

U.S. home builder sentiment held steady at a low level in November, according to a survey taken before the government extended a popular tax credit for first-time buyers.

The National Association of Home Builders/Wells Fargo Housing Market Index was unchanged at 17 for November, below market expectations for a reading of 19. October's index was previously reported at 18.
A reading above 50 indicates that more builders view sales conditions as good than poor.

The survey, released on Tuesday, was conducted before the government extended and expanded the popular $8,000 tax credit for first-time home buyers, which has been widely credited with pulling the housing market from a three-year slump.

" Now that Congress has done its job by both extending the tax credit into next year and expanding eligibility for it among potential buyers, we are very hopeful that this will have the intended stimulative effect on sales activity going forward," said NAHB Chairman Joe Robson.

Source: Reuters

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Stocks Jump as Retail Sales Rebound in October

Monday November 16, 2009

Investors grew more upbeat about the economy Monday after retail sales rebounded more than expected in October and as a weaker dollar sent commodity prices higher.

Major stock indexes rose more than 1 percent to new 13-month highs, including the Dow Jones industrial average, which jumped 115 points. The Standard & Poor's 500 index topped 1,110, the first convincing move above 1,100 after hovering around that level for the past month.

Stocks pared some of their gains after Federal Reserve Chairman Ben Bernanke said policymakers would monitor the dollar while at the same time repeating that the Fed will hold interest rates low until the economy strengthens.

Low interest rates and easing fears about the global economy have weakened demand for the dollar.

In prepared remarks for a speech to the Economic Club of New York, Bernanke said the Fed will "ensure that the dollar is strong and a source of global financial stability."

The rare discussion about the dollar from the Fed gave a boost to the currency, which pulled off its lows. That weighed on the gains of major stocks indexes.

Weakness in the dollar earlier Monday lifted gold to a new record and pumped up prices of other commodities, including oil. That, in turn, helped shares of energy and materials companies.

In afternoon trading, the Dow rose 116.46, or 1.1 percent, to 10,386.93 after rising nearly 143 points ahead of Bernanke's speech.

The broader S&P 500 index rose 15.31, or 1.4 percent, to 1,108.79. It traded above 1,100 in mid-October but hasn't closed above that benchmark since October last year.

Source: Associated Press

Source: Fortune

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Housing plan reaches 1 in 5 borrowers

Tuesday November 10, 2009

After a slow start, the Obama administration's mortgage relief program has reached one in five eligible homeowners, a government report says.

More than 650,000 borrowers, or 20 percent of those eligible, have signed up for trials lasting up to five months, the Treasury Department said Tuesday. The modifications reduce monthly payments to more affordable levels.

Launched with great fanfare in March, the plan got off to a weak start, but now nearly 920,000 loan modification offers have been sent to more than 3.2 million eligible homeowners. That works out to 29 percent, up from 15 percent at the end of July.

In California, about 130,000 homeowners have been enrolled in the "Making Home Affordable" loan modification plan, which President Barack Obama unveiled in February. That works out to about 19 percent of the state's homeowners who were either two payments behind or in foreclosure at the end of last month, according to Treasury Department data.

" We are reaching all the places that really got decimated," said Michael Barr, an assistant Treasury secretary. "The other basic story is we're reaching borrowers at a scale that has not been done by any other modification program."

Two other hard-hit states, Arizona and Nevada had similar rates of assistance as California, at 22 percent and 18 percent respectively. Florida, however, was much lower, at 12 percent, possibly because of high numbers of investor-owned properties that don't qualify for the program.

Source: Associated Press

Median Home Prices Fell Nationwide in 3Q

Tuesday November 10, 2009

A real estate group says home prices fell in eight out of every 10 U.S. cities in the third quarter of this year as heavily discounted distressed sales made up 30 percent of all deals.

But home sales continued their climb, with quarterly sales outpacing the second quarter and the previous year's figures, the National Association of Realtors said Tuesday.

The median sales prices of existing homes declined in 123 out of 153 metropolitan areas compared with the same period a year ago. Prices rose in the other 30 cities.

The national median price clocked in at $177,900, or 11 percent below the third quarter last year.
" The decline in the national median price has moderated recently, and a shrinking supply of unsold inventory suggests we are getting closer to price stabilization in many areas, " said Lawrence Yun, the group's chief economist, in a statement. "But we need a steady stream of financially qualified buyers to further reduce inventory and get us to a self-sustaining market."

Source: Yahoo Finance

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Fed Officials Warn Weak Recovery Won't Spur Jobs

Tuesday November 10, 2009

Unemployment likely will remain high for the next several years because the economic recovery won't be strong enough to spur robust hiring, Federal Reserve officials warned Tuesday.

AP - In this photo made Wednesday, Nov. 4, 2009, Sonja Jackson, of Detroit, holds a Employment Guide while attending ...

The cautionary note struck by the presidents of regional Fed banks in San Francisco and Atlanta were the first public remarks of Fed officials since the government reported last week that the nation's jobless rate bolted to 10.2 percent in October. It marked only the second time in the post-World War II period that the rate surpassed 10 percent.

In separate speeches, Janet Yellen, president of the Federal Reserve Bank of San Francisco, and Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, warned that rising unemployment could crimp consumers, restraining the recovery. Consumer spending accounts for about 70 percent of economic activity.

" With such a slow rebound, unemployment could well stay high for several years to come," Yellen said. "In other words, our recovery is likely to feel like something well short of good times."

Yellen envisions the shape of the recovery kind of like an "L" with a gradual upward tilt of the base.
Lockhart said "very slow net job gains" may occur "sometime next year."

Troubles in the commercial real estate market and the plight of small businesses also will weigh on the recovery, they said.

Small businesses -- which held up reasonably well in the 2001 recession -- have been clobbered by the downturn, accounting for about 45 percent of net job losses through the end of 2008, Lockhart said. During the last two economic recoveries, small businesses contributed about one-third of net job growth. Lockhart said he doubted that would be the case this time.

That's because many small businesses rely on smaller banks for credit. But troubled commercial real estate loans are concentrated at those banks, hobbling the flow of credit. Lockhart said he is "particularly concerned" about that linkage.

Source: Associated Press

Trex(R) Debuts New Board Profiles and Reduced Bundle Packs

Monday, November 9, 2009

Enhanced One-inch Trex Contours® and Trex Accents® Offer Product Consistency

Trex® recently announced the debut of one-inch board profiles on two of its best-selling collections – Trex Accents® and Trex Contours®. These enhancements were the direct result of feedback from Trex's industry partners and set the stage for larger changes to the overall Trex product portfolio – including a ground-breaking new decking and railing line – which will be unveiled at the company's Distributor Meeting this week.

“ The transition to new board profiles on Accents and Contours will simplify our decking offerings and provide greater design flexibility to mix and match all of our product lines,” said Adam Zambanini, senior product manager of decking at Trex, the nation's largest manufacturer of wood-alternative decking, railing and fencing products.

In addition to the new board profiles, Trex also will be the first decking manufacturer to offer reduced-size product bundles – transitioning from a bundle size of 96 pieces per unit to 48 pieces per unit. This change will create increased product turns for Trex’s industry partners. Distributors will benefit from efficiencies in material handling and reduced in-transit material handling damage – while dealers will be able to stock more Trex product without increasing their inventory position.
Said Zambanini, “We believe the reduced packs will provide greater bundling opportunities for our distributors and dealers – allowing them to move more product in less time while increasing productivity and profitability.”

With these enhancements, all Trex decking will now measure 1” x 5.5” and be compatible with the Trex HideawayTM hidden fastening system. Additionally, Trex Contours will have a square-edged profile and a grooved edge profile, as opposed to its former scalloped underside. The updated boards currently are available at both Trex manufacturing facilities in Winchester, Va., and Fernley, Nev.

Trex Accents offers a subtle, refined wood grain pattern while Trex Contours features a bold, dramatic grain. Naturally soft and comfortable to the touch, both collections are eco-friendly and low-maintenance, and provide superior durability and wear resistance.

“ We are confident that these enhancements to the Accents and Contours products will provide more flexibility and design options to consumers, as well as more convenience and efficiency to distributors and dealers,” said Zambanini.

Source: BUSINESS WIRE

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U.S. Jobless Rate Hits 10.2 Percent

Friday, November 6, 2009

The U.S. jobless rate unexpectedly jumped to a 26-1/2-year high of 10.2 percent last month, adding to pressure on the Obama administration to do more to tackle unemployment even as signs of recovery mount.

The Labor Department said on Friday that employers cut 190,000 jobs in October, more than the 175,000 markets had expected but fewer than the 219,000 lost in September.

Taking some of the sting out of the report, job losses for August and September were revised to show 91,000 fewer jobs were lost than previously reported.

While that hinted at some improvement in labor market conditions, economists had looked for the jobless rate to rise to 9.9 percent from September's 9.8 percent.

" Unfortunately, the problem is becoming deeper and more protracted," Mohamed El-Erian, chief executive of bond giant Pacific Investment Management told Reuters. "It's not just the increase in the headline number. ... It's also about the longer-term nature of unemployment, the increase in underemployment, and the prospect for only a very gradual recovery."

Stocks erased early losses on the heels of the report, somewhat heartened by a lessening in the pace of monthly job losses. The report lifted prices for U.S. government bonds and the flight to safer assets initially boosted the U.S. dollar, but it later fell back.

President Barack Obama has called job creation priority No. 1, but his scope to take further steps to lift the economy is limited by record budget deficits.

Mounting unemployment could pose problems for the Democrats who control Congress as they head into congressional elections in November 2010. This week, Republicans wrested control of two state governorships away from Democrats in races where the weak economy figured prominently.

" President Obama promised jobs during his campaign for president, and the elections in Virginia and New Jersey on Tuesday were a clear referendum on his failure to deliver on this promise," said Republican National Committee Chairman Michael Steele.

Source: Reuters

Builders Applaud Congress on Extending Home Buyer Tax Credit

Thursday, November 5, 2009

The National Association of Home Builders (NAHB) today applauded Congress for passing legislation that will extend and expand the $8,000 first-time home buyer tax credit, stating that this will provide a much-needed boost to the fragile housing market and economy.

"We commend lawmakers for acting in a bipartisan manner to extend the first-time home buyer tax credit beyond its Nov. 30 deadline and expand it to a wider group of home buyers," said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. "The tax credit has proven to be a powerful economic incentive. Today's action by Congress will further stabilize housing and the economy by creating new jobs, stimulating home sales, reducing foreclosures, cutting excess inventories and stabilizing home prices."

The new law will extend the $8,000 credit for first-time home buyers for sales contracts entered into by April 30, 2010 and closed by June 30. Further, it has been expanded to include a new $6,500 credit for owners of existing homes who are purchasing a new principal residence. An existing home owner can claim the $6,500 tax credit if they have been residing in their principal residence for five consecutive years out of the last eight. Additionally, the income eligibility limits to claim the full credit amount for both groups of home buyers have been raised to $125,000 for individuals and $225,000 for married couples.

NAHB estimates that the extended and expanded home buyer tax credit will create 211,000 jobs and generate 180,000 additional home sales in the coming year. It is also expected to generate $9.6 billion in wage income and $6.9 billion in federal, state and local taxes.

The legislation, which also extends unemployment insurance benefits and offers relief to cash-strapped firms by providing broader tax benefits for businesses with net operating losses (NOLs), is expected to be signed into law shortly by President Obama.

"The new NOL rules will throw a lifeline to struggling businesses, allowing them to continue making payrolls, paying business loans and otherwise keep their doors open until the economic recovery takes hold," said Robson.

Source: NAHB

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Mortgage Rates Drop Below 5 Percent: Freddie Mac

Thursday, Nov 5, 2009

U.S. mortgage rates fell below 5 percent for the first time in three weeks, a key level that may boost home loan demand and help the hard-hit housing market recover, a closely watched mortgage survey showed Thursday.

Interest rates on U.S. 30-year fixed-rate mortgages averaged 4.98 percent for the week ending November 5, down from the previous week's 5.03 percent, according to a survey released on Thursday by home funding company Freddie Mac.

Many industry experts view 5 percent as a key psychological level. When rates drop below this threshold, home loan demand tends to rise, while the opposite holds true when rates rise. A year ago, 30-year mortgage rates averaged 6.20 percent.

Source: Reuters

Fed Likely to Keep Key Interest Rate at Record Low

Wednesday, November 4, 2009

Faced with lurking dangers to the budding recovery, Federal Reserve policymakers are sure to leave a key interest rate at a record low to entice Americans to spend more and help the economic turnaround gain traction.

The economy started to grow again last quarter for the first time in more than a year, although there are uncertainties about the strength and staying power of the recovery, especially after government supports are removed.

Fed Chairman Ben Bernanke and his colleagues resumed meeting Wednesday morning and are likely to note the country's economic and financial improvements when they wrap up their two-day session in the afternoon. But they'll also warn that rising joblessness and hard-to-get-credit for many people and companies will restrain the rebound in the months ahead. Troubles in the commercial real estate market, where soured loans are contributing to bank failures, also remain a concern.

At its last meeting in late September, the Fed opted to stretch out into early next year a key program aimed at forcing down mortgage rates and providing support to the housing market. The central bank isn't expected to veer from that course Wednesday.

Wanting to nurture the recovery, the Fed is widely expected to keep the target range for its bank lending rate at zero to 0.25 percent. If it does, commercial banks' prime lending rate, used to peg rates on home equity loans, certain credit cards and other consumer loans, will stay at about 3.25 percent, the lowest in decades.

" I don't think there is confidence at this point that the economy is firing on all cylinders by itself," said Bill Cheney, chief economist at John Hancock Financial Services. "It is not ready to be weaned off the extra fiscal and monetary support."

Against that backdrop, many economists predict the Fed will maintain a pledge to keep rates "exceptionally low" for an "extended period." The hope is that super-low rates will spur consumers and businesses to spend more, supporting the recovery.

Source: Associated Press

Stocks Surge on Manufacturing, Housing Data

Monday November 2, 2009

Stocks are snapping back from Friday's big losses as stronger-than-expected reports on manufacturing and housing allay concerns that the economy's recovery won't last. Major indexes rose more than 1 percent in early trading Monday, including the Dow Jones industrials, which jumped about 130 points, erasing a chunk of Friday's 250-point loss.

The gains came after the Institute for Supply Management said the manufacturing industry grew at the fastest pace in October since April 2006. The ISM manufacturing index clocked in at 55.7, much better than the 53 economists had expected. It was the third month in a row the index came in above 50, which indicates growth.

Meanwhile, the National Association of Realtors said pending home sales increased for the eighth straight month in September. The index rose 6.1 percent from August to 110.1. It was the highest reading since December 2006 and more than 21 percent above a year ago. Economists had expected the index would be level at 103.8.

Also Monday, the Commerce Department said construction spending increased 0.8 percent in September, matching the gain in August. Economists had been expecting a 0.3 percent decline.
" This should help relieve some of the fears that the recovery is not sustainable," said Peter Cardillo, chief market economist Avalon Partners Inc. of the reports.

Source: Associated Press

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September Pending Home Sales Rise 6.1 Percent

Monday November 2, 2009

The volume of signed contracts to buy previously occupied homes rose for the eighth straight month in September as buyers scrambled to take advantage of a tax credit for first-time owners that expires at the end of this month.

The National Association of Realtors said Monday its seasonally adjusted index of sales agreements rose 6.1 percent from August to 110.1. It was the highest reading since December 2006 and more than 21 percent above a year ago. Economists surveyed by Thomson Reuters expected the index would be level at 103.8.

Typically there is a one- to two-month lag between a contract and a done deal, so the index is a barometer of future sales.

The housing market has been rebounding from the worst downturn in decades, aided by an aggressive federal intervention to lower mortgage rates and bring more buyers into the market.
Completed home resales rose in September to the highest level in more than two years as buyers scrambled to complete their purchases before the tax credit of up to $8,000 for first-time owners expires on Nov. 30.

Congress is moving to extend the credit to buyers who sign sales agreements by April 30. Lawmakers also want to add a $6,500 credit for buyers moving into other homes as long as they have been living in their current residence at least five years.

With foreclosures continuing to surge, "an extended and expanded tax credit would help absorb this incoming inventory," Lawrence Yun, the Realtors' chief economist, said in a statement.

Pending sales were up 10 percent in the West and 8 percent in the Midwest. They were up 5 percent in the South and were down 2 percent in the Northeast.

Source: Associated Press

$8,000 Home Credit Still in Play

Thursday, October 29, 2009

Confused about whether lawmakers will extend the $8,000 first-time homebuyer credit and what it would look like?

That's understandable, since the situation is still very fluid.

Here's where things stand.

Support for the credit: There is still bipartisan support in Congress for extending the credit past Nov. 30 and making it available to more homebuyers.

The Obama administration wants the credit extended for a "limited period," Treasury Secretary Tim Geithner and Housing Secretary Shaun Donovan said Thursday. They did not elaborate.

What's on the table now: There appears to be a compromise deal that falls between the most and least generous proposals that have been put forth so far.

" There is bipartisan compromise to extend the credit through spring and expand it to existing homeowners who are stepping up to a different home," financial policy analyst Jaret Seiberg wrote in a research note for Concept Capital's Research Group.

The latest idea under discussion is a credit worth up to $8,000 for first-time homebuyers and up to $6,500 for homeowners looking to trade up to a bigger primary residence and who have already lived in their current home for five years. (CNN: Senate compromise may be in the works.)

To qualify for the full credit, however, homebuyers must have adjusted gross income of less than $125,000 ($225,000 for married couples filing jointly).

In addition, the credit would only apply to homes sold for $800,000 or less. Contracts to buy a home must be signed by April 30, 2010, and the deals must close by June 30 in order for a buyer to qualify for the credit.

Rationale for extending the credit: Supporters of the credit say it has helped to boost existing home sales in recent months. Extending the credit would help further support sales, stabilize housing prices and generate jobs in the face of an expected rise in foreclosures next year, which is expected to put downward pressure on prices.

If the credit is allowed to expire, they say, the housing market and the broader economy will grow moribund again.

" The most fundamental argument for the credit is that nothing works in the economy if housing is falling -- it hurts household wealth and credit becomes tight," said Mark Zandi, chief economist at Moody's Economy.com. "[The credit] is a good insurance policy. It's vital to stem the housing price declines."

Source: CNNMoney.com

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Economy Grows in 3Q, Signals End of Recession

Thursday October 29, 2009

The economy grew at a 3.5 percent pace in the third quarter, the best showing in two years, fueled by government-supported spending on cars and homes. It's the strongest signal yet that the economy has entered a new, though fragile, phase of recovery and that the worst recession since the 1930s has ended. Going forward, many analysts expect the pace of the budding recovery to be plodding due to rising unemployment and continuing difficulties by both consumers and businesses to secure loans.

" This welcome milestone is just another step, and we still have a long road to travel until the economy is fully recovered," said Christina Romer, President Barack Obama's chief economist. "It will take sustained, robust ... growth to bring the unemployment rate down substantially. Such a decline in unemployment is, of course, what we are all working to achieve."

Source: Associated Press

Foreclosures: Worst-Hit Cities

Thursday October 29, 2009

While foreclosure rates are easing in some of the hardest-hit cities, the crisis is beginning to expand into new metro areas.

On Wednesday, RealtyTrac released its list of cities with the biggest foreclosure problems during the third quarter. As expected, towns in California, Florida and Nevada dominated the top 10, with Las Vegas taking the top spot with a rate of 1 in 20 homes. That's a 53% increase over the third quarter 2008.

But there was a bright spot: Half of the cities in the top 10 showed year-over-year declines in their foreclosure rates, and 60% showed improvement compared with the second quarter.

For example, second place Merced, Calif., saw foreclosures fall by 11% from last year and 13% from last quarter, to 1 out of every 27 homes. And Stockton, Calif., slipped to No. 4 from No. 2 last quarter. The city, which is 80 miles east of San Francisco, had ranked highest for all of 2008.
" We're not sure if that will be a one-time thing or a true continued trend, but it's one of the first positive signs we've seen," said Rick Sharga, a senior vice president at RealtyTrac.

But if Las Vegas was the big loser, its neighbor, Reno, Nev., was hot on its heels. The No. 9 city posted an 80% gain in foreclosures -- 1 in 37 homes -- compared to the third quarter of last year. And it's just one of several smaller metro areas that are creeping their way up RealtyTrac's foreclosure list.

" Foreclosure activity is spreading from primary cities into secondary areas," said Sharga. "These aren't your LAs and Phoenixes -- it's moving into outlying regions."

Boise, Idaho, cracked the top 20 for the first time as foreclosures jumped 141% -- the largest increase from 2008. Similarly, Provo, Utah, rose 120%.

The pair of cities "are the first two cases where areas with very high unemployment are breaking into the top spots," Sharga said. "That will continue over the next few months."

"The fact is, we're still seeing record levels of foreclosure activity," said Sharga, who doesn't expect rates will peak until 2010 because many option-ARMs will reset over the next several months.

Still, the housing market seems to be adjusting, because home prices are stabilizing -- albeit at a lower level, Sharga said.

A record number of properties "are coming down the foreclosure pipeline" as well, Sharga said, and they will be trickling into the housing market over the next four years.

" We expect a longer, less robust recovery for the housing market," Sharga said. "We won't know what's what until everything gets worked out of the system."

Source: CNNMoney.com

First-time Jobless Claims Drop Less Than Expected

Thursday October 29, 2009

The number of Americans claiming jobless benefits for the first time dropped less than expected last week, evidence that the labor market remains weak even as the economy is recovering.

The Labor Department said Thursday its tally of newly laid-off workers seeking unemployment insurance fell by 1,000 to a seasonally-adjusted 530,000. Analysts expected a steeper drop to 521,000, according to a survey by Thomson Reuters.

The report came on the same day the Commerce Department said the economy grew at a 3.5 percent pace in the July-September quarter, snapping a record streak of four straight quarterly declines. But the economy isn't growing quickly enough to spur much hiring.

Initial claims need to fall below about 450,000 to signal that employers are actually adding jobs, several economists said. Still, many saw some positive signs in the report.

The number of people continuing to claim unemployment insurance benefits dropped 148,000 to 5.8 million, a steeper fall than expected and the sixth straight decrease. Those figures lag initial claims by a week.

Source: Associated Press

Stocks Slide as New Home Sales Fall

Wednesday, October 28, 2009

Major market indexes fell sharply Wednesday after the Commerce Department said new home sales dropped for the first time in five months. Sales slid 3.6 percent in September to 402,000. Analysts had expected an increase.

The Dow Jones industrial average lost 119 points, or 1.2 percent. The Nasdaq composite index fell 2.7 percent, while the Russell 2000 index of smaller companies tumbled 3.5 percent. Many of the stocks in both indexes are considered more risky and so they suffered some of the biggest losses.

The retreat came as Goldman Sachs Group Inc. reduced its expectation for the nation's economic output for the July-September period. Goldman Sachs predicts third-quarter gross domestic product rose at an annual rate of 2.7 percent, weaker than its earlier forecast of 3 percent.

The government's report on third-quarter GDP is due Thursday. Economists are looking for growth at an annual rate of 3.3 percent after a record four straight quarters of contraction.

The day's slide signaled that investors were reassessing their hopes for a recovery in the economy. Demand for safe-havens like Treasurys rose as did stocks of companies whose business is expected to fare better in a slump. Stocks of consumer staples companies like Procter & Gamble Co., which makes Tide detergent and Gillette razors, edged higher.

Analysts said the market's slide in the past week isn't surprising given the size of the advance in the last eight months and mixed economic readings.

" I'm not panicked at the moment," said Manny Weintraub, president of Integre Advisors in New York. "I don't think anyone expected a super robust recovery."

Stocks struggled Tuesday after a disappointing report on consumer confidence stirred worries about the strength of the coming holiday shopping period.

According to preliminary calculations, the Dow fell 119.48, or 1.2 percent, to 9,762.69.

The broader Standard & Poor's 500 index fell for the fourth straight day, sliding 20.78, or 2 percent, to 1,042.63. The Nasdaq fell 56.48, or 2.7 percent, to 2,059.61.

The Russell 2000 index of smaller companies fell 20.63, or 3.5 percent, to 566.36.

At the New York Stock Exchange 2,777 stocks rose, while 322 rose. Volume came to 1.7 billion shares compared with 1.4 billion Tuesday.

Source: Associated Press

Surprise Drop in New Home Sales

Wednesday, October 28, 2009

Sales of newly built homes fell unexpectedly in September after rising for five straight months, according to government figures released Wednesday.

The Commerce Department said new home sales fell 3.6% to a seasonally-adjusted annual rate of 402,000 last month, from a downwardly revised rate of 417,000 in August. It was the first time new home sales declined since March.

Economists surveyed by Briefing.com had expected September new home sales to rise to a rate of 440,000 units.

" We're attributing most of the decline to the potential expiration of the new home-buyer tax credit," said Adam York, an economist at Wells Fargo.

In addition to relatively low prices and attractive mortgage rates, the housing market has been supported in recent months by a temporary government tax credit for first-time homebuyers.

The credit, which can be worth up to $8,000 for eligible buyers, is set to expire at the end of November. Congress is expected to extend the credit, but the terms are still being debated.

Wednesday's report showed the median sales price rose to $204,800 in September from $195,200 the month before. The average sales price was $282,600.

The estimated number of new homes for sale at the end of last month was a seasonally adjusted 251,000, according to the Commerce Department. Last month, it was 262,000 unsold homes.

At the current sales pace, it would take 7.5 months to sell through that inventory, according to the report. That's up from the previous month, when the there was about 7.3 months of inventory on the market.

Source: CNNMoney.com

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U.S. Consumer Confidence Up For First Time Since 2007

Wednesday, October 28, 2009

Global consumer confidence is rebounding, and in the United States has risen for the first time since 2007, amid signs the world economy is picking up although spending is still restrained, a survey showed on Wednesday.

Confidence was highest in India, followed by Indonesia and Norway, and was weakest in Japan, Latvia, Portugal and South Korea, although in Korea it had improved markedly, according to a quarterly survey by The Nielsen Company, conducted between September 28 and October 16.

" Consumer confidence is rising faster in BRIC countries than other markets, driven by increasing job prospects," Oliver Rust, managing director of Nielsen Hong Kong, told Reuters.

In the United States and Europe, high unemployment continued to discourage spending on big-ticket items although confidence had improved as the worst appeared to be over for those economies, New York-based Nielsen said.

In the United States -- the world's biggest consumer market -- consumer sentiment rose from three months ago for the first time since early 2007. The data contrasts with a Conference Board index of U.S. consumer confidence, released on Tuesday, which showed a sharp deterioration in confidence this month.

The U.S. reading in The Nielsen Global Consumer Confidence survey at 84 was up 4 points from a similar survey in July but just below the global average reading of 86 and well below India's score of 120 and Indonesia on 115.

" While consumer confidence in the United States edged up 4 index points, that hasn't translated into spending confidence for the vast majority of American consumers," said James Russo, vice-president, global consumer insights at The Nielsen Company. "Clearly, this recovery will be manifested in measured and restrained spending as consumers work to repair their balance sheets."

A reading above 100 is considered optimistic. The global average was up four points from a similar survey in July.

Source: Reuters

Mortgage Applications Slide as Tax Credit Expiration Looms

Wednesday October 28, 2009

Mortgage applications fell last week for the third week in a row, even as interest rates edged lower, an industry group said Wednesday.

The Mortgage Bankers Association (MBA) said its index of mortgage application volume fell 12.3% in the week ended Oct. 23 from the prior week.

The drop in activity came as a popular tax credit for first-time homebuyers faced an uncertain future. The credit, which can be worth up to $8,000 for eligible buyers, is set to expire at the end of next month.

The MBA said refinancing applications also fell, by 16.2% from the previous week. The purchase index, a measure of applications at mortgage lenders, declined 5.2% last week.

Meanwhile, interest rates on the widely-used 30-year fixed mortgage eased to 5.04% from 5.07%, according to the MBA.

The MBA report also showed the average rate for 15-year fixed-rate mortgages rose to 4.53% from 4.51%.
Rates for one-year adjustable rate mortgages, or ARMs, slid to 6.79% from 6.86%.

Government figures are expected to show Wednesday that sales of newly built homes rose at an annual rate of 440,000 units in September. That would be an increase of 2.6% versus the previous month.

Source: CNNMoney.com

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Home Prices Rise for 3rd Straight Month

Tuesday, October 27, 2009

Home prices rose for the third straight month in August, data Tuesday showed, a key sign for a broad and sustained housing recovery.

The Standard & Poor's/Case-Shiller home price index of 20 major cities climbed 1 percent from July to a seasonally adjusted reading of 144.5. While prices are down 11.4 percent from August a year ago, the annual declines have slowed since February.

Prices are at levels not seen since August 2003 and have fallen almost 30 percent from the peak in May 2006.

The latest index shows a widespread turnaround with prices rising month-over-month in 15 metro areas since June.

" If the increases are consistent across the markets, this is key," said Wharton School real estate professor Susan Wachter before the index was released. "Then we're seeing the formation of a bottom."

However, Wachter along with other industry experts still worry that rising unemployment and more foreclosures could stifle the rebound. Another unknown is whether a temporary federal tax credit for first-time buyers will be extended to help boost sales.

First-time homebuyers can receive a credit of 10 percent of the sales price, up to $8,000. The real estate industry is lobbying Congress to extend the credit past the Nov. 30 deadline. Top Democrats in the Senate are pressing a plan that would prolong the credit but gradually phase it out over the next year.

Not all metros posted gains in August, though. Prices in Las Vegas, Seattle and Charlotte, N.C., all fell to their lowest levels in August. Prices in Las Vegas have plunged by 56 percent since peaking in April 2006, the largest peak-to-trough decline of all 20 cities.

Source: The Associated Press

Worsening Job Picture Fuels Slide in Confidence

Tuesday October 27, 2009

Americans' confidence about the U.S. economy fell unexpectedly in October as job prospects remained bleak, a private research group said Tuesday, fueling speculation that an already gloomy holiday shopping forecast could worsen.

The Consumer Confidence Index, released by The Conference Board, sank unexpectedly to 47.7 in October -- its second-lowest reading since May.

Forecasters predicted a higher reading of 53.1.

A reading above 90 means the economy is on solid footing. Above 100 signals strong growth.
The index has seesawed since reaching a historic low of 25.3 in February and climbed to 53.4 in September.

Economists watch consumer confidence because spending on goods and services by Americans accounts for about 70 percent of U.S. economic activity by federal measures. While the reading doesn't always predict short-term spending, it's a helpful barometer of spending levels over time, especially for expensive, big-ticket items.

Recent economic data, from housing to manufacturing, has offered mixed signals but some evidence that an economic recovery might be slow.

But on Tuesday, the figures showed that shoppers have a grim outlook for the future, The Conference Board said, expecting a worsening business climate, fewer jobs and lower salaries.

That's particularly bad news for retailers who depend on the holiday shopping season for a hefty share of their annual revenue.

" Consumers also remain quite pessimistic about their future earnings, a sentiment that will likely constrain spending during the holidays," said Lynn Franco, director of The Conference Board's Consumer Research Center.

Source: The Associated Press

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Big Rebound in Existing-Home Sales Shows First-Time Buyer Momentum

Washington, October 23, 2009

Existing-home sales bounced back strongly in September with first-time buyers driving much of the activity, marking five gains in the past six months, according to the National Association of Realtors®.

Existing-home sales – including single-family, townhomes, condominiums and co-ops – jumped 9.4 percent to a seasonally adjusted annual rate1 of 5.57 million units in September from a level of 5.10 million in August, and are 9.2 percent higher than the 5.10 million-unit pace in September 2008. Sales activity is at the highest level in over two years, since it hit 5.73 million in July 2007.

Lawrence Yun, NAR chief economist, said favorable conditions matched with a tax credit are boosting home sales. “Much of the momentum is from people responding to the first-time buyer tax credit, which is freeing many sellers to make a trade and buy another home,” he said. “We are hopeful the tax credit will be extended and possibly expanded to more buyers, at least through the middle of next year, because the rising sales momentum needs to continue for a few additional quarters until we reach a point of a self-sustaining recovery.”

Even with the improvement, Yun said the market is underperforming. “Despite spectacular gains in the stock market, principally from the financial sector recovery, most of the 75 million home owning families have more wealth tied to their homes. Home values could soon turn consistently positive and help the broad base of middle-class families, but we are not there yet,” he said. “We’re getting early indications of price stabilization, but we need a steady supply of qualified buyers to meaningfully bring inventories down and return us to a period of normal, steady price growth and to fully remove consumer fears, which would then revive the broader economy. Without a firm foundation for middle-class wealth recovery, the post-recession economic growth likely will be one of the weakest in U.S. history.”

Source: National Association of Realtors

Leading Economic Indicators Rise Again in September

Thursday October 22, 2009

A private forecast of economic activity rose for the sixth straight month in September, a sign the economy will keep growing next year.

The Conference Board's index of leading economic indicators rose 1 percent last month after a 0.4 percent gain in August. Wall Street economists expected an increase of 0.8 percent last month, according to a survey by Thomson Reuters.

Economists expect the economy grew about 3 percent in the third quarter after falling for a record four straight quarters. But many wonder if that pace can continue in the current quarter and next year as unemployment rises and consumers remain hesitant to spend.

The Conference Board index's six-month growth rate through September was the strongest since 1983, but joblessness was weighing on the recovery.

Source: Associated Press

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Economists Forecast Strong Housing Growth

Wednesday, October 21, 2009

The U.S. housing market appears to have bottomed out and looks likely to return closer to normal--but not boom--levels by 2012, a group of housing economists predicted today.

Enthusiasm with several strings attached was the prevailing mood expressed in presentations prepared for the National Association of Home Builders (NAHB) 2009 Fall Construction Forecast Conference. Those experts who did venture numbers suggested that housing starts, which were at a seasonally adjusted annual rate of 590,000 in September, would top 800,000 around mid-2010, crack 1 million in mid-2011 and go over 1.5 million during 2012. That's still significantly below the 2005-2006 boom years, however, when starts topped 2 million, or even what some economists regard as a sustainable housing demand of roughly 1.8 million starts. But for a beleaguered industry, any sign of growth is good news.

Indeed, after having to predict slumps at past NAHB conferences, the economists' presentations were nearly giddy in comparison. "Housing Market Recovery: Are We There Yet?" Robert Denk, NAHB's assistant vice president for forecasting and analysis, titled his presentation. The next slide gave his answer: "YES!"

Mark Zandi, chief economist at Moody's Economy.com, entitled his speech "The Housing Crash Is Nearly History." And Carl Reichardt, managing director and senior research analyst at Wells Fargo Securities, said he thinks St. Patrick's Day was the date the market bottomed out this year.

NAHB Chief Economist David Crowe forecast that several key improvements in the economy--including employment growth, a reduced unemployment rate, and inflation-adjusted increases in the gross domestic product--all would start showing up sometime next year. He looks for a sharp, V-shaped recovery in both starts and in sales of new and existing homes to become apparent by next summer.

Joel Prakken, chairman of Macroeconomic Advisers, also saw better days ahead; he predicts private housing starts will rise from an annual rate of 614,000 this quarter to 1.1 million in the July-September period of 2010. But like the others, he cited several downside risks. They include lingering problems with the mortgage security markets, stingy bank lending to consumers, the possibility that home prices will erode again, and such unknowns as energy prices and the knock-on effects on the economy from health care reform. As one of Denk's slides suggested, we're on "The Long Road Back to Normal."

Source: ProSales Magazine Online

Fewer Home-Building Permits Signal Weakness Ahead

Tuesday, October 20, 2009

Applications for home building permits, a gauge of future construction, fell in September by the largest amount in five months -- a discouraging sign for the housing industry.

The Commerce Department said Tuesday that construction of new homes and apartments rose 0.5 percent last month to a seasonally adjusted annual rate of 590,000 units. That was a weaker showing than the 610,000 economists had expected.

The applications for building permits fell 1.2 percent in September. That's the biggest decline since a 2.5 percent drop in April and underscored worries that the fledgling housing revival could be derailed by rising unemployment, tighter bank lending standards and the expiration on Nov. 30 of the government's $8,000 tax credit for first-time homebuyers.

Housing has been struggling to recover this year following a steep collapse that helped pull the overall economy into the worst recession since the 1930s.

Real estate agents and homebuilders are lobbying Congress to extend the tax credit, an effort appears to be gaining momentum, but the administration is being vague about its position.

Sen. Johnny Isakson, R-Ga., who spent his career as a real estate agent before being elected to Congress, said "this market is going to die a sudden death" without an extension.

Isakson and Sen. Christopher Dodd, D-Conn., chairman of the Senate's banking committee, want to extend the credit until June 30 and to drop the requirement that the credit be available only to first-time buyers. That's estimated to cost $16.7 billion.

The lawmakers have suggested that their measure be attached to an extension of federal assistance to the millions in danger of exhausting unemployment insurance benefits.

Housing Secretary Shaun Donovan said at a congressional hearing Tuesday that supporting the housing market "can be very expensive, especially at a time of significant budget deficits."

The administration will make a recommendation on whether to extend the credit in the coming weeks, after studying data on tax filings from the Internal Revenue Service. While there would be some negative effects if it were allowed to expire, Donovan said, "I do not believe that a catastrophic decline would be the result."

Source: Associated Press

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Builders Urge Congress to Renew Home Buyer Tax Credit to Create Jobs, Boost Economy

Tuesday, October 20, 2009

In order to create hundreds of thousands of badly needed jobs and move the economy to higher ground, the National Association of Home Builders (NAHB) today called on Congress to extend and expand the $8,000 first-time home buyer tax credit set to expire at the end of next month.

Testifying before the Senate Banking Committee, NAHB Chief Economist David Crowe warned that builders are reporting that business generated by entry-level buyers is already declining because it is now too late to complete a new home sale in time to take advantage of the tax credit.

"Not only will builders soon be losing one of their most effective selling tools when the $8,000 federal housing tax credit expires on Nov. 30, they are also facing significant challenges that threaten to derail the fragile housing recovery before it even has time to take root," said Crowe. "Strict mortgage underwriting and low appraisals are making it difficult for a willing buyer to complete the sale, and terms and credit availability for builder acquisition, development and construction (AD&C) loans are extremely tight. The bottom line is that housing and the economy are at a critical crossroads."

To spur job growth, help reduce foreclosures and excess housing inventories and stabilize home values, NAHB is calling on Congress to extend the home buyer tax credit for an additional year through Nov. 30, 2010 and make it available to all purchasers of a principal residence.

"We estimate this would increase home purchases by 383,000 and create nearly 350,000 jobs in the coming year," said Crowe, adding that it would also generate $16.1 billion in wages and salaries; $12.1 billion in business income and tax income of $11.6 billion for federal, state and local governments.

Source: NAHB

Homes: About to Get Much Cheaper

Tuesday, October 20, 2009

If you thought home prices were bottoming out, you may be wrong. They're expected to head a lot lower.

Home values are predicted to drop in 342 out of 381 markets during the next year, according to a new forecast of real estate prices.

Overall, the national median home price is predicted to drop 11.3% by June 30, 2010, according to Fiserv, a financial information and analysis firm. For the following year, the firm anticipates some stabilization with prices rising 3.6%.

In the past, Fiserv anticipated the rapid decline in home-sale prices over the past few years -- though it underestimated the scope.

Mark Zandi, chief economist with Moody's Economy.com, agreed with Fiserv's current assessments. "I think more price declines are coming because the foreclosure crisis is not over," he said.

In fact, those areas with high concentrations of foreclosure sales will experience the steepest drops, according to Fiserv. Miami, for example, is expected to be the biggest loser. Prices are forecast to plunge 29.9% by next June -- after having already fallen a whopping 48% during the past three years.

If Fiserv's forecast holds, Miami real median home price will tumble to $142,000 by June 2011.
In Orlando, Fla., the second-worst performing market, Fiserv anticipates a 27% price collapse by June 2010, followed by a less severe drop the following year. In Hanford, Calif., prices are estimated to drop 26.9% and continue falling 9.5% in 2011; in Naples, Fla., they're expected to fall 26.8% and then flatten out.

Other notable losers include Las Vegas, where prices have already fallen 54.6% and are expected to lose another 23.9% by June 2010. In Phoenix values have already collapsed by 54% and could fall another 23.4%. In both cities, Fiserv anticipates the losses to continue into 2011, but they will be less than 5%.

Source: CNNMoney.com

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Builder Confidence Slips in October

Monday, October 19,2009

With the expiration date for an important home buyer incentive approaching, builder confidence in the market for newly built, single-family homes slipped one point to 18 in October, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI).

"It comes as no surprise that after trending upward from an historic low in January, the HMI's positive momentum now appears to have stalled," said Joe Robson, chairman of the National Association of Home Builders (NAHB) and a home builder from Tulsa, Okla. "Our economists have repeatedly warned that the approaching expiration of the $8,000 home buyer tax credit on Nov. 30, combined with the massive hurdles that builders face in obtaining construction financing and appropriate appraisals on new homes, could derail the fragile recovery in housing just as it is starting to take shape.

"Congressional action to expand the tax credit and extend it for one year would provide a critically needed boost to the employment market and economy, generating nearly 350,000 jobs, $28.2 billion in wages, salaries and business income and $11.6 billion in additional tax revenues. That's an opportunity we can't afford to pass up at this difficult time."

"This is the first time since November of 2008 that all three component indexes of the HMI have declined," noted NAHB Chief Economist David Crowe. "Clearly, builders are experiencing the effects of the expiring tax credit on their sales activity, since it would be virtually impossible at this point to complete a new home sale in time to take advantage of that buyer incentive before Nov. 30."

Source: NAHB

Retail Sales Hint at Improving Consumer Demand

Wednesday, October 14, 2009

Sales at U.S. retailers fell in September, but rose excluding motor vehicles for a second straight month in September, raising cautious optimism consumer spending could support the economic recovery.

The Commerce Department said on Wednesday total retail sales fell 1.5 percent in September, the biggest decline since December, after surging by a revised 2.2 percent in August. Sales in August were previously reported to have increased by 2.7 percent.

Analysts polled by Reuters had forecast headline retail sales falling 2.1 percent in September.
" There's solidity, or new strength, in all discretionary spending categories and many of those were strong last month, said Pierre Ellis, senior economist at Decision Economics in New York. "We evidently have hit the bedrock level of consumer spending and can even see a little bit of normalcy going forward."

Source: Reuters

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For Many U.S. Wealthy, Housing Crisis Still a Squeeze

Wednesday, October 14, 2009

Despite some signs that the worst of the U.S. residential housing crisis may be over, many wealthy homeowners are still being squeezed by the combination of weak home prices and the stock market crash.

" I think for wealthy homeowners it will get worse before it gets better," said Dennis Hedlund, founder of iEmergent, a forecaster for mortgage and real estate companies.

" I don't think home prices have bottomed yet. Many people are stuck at the high end, as there aren't many buyers out there," Hedlund said of owners of luxury properties.

From California to Massachusetts, the U.S. housing crisis came after years of easy credit and soaring property values. Towns like the western Chicago suburb of St. Charles saw an unprecedented growth of wealth, especially in high-end homes.

An hour by train from Chicago and known for good schools, St. Charles was a magnet for senior managers and professionals. But as the housing crisis that began in the subprime residential market spread up the property chain, the once-thriving high-end local market ground to a near halt.

" We've never seen anything like it," said Maurine Trafals, office manager at local realty agency Source One. "The market just stopped in the summer."

St. Charles, population 40,000, now has 74 homes for sale with buyers asking more than $1 million.
" That's a huge number to have on the market in a community of this size," Trafals said.
In 2009 five homes over $1 million have sold, compared with 21 in 2008. Prices are down 20 percent from the peak in 2007.

" There are fewer and fewer potential buyers out there, as mid-range homeowners are getting squeezed," said Ray Schafer, co-owner of home builder Michael Raymond Custom Homes, whose firm has had a luxury home on offer here for more than a year.
Schafer has cut his asking price by $50,000 to just under $1.2 million, without drawing out any offers.

" We can't hold onto inventory forever," Schafer said. "So we're just lowering the price until it's such an extreme bargain someone picks it up."

The national luxury market is weak on both the buyer and seller sides, coast to coast. Wealthy homeowners have seen cash reserves erode from the stock market collapse, which also hit retirement savings. The big drops in home prices have squeezed home equity loans. And many high-earners have also lost jobs.

" High-end owners have been hit from all sides," said Cora Berkery, a realtor at Surterre Properties in Orange County, California, site of Disneyland and hundreds of million-dollar homes.
Many wealthy homeowners have held asking prices high in the hope of outlasting the 2-year old property slump. But more are expected to slash prices in the coming year to avoid further losses or obtain cash, adding more properties to the market.

Source: Reuters

Roubini says Housing Market Hasn't Bottomed

Thursday, October 8, 2009

U.S. housing prices may still fall more than 10 percent, killing an incipient recovery, as demand from first-time home buyers fades, leading economist Nouriel Roubini said on Thursday.

Roubini, one of the few economists who accurately predicted the magnitude of the financial crisis, said massive losses in commercial real estate loans will add to the problem, forcing banks to raise more capital.

" The stress is moving from residential mortgages that are still in deep trouble, to commercial real estate, where they are just starting to recognize that they're going to have massive, massive losses," Roubini of RGE Global Monitor told reporters after a presentation for a World Economic Forum report on the global financial system.

U.S. home prices rose for the third straight month in July, raising hopes the market is stabilizing after a three-year plunge.

A first-time buyer credit of $8,000, which is set to end on November 30, has jump-started housing activity this year and has helped reduce a massive inventory of unsold homes.

While the number of unsold houses may have bottomed out, prices are poised to fall further, increasing pressure on the economy again, Roubini said.

One of the main risks next year may be from losses on some $2 trillion in outstanding commercial real estate loans, the economist predicted.

" Half of this is in medium-sized and smaller banks, and even in the larger ones. Most of these losses are not recognized because they're keeping the loans at face value on their books," he said, forecasting that U.S. and U.K. banks will need to raise more capital when those writedowns are made.

Still, Roubini sees a greater chance of a U-shaped economic recovery in developed economies, with a 20 percent to 25 percent chance of a double-dip.

" If it's a U-shaped recovery, China, Asia, and emerging markets will do fine. If there is a double dip, the consequences will be severe for everybody."

Source: Reuters

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House Votes to Extend Home Credit for Military

Thursday, October 8, 2009

The U.S. House of Representatives on Thursday voted overwhelmingly to extend a first-time homebuyers' tax credit for overseas military members through November 30, 2010.

The measure, which passed by a vote of 416 to 0, comes as Democrats are weighing whether to extend the $8,000 tax credit for all first-time homebuyers, which was enacted to combat the worst downturn since the Great Depression.

A broader expansion, however, would not necessarily win such widespread support.

President Barack Obama and Democratic leaders in Congress also are considering an extension of social safety-net programs, such as unemployment insurance, and spending for new construction programs to spur the economy and reverse a climb in the U.S. unemployment rate, which is now at a 26-year high.

But they face opposition from Republicans who say existing measures have added massively to the U.S. budget deficit and done little to jump-start growth.

Source: Reuters

Average rates for 30-year home loans stayed below 5 percent for the second-straight week, kick-starting refinancing activity, Freddie Mac said Thursday.

The average rate on a 30-year fixed mortgage was 4.87 percent, down from 4.94 percent last week, Freddie Mac said. The last time rates for 30-year home loans were lower was the week ending May 21, when they averaged 4.82 percent.

This week's average rate for 30-year mortgages remained above the record low of 4.78 percent established in the spring. Last year at this time, the 30-year fixed-rate mortgage averaged 5.94 percent.

Low rates make home buying or refinancing more attractive for consumers. Case in point: refinance applications climbed 18 percent from last week, the Mortgage Bankers Association said Wednesday.
By refinancing at current rates, borrowers could trim nearly $134 off their monthly mortgage payments on a $200,000, 30-year fixed-rate loan, Freddie Mac said.

" Such low rates are spurring mortgage demand," said Frank Nothaft, Freddie Mac's chief economist.
Still, borrowers may want to consider the Federal Reserve's recent announcement that it is slowing down a program intended to lower mortgage rates and boost the housing market. Analysts say mortgage rates should remain low for now but could eventually move higher, and homeowners who want to refinance mortgages shouldn't drag their feet.

Source:Associated Press

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More Upside for Homebuilders or Is It Too Late?

Thursday, October 8, 2009

Homebuilders such as Lenar (LEN) and Toll Brothers (TOL) have enjoyed a nice rally amid hopes the worst of the housing crisis is over.

But Goldman Sachs recently raised eyebrows, when it upgraded the group to "attractive" from "neutral," adding "stable home prices, low mortgage rates, and strength in sales activity...should lead to higher equity values," according to WSJ.

In contrast, Citi analyst Josh Levin says the party's over for now, and can't see justifying owning the group at such high valuations, according to WSJ.

Our guest Jon Najarian, president of OptionMonster.com, notes Goldman may be looking ahead to more stimulus for the housing sector. President Obama's $8,000 tax credit for first-time homebuyers is set to expire November 30. "I think they will extend it," says Najarian. (Senate Banking Chairman Chris Dodd wants a six-month extension.) Najarian points to sharp declines in auto sales after the Cash for Clunkers program ended -- a similar trend that wouldn't be politically palpable for Washington right now.

Click on the video to view Najarian's picks and strategies for the home-building sector.
Najarian does not own any of the homebuilder stocks mentioned in the segment.

Source: Yahoo Finance

Homeowners Reject Frills Like Media Rooms: Study

Tuesday, October 6, 2009

Home theaters are passe. Home offices are in.

The long U.S. housing downturn has led homeowners to scale back both the size of houses and the amenities found within them, but consumers are still willing to invest in energy efficiency, according to a quarterly survey by an architects' trade group.

The survey by the American Institute of Architects (AIA) found budget-conscious Americans are less interested in having hobby or game rooms, media rooms, home workshops, or suites for au pairs or in-laws. Exercise rooms and additional laundry space are also less popular than a year ago, as are three-car garages, the AIA said on Tuesday.

The shift in tastes reflects worries about home values, tighter family budgets, and the threat of unemployment.

" Affordability is a big concern," said AIA Chief Economist Kermit Baker. "Homeowners are not looking to spend more on their home for frills, particularly if they don't think they can recapture that when they sell it."

Home offices are the most popular special-function room, the survey found. Almost 46 percent of architects said home offices are gaining in popularity, up about 5 percentage points from a year earlier.

The increase is due to the appeal of telecommuting and the growing number of Americans who are self-employed or who run small businesses that have had to give up office space.

Meanwhile, more consumers are asking architects to make sure their homes are energy-efficient. Two-thirds of architects said clients increasingly demand better insulation to lower heating and cooling costs. More are also requesting double- and triple-glazed windows, water-saving devices and solar panels.

The AIA's quarterly survey polled more than 500 architecture firms that focus on residential buildings. It reflects both work on new homes and improvements to existing spaces. A March AIA survey found a sharp decline in demand for high-end kitchen and bath amenities, amid concerns over cost and homes' eventual resale values.

Source: Reuters

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Builders Ready to Work with White House, Congress to Extend Home Buyer Tax Credit

Tuesday, October 6, 2009

The National Association of Home Builders (NAHB) today commended the White House for recognizing the success of the $8,000 first-time home buyer tax credit and that extending the program past its Dec. 1 expiration date will help to bolster the economy.

"The tax credit has clearly had a positive effect on housing demand and in the job market," said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. "We stand ready to work with President Obama and the Congress to extend and enhance the tax credit to help reduce foreclosures and excess housing inventories, to stabilize home values and to push housing and the economy on a glide path to recovery."

NAHB estimates conservatively that approximately 200,000 additional home sales are attributable to the tax credit and that it has resulted in a net increase of 187,000 jobs. Extending the credit through Nov. 30, 2010 and making it available to all purchasers of a principal residence would result in an additional 383,000 home sales and generate 347,000 new jobs in the coming year.

White House Press Secretary Robert Gibbs said yesterday that "there has been quite a bit of success" with the home buyer tax credit. He added that President Obama is considering extending the tax credit to strengthen the economy and create jobs.

"Housing is the best opportunity to put this country back to work. Prompt congressional action on the tax credit is a crucial first step to shoring up the fragile housing recovery and leading the economy to higher ground," said Robson.

Source: NAHB

Dropping Rents Will Drag House Prices Down with Them

Tuesday, October 6, 2009

The vacancy rate for rental apartments in the U.S. is now 7.8% and climbing, says the Wall Street Journal. This is the highest vacancy rate in 23 years.

Worse, the vacancy rate is expected to keep climbing through the winter, ultimately hitting the highest rate on record.

This is good news for renters and bad news for landlords. It's also bad news for anyone who owns and would like to sell a house.

Why are rising rental vacancies bad news for homeowners?

Because rising vacancies put pressure on rents, as landlords have to cut prices to woo a smaller pool of tenants. As rents drop, meanwhile, one of the key measures of house-price value--the price-to-rent ratio--also changes, and not for the good.

All else being equal, when rents drop, the "Housing P/E ratio" -- price to rent -- increases as rents decrease. This is the same thing that would happen to the P/E ratio of a stock if the company's earnings began to shrink.

The more the rent/earnings shrink, the more expensive the house or company is as a multiple of the rent/earnings.

Will people suddenly refuse to pay as much for houses because the price-to-rent ratio rises a bit? No. But they may decide to rent instead of buy, which will remove some demand from the housing market. And, this, in turn, will put pressure on house prices.

Source: Yahoo Finance.com

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Bad News: Jobs Market Getting Worse

Friday, October 2, 2009

Employers cut more jobs from their payrolls in September and the unemployment rate hit another 26-year high, as the long-battered U.S. labor market took an unexpected turn for the worse, according to a government report Friday.

The Labor Department said there was a net loss of 263,000 jobs in the month, up from a revised loss of 201,000 jobs in August. Economists surveyed by Briefing.com had forecast losses would fall to 175,000 jobs.

This is only the second time this year that job losses rose from the previous month, as the labor market had shown slow but relatively steady improvement since a loss of 741,000 jobs in January.

September marked the 21st consecutive month that the number of workers on payrolls has shrunk, a period during which 7.2 million jobs have been lost.

Even though many economists, including those at the Federal Reserve, have said there are signs that the economy is growing once again, Friday's jobs report shows that job losses could continue well into the recovery, limiting the strength of any economic turnaround.

" This report is dismal and disappointing," said Sung Won Sohn, economics professor at Cal State University Channel Islands. "The 'green shoots' in the economy are withering. Technically, the economy may have bottomed, but the job market is lagging behind and struggling."

Source: CNNMoney.com

August Pending Home Sales Rise to 2 1/2 Year High

Thursday October 1, 2009

Aspiring U.S. homebuyers rushed to take advantage of a tax credit for first-time owners that expires in November, driving up the number of signed sales contracts for the seventh straight month in August. Construction spending also rose unexpectedly in August on the biggest jump in housing activity in nearly 16 years, another sign the real estate market is recovering from its four-year slump, data Thursday showed.

Sales and homebuilding are being fueled by a tax-credit of up to $8,000, low mortgage rates and cheap foreclosures. In some of the most hard-hit areas, like Phoenix and Las Vegas, there are bidding wars for deeply discounted properties. And in all but a few cities, home prices are slowly starting to rise, reversing their three-year descent.

To make sure first-time buyers can complete their purchases by the Nov. 30 deadline, real estate agents "have been pushing buyers to sign a contract at least a couple months in advance" according to Abiel Reinhart, an economist with JPMorgan Chase.

More than a dozen bills have been introduced in Congress to extend the credit, but it's unclear if lawmakers want to continue to subsidize the market.

The National Association of Realtors said Thursday its index of sales agreements rose 6.4 percent from July to 103.8, beating forecasts. It was the highest since March 2007 and 12 percent above a year ago. Economists surveyed by Thomson Reuters expected the index would rise to 98.6.

Source: Associated Press

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U.S. Personal Spending Surges, Jobless Claims Rise

Thusday, October 1, 2009

U.S. consumer spending in August rose at the fastest in nearly 8 years, but a weak labor market and the manufacturing sector's below forecast growth in September could hamper a nascent economic recovery.

The Commerce Department said on Thursday personal spending jumped 1.3 percent, the largest gain since October 2001, after a 0.3 percent increase in July. Spending was up for a fourth straight month and beat expectations for a 1.1 percent gain.

Optimism over the rise in spending, which normally accounts for over two-thirds of U.S. economic activity, was clouded by reports showing a rise in the number of people applying for first-time unemployment benefits last week and a below forecast expansion in manufacturing activity last month.

Source: Reuters

Slide in Manufacturing Activity Sends Stocks Lower

Thursday, October 1, 2009

Stocks began the fourth quarter on a down note Thursday, falling sharply amid more signs that the economy's recovery will be slow and bumpy.

Major stock indicators fell more than 1 percent after disappointing reports on the manufacturing industry and the labor market overshadowed good news on housing and consumer spending. The Dow Jones industrial average fell 145 points. Bond prices rose as investors nervously sought a safer place for their money.

The Institute for Supply Management said its index of manufacturing activity in September slipped to 52.6 from 52.9 in August, well below analysts' expectations of 54. It was the second month in a row the reading came in above 50, which indicates growth, after contracting for 18 months.

Earlier Thursday, the Labor Department said new claims for jobless benefits rose more than expected to 551,000, evidence that the labor market is still struggling and that jobs remain scarce. Economists polled by Thomson Reuters had predicted claims to rise to 535,000.

The increase came after three weeks of declines and a day before the Labor Department's monthly report on employment. Economists expect that the unemployment rate rose to 9.8 percent in September from 9.7 percent in August.

Better reports on housing and consumer spending weren't enough to stem the stock market's losses.

Several economic reports this week have already raised doubts among investors about the strength of the recovery and whether this year's powerful stock market rally should continue. The Dow Jones industrial average lost nearly 30 points Wednesday, as a disappointing report on Midwestern manufacturing contributed to the bearish tone.

Despite ending on a wobbly note in September, stocks still put in a stellar third quarter. Both the Dow Jones industrials and the Standard & Poor's 500 index gained 15 percent. It was the Dow's best three-month period since the fourth quarter of 1998.

Source: Associated Press

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Mortgage Demand Falls Despite Lower Rates

Wednesday. September 30, 2009

U.S. mortgage applications fell last week despite the lowest loan rates in four months, the Mortgage Bankers Association said on Wednesday, in another sign that housing will likely recover slowly from its three-year plunge.

Home loan applications fell a seasonally adjusted 2.8 percent in the September 25 week, driven down by a 6.2 percent drop in demand for purchase loans and a 0.8 percent decline in refinancing requests.

Borrowing costs inched closer to record lows, with average 30-year rates dipping 0.03 percentage point to 4.94 percent.

The 30-year rates were the lowest since the week ended May 22, at 4.81 percent, after hitting an all-time low of 4.61 percent in March, according to the industry group. A year ago, before intensive government interventions, 30-year rates averaged 6.33 percent.

Source: Reuters

U.S. Q2 Home Foreclosures, Mortgage Delinquencies Up

Wednesday, September 30, 2009

The number of home foreclosures in process and delinquent mortgages rose during the second quarter, while home retention actions also increased, U.S. bank regulators said on Wednesday.
Foreclosures jumped 16 percent to 2.9 percent of serviced mortgages, while home retention actions such as loan modifications rose 21.7 percent, the Office of the Comptroller of the Currency and the Office of Thrift Supervision said in a report.

" The mortgage data reported for the second quarter of 2009 continued to reflect negative trends influenced by weakness in economic conditions, including high unemployment and declining home prices in weak housing markets," the report said.

The report covers mortgages serviced by most of the industry's largest mortgage servicers, whose loans make up about 64 percent of all mortgages outstanding in the United States.

The regulators said there was a lull in newly initiated foreclosures during the second quarter as mortgage servicers worked to implement the federal "Making Home Affordable" program.

The $50 billion program, launched in March, is designed to stabilize the housing market by helping up to 9 million Americans reduce their monthly mortgage payments to more affordable levels.

The OCC and OTS said the emphasis on the program contributed to a dramatic shift in the composition of home retention actions toward lowering payments. Previously, the vast majority of loan modifications either did not change or increased monthly payments.

The weak economy continued to drive up the number of delinquent mortgages. The number of mortgages delinquent 30 to 60 days jumped 10.9 percent during the second quarter to 3.2 percent of all mortgages covered by the report.

The number of mortgages that were more than 90 days delinquent increased 11.5 percent, rising to 5.3 percent of serviced mortgages.

Source: Reuters

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U.S. Economy Shrinks Less in Second Quarter

Wednesday, September 30, 2009

The U.S. economy contracted in the second quarter at a slower pace than previously thought, while a surprise slide in manufacturing activity in the country's Midwest region in September pointed to a patchy recovery from recession.

Gross domestic product, which measures total goods and services output within U.S. borders, fell at a 0.7 percent annual rate instead of the 1.0 percent decline it reported last month, the Commerce Department said on Wednesday.

This was better than market expectations for a 1.2 percent contraction and an improvement from the first quarter, when GDP fell at a 6.4 percent rate.

On the manufacturing front, however, the Institute for Supply Management-Chicago said its business barometer fell to 46.1 in September from 50.0 in August, with a reading above 50 indicating expansion. Economists had expected a rise to 52.0.

" What it comes down to is how much of this recovery is going to be sustainable. I'm not a believer yet that this is a robust economy. This is going to be a very frustratingly weak growth period," said Robert Macintosh, chief economist at Eaton Vance Corp. in Boston.

Source: Reuters

U.S. Consumer Woes Overshadow Housing Cheer

Tuesday, September 29, 2009

U.S. house prices rose for a third month in July, but consumer confidence fell unexpectedly in September as the worst job market in 26 years fueled worries about personal finances, private reports showed on Tuesday.

The reports show it is still early days for the economic rebound, following the worst recession in decades, and it could take a long time before consumers begin to contribute to growth.

Also, despite improvements elsewhere in the economy and a roaring stock market rally since March, the weakness of the consumer sector bodes ill for the year-end, which is traditionally a period of heavy shopping and spending.

" While not as pessimistic as earlier this year, consumers remain quite apprehensive about the short-term outlook and their incomes," said Lynn Franco, director of the Conference Board Consumer Research Center.

" With the holiday season quickly approaching, this is not very encouraging news."

Source: Reuters

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Drop in Consumer Confidence Sends Stocks Lower

Tuesday, September 29, 2009

A report showing Americans are still downbeat on the economy is giving investors reason to sell stocks. The market failed to hold on to early gains and is edging lower midday after the Conference Board said its consumer confidence index fell to 53.1 in September, down from 54.5 in August and much lower than the reading of 57 that economists had been expecting.

Many analysts say a true turnaround in the economy can't occur until consumers start spending again and employers create more jobs.

The disappointing report was tempered by an increase in home prices in July.

The Dow Jones industrials are down 25 at 9,763. The Standard & Poor's 500 index is down 1 at 1,061, and the Nasdaq composite index is down 7 at 2,122.

Source: Associated Press

Index Shows Home Prices Rose for 3rd Month in July

Tuesday September 29, 2009

Home prices rose for the third month in a row in July, new data Tuesday showed, more proof a fragile housing recover is underway.

The Standard & Poor's/Case-Shiller home price index of 20 major cities rose 1.2 percent from June to a reading of 143.05. Though home prices are still 13.3 percent below July a year ago, the annual declines have slowed in all 20 cities for the sixth straight month.

" We expected another gain but this is remarkable," wrote Ian Shepherdson, chief U.S. Economist for High-Frequency Economics. He noted the index has risen at an 8 percent annualized rate in the three months to July, the best performance since early 2006.

The index, however, is down about 33 percent from the peak in mid-2006. Home prices are now at levels not seen since the third quarter of 2003. And prices in Las Vegas, Detroit and Seattle are still falling, on a seasonally adjusted basis.

Prices in Las Vegas, one of the most speculative markets during the boom, are down more almost 55 percent from their peak. In August, almost 80 percent of home resales in Nevada were either a foreclosure or a sale below the value of the mortgage, according to a survey by the National Association of Realtors.

The Detroit housing market is reeling from layoffs in the automotive industry. Seattle, by contrast, was one of the last areas to enter the downturn so prices there have yet to hit bottom.

Source: Associated Press

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Survey Show Credit Woes Threaten Housing Recovery

Monday, September 28, 2009

Nearly two-thirds of single-family home builders are reporting a severe lack of credit for housing production, threatening the fragile housing recovery before it has time to take hold, according to a new builder survey of acquisition, development and construction (AD&C) financing conducted by the National Association of Home Builders (NAHB).

"Across the country, home builders and developers are reporting a deterioration in credit availability and intensifying pressure on borrowers with outstanding loans," said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. "Lenders are cutting off loans for viable new housing projects and producing unnecessary foreclosures and losses on AD&C loans. With the pending expiration of the $8,000 first-time home buyer tax credit, these challenges threaten to halt any positive developments we have seen in the housing market in recent months."

In the latest NAHB survey of AD&C financing conditions, 63 percent of builders stated that the availability of credit for single-family construction loans worsened in the second quarter of 2009.

Builders reporting deteriorating credit conditions cited the following reasons: 80 percent said that lenders are lowering the allowable loan-to-value ratio, 76 percent reported that lenders are not making new loans, 75 percent stated that lenders are reducing the amount they are willing to lend and 62 percent said that lenders are requiring personal guarantees or collateral not related to the project.
Two-thirds of respondents reported putting single-family construction projects on hold until the financing climate gets better.

While federal banking regulators continue to maintain that they are not instructing institutions to stop making loans or to indiscriminately liquidate outstanding loans, builders responding to the survey cited the top reason that lenders have given them for restricting the availability of new loans or for tightening the terms of outstanding loans is that "regulators are forcing lenders to do it."

NAHB believes that regulators and lenders should provide leeway to residential construction borrowers who have loans in good standing by providing flexibility on re-appraisals, loan modifications and perhaps forbearance on loans to give builders time to complete and sell their inventory.

"There can be no meaningful economic recovery until the flow of credit is restored to housing," said Robson.

Source: NAHB

New Home Sales Rise for 5th Straight Month

Friday, September 25, 2009

Sales of newly constructed homes rose for the fifth straight month in August, a government report said Wednesday.

New home sales inched up 0.7% last month to a seasonally-adjusted annual rate of 429,000, the Commerce Department reported. That was an increase from a downwardly-revised reading of 426,000 in July.

August sales came in well below economists' consensus estimate of 440,000, compiled by Briefing.com

New home sales were also 3.4% below August 2008, when the estimate stood at a 444,000 annual rate.

Source: CNNMoney.com

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U.S. Home Sales, Jobless Claims Unexpectedly Drop

Thursday, September 24, 2009

The number of U.S. workers filing new claims for jobless benefits fell last week, but a surprise drop in sales of existing homes in August suggested the economy's recovery from a severe recession would be slow.

A report from the Labor Department on Thursday showed new claims for unemployment benefits unexpectedly fell 21,000 to a seasonally adjusted 530,000 last week. Analysts polled by Reuters had expected initial claims to rise to 550,000.

Separately, the National Association of Realtors said sales of existing homes fell 2.7 percent to an annual rate of 5.10 million units from 5.24 million units in July. That compared to market expectations for a rise to a 5.35 million unit pace.

The report, however, did little to change views the economy is recovering from its worst recession in 70 years. The Federal Reserve -- the U.S. central bank -- on Wednesday acknowledged activity had picked up and noted the improvement in the housing sector when it left its key overnight lending rate near zero.

U.S. stock indexes erased gains after the release of the housing data, falling into negative territory, while prices of government bonds, a haven in times of economic turmoil, rose.

NAR Chief Economist Lawrence Yun described the decline as a "mild retreat" after a strong gain in July, adding that the August pace was the second-highest in 23 months. Compared to August last year, however, sales were up 3.4 percent.

" Some of the give-back in closed sales appears to result from rising numbers of contracts entering the system, with some fallouts and backlogs contributing to a longer closing process," Yun told reporters

Source: Reuters

U.S. Home Loan Demand Hits Highest Since Late May

Wednesday, September, 23, 2009

U.S. mortgage applications jumped last week to their highest since late May as interest rates tumbled below 5 percent, data from an industry group showed on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week to September 18 increased 12.8 percent to 668.5, the highest since the week ended May 22.

While consumers clamored for home refinancing loans, their appetite was also robust for applications to buy a home, a tentative early indicator of sales. The overall trend bodes well for the hard-hit U.S. housing market, which has been showing signs of stabilization.

Eric Belsky, executive director at Harvard University's Joint Center for Housing Studies, said several months of improvement in new and existing home sales is a positive sign.

" Low interest rates on mortgages are important to the fledgling housing recovery," he said, and this has made a significant impact on the affordability front.

" While an uptick may bring buyers anxious that rates will keep rising into the market temporarily, a material increase in rates could threaten the rebound," he said.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 4.97 percent, down 0.11 percentage point from the prior week and the first time since the week to May 22 the rate on this most widely used home loan was below 5 percent.

Source: Reuters

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U.S. Economy at "Beginnings" of Recovery: Geithner

Tuesday, September, 22, 2009

U.S. Treasury Secretary Timothy Geithner on Tuesday said that the U.S. economy appeared to be picking up steam and G20 leaders gathering in Pittsburgh this week would strive to ensure the recovery was balanced.

" We are at the very beginnings of this recovery ... We need to make sure that we keep at this, so we have in place a recovery that is going to be self-sustaining, led by private demand, (and) a financial system that can actually provide the credit that is needed," he told a press briefing.

G20 leaders will meet in Pittsburgh on September 24-25 and Geithner said the aim was to take stock of the world economy and ensure better growth in the future.

" To make sure that as we recover from this crisis we are laying the seeds for a more balanced, more sustainable recovery. That is the agenda," Geithner said.

U.S. officials want the G20 to adopt a framework aimed at lifting growth in export-orientated members like China, Germany and Japan, while boosting savings and curbing consumption among import-hungry debtors like the United States.

Source: Reuters

U.S. Mortgage Delinquencies Set Record

Monday, September 21, 2009

High U.S. unemployment keeps pushing up the rate of mortgage delinquencies, which could in turn drive personal bankruptcies and home foreclosures, monthly data from the Equifax Inc credit bureau showed on Monday.

Among U.S. homeowners with mortgages, a record 7.58 percent were at least 30 days late on payments in August, up from 7.32 percent in July, according to the data obtained exclusively by Reuters.

August marked the fourth consecutive monthly increase in delinquencies, and the report showed an accelerating pace. By comparison, 4.89 percent of mortgages were 30 days past due in August 2008, while in August 2007, the rate was 3.44 percent, Equifax data showed.

The rate of subprime mortgage delinquencies now tops 41 percent, up from about 39 percent in each of the prior five months.

The results, which correlate with consumer bankruptcy filings, suggest U.S. homeowners remain under financial stress despite signs of improving sentiment and fundamentals in the U.S. housing market.

August bankruptcy filings were up 32 percent from a year earlier, compared with a 35 percent year-over-year increase in July.

Still, while more Americans were late with mortgage payments, they are keeping up with other bills. The proportion of credit card accounts at least 60 days past due was down in August for the third straight month, while subprime card delinquencies also fell.

That improvement in delinquency rates partly reflects risk-aversion among issuers, which have cut the number of cards by 82 million, or 19 percent, over the past year, while slashing credit limits by $721 billion, to about $3.6 trillion.

The number of new cards being issued is down even more dramatically. In June, 2.6 million new cards were issued, compared with 4.7 million a year earlier.

Lenders are increasingly targeting consumers with high credit scores, Equifax found. While in 2007, about one in five new cards went to people with a credit score above 760, such consumers account for two in five new cards in 2009. Equifax found similar trends in auto loans.

" The data from August further confirms that we're witnessing a dramatic change in consumer habits," said Dann Adams, president of Equifax's Consumer Information Solutions group.

Total consumer debt is down more than $300 billion, or almost 3 percent, from its peak in September 2008, Adams said, while the savings rate is nearing 5 percent, "a level we haven't seen in years."

Source: Reuters

Housing Industry Groups Agree on Need to Reform Appraisal Process

Monday, September 21, 2009

The National Association of Home Builders (NAHB) today hosted a Residential Real Estate Appraisal Summit with federal regulatory agencies and the major housing and financial institution stakeholder and appraisal organizations to discuss constructive solutions to appraisal problems.

Among the problems discussed at the summit was the use by some appraisers of foreclosed or other distressed properties as comparables without proper adjustments. Summit participants also addressed unintended consequences from the implementation of the Home Valuation Code of Conduct (HVCC) which are impeding the ability to obtain appraisals of the quality required in today's distressed markets.

These inappropriate practices, including reports that some appraisers are working in areas where they don't know the market, are driving down home values and impacting home sales as inaccurate appraisals are coming in below the contract sales price. This is causing unwarranted downward pressure on home prices at a time when housing and the economy are struggling to emerge from the worst downturn in decades.

Following the meeting, the leadership of NAHB, the National Association of REALTORS® and the Mortgage Bankers Association were united in calling for immediate action to address their appraisal-related concerns, including clarifications with regard to the HVCC and the establishment of "best practices" for the appraisal process. The groups also urged the regulators to adopt and enforce clear, concise regulatory guidance on the use of distressed and/or foreclosed properties that will allow appraisers to develop realistic valuations based on sales that are truly comparable.

"Appraisers generally are only required to inspect the exterior of a property that is being used as a comparable because they are normally unable to enter these homes and examine their interiors," said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. "But all too often, properties that have been subject to foreclosure or distress sales have issues related to deferred maintenance or internal damage that an external inspection simply cannot detect. You can't compare these properties to new homes that are in market-ready condition. NAHB believes that it's time for appraisers to have regulatory guidelines that acknowledge such realities."

"NAR supports the independence of appraisers and the integrity of the appraisal process," said NAR President Charles McMillan. "An accurate appraisal is an important part of any real estate transaction, and reforming the appraisal process is critical to the nation's housing recovery.

Quality appraisals are threatened by unintended HVCC consequences and an inconsistency among the various federal regulators. As the leading advocate for housing issues, NAR calls on the federal government to establish consistent appraisal rules for FHA and the GSEs."

"Ensuring that appraisals are fair and accurate is the lynchpin of our secured lending system," said Robert E. Story, Jr., CMB, Incoming Chairman of the Mortgage Bankers Association. "As a lender, it is crucial that I can count on the fact that an appraisal is correct and that the appraiser has not been subject to pressure from any interested party to the transaction. We want to work with appraisers and regulators to ensure that every appraisal results in an honest, truthful evaluation of a property's value."

Source: NAHB

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Jobless Rate Tops 12% in 5 States

Friday, September 18, 2009

Five states posted jobless rates above 12% in August, according to federal data released Friday.
California, Nevada and Rhode Island each hit record-high rates, the Labor Department said.
Michigan led the nation in unemployment, with a rate of 15.2%, while Nevada was next at 13.2% and Rhode Island was third at 12.8%. California and Oregon were tied for the fourth spot, each with unemployment at 12.2%.

In August, 27 states and the District of Columbia recorded month-over-month unemployment rate increases, while 16 states posted a decrease in unemployment and seven saw rates hold steady.
The total number of nonfarm jobs fell in 42 states and the District of Columbia, while 8 states saw an increase.

The state-by-state unemployment report for August came after the government reported earlier this month that American employers cut 216,000 jobs in August, sending the nationwide unemployment rate to 9.7% from 9.4% in July.

Lowest rates: North Dakota posted the lowest jobless rate in August, at 4.3%. It was followed by South Dakota, at 4.9%; Nebraska, with 5%; Utah, at 6%, and Virginia, at 6.5%.
Biggest over-the-year increases: All states and the District of Columbia recorded statistically significant increases in their jobless rates from August 2008.

Michigan reported the largest unemployment rate increase over the year, at 6.6 percentage points.
Three other states saw rates climb more than 5 percentage points: Nevada's unemployment rate has climbed 6.2 points year over year, while Oregon's rate jumped 5.7 points, and Alabama's rate increased 5.2 points. West Virginia saw the fifth-largest annual increase of 4.8 percentage points.
Largest over-the-month increases: Six states posted statistically significant over-the-month unemployment rate increases in August.

New Mexico's was highest, at 0.5 percentage points, followed by New Jersey, New York and Oregon -- all three of which reported a 0.4 point increase.

California and Iowa each posted a 0.3 point increase over the month. The District of Columbia also reported a jump, of 0.5 percentage points.

Biggest over-the-month decreases: Four states reported statistically significant decreases in unemployment over the month.

Indiana's jobless rate dropped by 0.7 percentage point, Colorado's fell 0.5 percentage point, and Kansas and Virginia fell 0.4 point each.

Source: CNNMoney.com

More Signs of a Housing Revival

Thursday, September 17, 2009

New home building increased in August, a government report said Thursday, further signaling that home builders are regaining their confidence in the housing market recovery.

The Census Bureau reported Thursday that builders broke ground for 598,000 new homes during August, up 1.5% from a revised 589,000 in July. That was considerably higher than industry experts were predicting: The consensus analyst forecast compiled by Briefing.com was for 583,000 new starts.

Building permits rose 2.7% to 579,000 from a revised 564,000 in July.

On Wednesday, the National Association of Home Builders reported their index of homebuilder confidence had risen a point to 19, its highest level since May 2008.

Helping to boost demand for new homes has been the first-time homebuyer tax credit, which has enabled many builders to reduce their inventories of unsold homes.

" Many builders have not only reduced excess inventory, but now are actually reporting such low inventory that they need to start more homes to replace those they've just sold," said Brad Hunter, chief economist for Metrostudy, a real estate analytics firm.

Both starts and permits are still well off from their levels of a year ago. The number of starts is down 29.6% from 849,000 last August, and permits dropped 32.4% from 857,000 last year.

The housing starts report was the latest in a series of releases that indicate that the market may have bottomed. These include improvement in new home sales, existing home sales and housing prices.

Source: CNN/Money

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Single-Family Starts Ease as Credit Deadline Looms

Thursday, September, 17, 2009

Production of new single-family homes slowed in August as the expiration date for an important buyer incentive drew nearer, according to figures released by the U.S. Commerce Department today. While overall housing starts rose 1.5 percent to a seasonally adjusted annual rate of 598,000 units for the month, single-family starts declined 3 percent to a rate of 479,000 units, ending what had been a five-month run of improvements.

"With the $8,000 first-time home buyer tax credit set to expire at the end of November, the window is now basically closed for being able to start a new home that can be completed in time for purchasers to take advantage of that," said Joe Robson, Chairman of the National Association of Home Builders (NAHB) and a home builder from Tulsa, Okla. "Builders are therefore pulling back on new construction at this time. Clearly Congress must act now to extend the tax credit if we are to keep the market moving toward a recovery."

"The tax credit has been helping buoy demand for new homes since its passage in February, but builders are concerned about what happens after it is gone," said NAHB Chief Economist David Crowe. "On top of the credit's impending expiration, builders continue to grapple with a severe lack of credit for housing production loans and inappropriately low appraisals that are tied to the use of distressed properties as comps - both of which blunted the tax credit's positive effect. Together, these three challenges threaten to completely stifle the upward momentum we've seen in the first half of 2009."

NAHB is calling on Congress to extend the first-time home buyer tax credit for another year and to offer it to all income-eligible buyers of primary residences. In addition, NAHB is urging Congress to help eliminate the credit crunch, correct faulty appraisal practices and expand Net Operating Loss tax provisions that can help avoid more layoffs.

A 3 percent decline in single-family housing starts for August essentially erased the previous month's gain, bringing production back to a 479,000-unit annual rate. Single-family permits also edged downward in August, by two-tenths of a percent to a seasonally adjusted annual rate of 462,000 units, ending what had been a four-month run of gains. Meanwhile, multifamily housing starts, which tend to display greater volatility on a month-to-month basis, rose 25.3 percent from an extremely low level in the previous month, to a seasonally adjusted annual rate of 119,000. Multifamily permit issuance rose 16 percent from an all-time low in July, to a 117,000-unit rate.

Source: NAHB

Builder Confidence Edges Up Again in September

Wednesday, September 16, 2009

Builder confidence in the market for newly built, single-family homes edged higher for a third consecutive month in September, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today. The HMI rose one point to 19 this month, its highest level since May of 2008.

"Builders are seeing some improvement in buyer demand as a result of the first-time home buyer tax credit, and low mortgage rates and strong housing affordability have also helped to revive some optimism," noted Joe Robson, chairman of the National Association of Home Builders (NAHB) and a home builder from Tulsa, Okla. "However, the window is now basically closed for being able to start a new home that can be completed in time for buyers to take advantage of the tax credit before it expires at the end of November, and builders are concerned about what will keep the market moving once the credit is gone. Congress needs to act now to keep the credit from expiring just as its intended effect on buyer demand is starting to materialize."

"Today's report indicates that builders are starting to see some glimmers of light at the end of the tunnel in terms of improving sales activity," said NAHB Chief Economist David Crowe. "However, the fact that the HMI component gauging sales expectations for the next six months slipped backward this month is a sign of their awareness that this is a very fragile recovery period and several major hurdles remain that could stifle the positive momentum. Those hurdles include the impending expiration of the $8,000 tax credit as well as the critical lack of credit for housing production loans and continuing problems with low appraisals that are sinking one quarter of all new-home sales. These concerns need to be addressed if we are to embark on a sustained housing recovery that will help bolster economic growth."

Source: CNN/Money

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U.S. Mortgage Demand Drops, Supply Caps Improvement

Wednesday, September, 16, 2009

Demand for U.S. home loans fell by more than 8 percent as fixed mortgage rates rose last week in a banking period shortened by the Labor Day holiday, the Mortgage Bankers Association said on Wednesday.

Total applications were nonetheless at one of the highest levels seen since early June, with borrowers still eager to take advantage of the federal first-time home buyer tax credit before the program closes at the end of November.

Borrowing costs stayed relatively low, which continues to foster demand for potential buyers. But there is growing concern about whether housing can sustain its recent momentum once some key government rescue programs end.

As a result, the real estate industry is pressing Congress to extend the tax credit to all buyers and increase the size to $15,000 from $8,000 in a program now set to end on November 30.
Another concern is the end-2009 deadline for Federal Reserve mortgage-related debt purchases of up to $1.45 trillion -- aimed at keeping loan rates down.

" If the first-time home buyer tax credit expires at the end of November and if the Federal Reserve were to significantly scale back their mortgage (bond) purchases early in 2010, the housing market could hit a wall very quickly," said senior Bankrate financial analyst Greg McBride in North Palm Beach, Florida.

" I don't think that the Fed is going to do anything rash," he said. "I think they will slowly back away from the table so as to keep a lid on mortgage rates."

Source: Reuters

Foreclosures: The struggle continues

Thursday, September 10, 2009

The foreclosure crisis grinds on amid signs of hope.

A report released Thursday shows that substantially fewer people had their homes repossessed in August.

Unfortunately, a large number of Americans are still falling behind on their payments.

A total of 76,134 troubled borrowers lost their homes in August, but that is 12.7% fewer than in July, according to RealtyTrac, an online marketer of foreclosed properties.

The pipeline of troubled borrowers remains full, however. Filings of all kinds dropped only slightly, just 0.5%, from July.

According to RealtyTrac spokesman Rick Sharga, there are a couple of possible explanations for the decline in bank repossessions, called REOs in the industry.

" It could be that the government-led mortgage modification programs are finally gaining some traction," he said. "But it could also be that the banks are still delaying repossessions of these properties."

Because banks take big losses on REOs, they may leave delinquent borrowers in their homes, especially where lenders already have a substantial amount of vacant, unsold inventory.

Presumably, the borrowers are caring for the properties, which saves banks the time and expense of upkeep and maintenance.

Plus, there is always hope that some of these borrowers will "self-cure" -- or catch up on their loans without assistance -- which is better for banks' bottom lines. In fact, a recent report from the Boston branch of the Federal Reserve found that 30% of borrowers who have missed two mortgage payments eventually become current.

Increases in short sales could also be reducing the repossession statistics, according to Duane LeGate, president of HBN Interactive, a short-sale specialist. These are transactions in which lenders allow borrowers to sell their homes for less than what they owe.

" A lot of banks are delaying the foreclosure process if they see any kind of chance of making a reasonable short sale," he said.

The reprieve in repossessions could be coming to an end, however. Sharga expects a spate of payment problems to start this fall as interest rates reset on some of the exotic mortgage products that proliferated during the boom. Option ARMs (adjustable rate mortgages) in particular will be a big problem.

Source: CNN/Money

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Home Loan Demand at 3-Month High

Wednesday, September 9, 2009

U.S. mortgage applications surged last week to their highest since late May as consumers sought to take advantage of the lowest interest rates in months, data from an industry group showed on
Wednesday.

The Mortgage Bankers Association said rates on 30-year fixed-rate mortgages tumbled to a 3-month low, spurring a surge in demand for home refinancing loans. Applications to buy a home, a tentative early indicator of sales, also climbed, hitting their highest since early January.

The overall trend bodes well for the hard-hit U.S. housing market, which has been showing signs of stabilization.

The MBA said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week to September 4 increased 17.0 percent to 648.3, the highest since the week ended May 29.

Source: Reuters

Fed Report Sees Signs U.S. Economy is Improving

Wednesday, September 9, 2009

Half of the Federal Reserve's 12 districts saw evidence the U.S. economy had improved by the end of August, although labor markets remained weak and retail sales were flat, a Fed report said on Wednesday.

Dallas, Boston, Cleveland, Philadelphia, Richmond and San Francisco noted gains. Other areas reported the economy was stable or showing signs of stabilization while St. Louis said the pace of economic decline appeared to be moderating.

" Most districts noted that the outlook for economic activity among their business contacts remained cautiously positive," the Fed's Beige Book survey said.

The modestly upbeat report said most regions reported some improvement in hard-hit residential real estate markets and an uptick in manufacturing.

Tempering those developments, Fed contacts reported that demand for commercial property remained weak and that businesspeople in some areas believed recently higher vehicle sales levels were likely not sustainable after the government's "cash for clunkers" incentive program lapses.

But even some of the gloomiest segments of the economy held glimmers of hope, said the survey by the Fed -- the U.S. central bank.

" Labor market conditions remained weak across all districts, but several also noted an uptick in temporary hiring and a decline in the pace of layoffs," the report said.

The Fed at its last policy-setting meeting held its benchmark short-term interest rate steady near zero and said it would likely hold it there for an extended period to guide the way to recovery.

Fed officials have said recently they expect a sluggish recovery with persistently high unemployment. The U.S. jobless rate hit a 26-year high of 9.7 percent in August.

Source: Reuters

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U.S. Mortgage Applications Slip, Loan Rate Dip

Wednesday, September 2, 2009

U.S. mortgage applications slid last week even as mortgage rates edged lower, with requests for loans to buy homes declining for the first time since early July, an industry group said on Wednesday.

The Mortgage Bankers Association's applications index fell by a seasonally adjusted 2.2 percent in the week ended August 28, as demand for both purchase and refinance loans slipped.

Fixed 30-year mortgage rates averaged 5.15 percent last week, down 0.09 percentage point. This was still above the record low of 4.61 percent set in March yet a year ago this borrowing cost was 6.39 percent.

Source: Reuters

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U.S. Factory,Home Sales Data Signal Economic Recovery

Tuesday, September 1, 2009

The U.S. manufacturing sector grew in August for the first time in over a year and a half, while pending home sales surged to a two-year high in July, adding to mounting evidence the longest economic slowdown since the Great Depression is ending.

The Institute for Supply Management said its index of national factory activity rose to 52.9 in August from 48.9 in July. The median forecast of 78 economists surveyed by Reuters was for a reading of 50.5.

A reading above 50 indicates expansion in the manufacturing sector. The last time the index showed growth in the sector was in January 2008 with a reading of 50.8. August was the highest since a reading of 52.9 in June 2007.

The manufacturing and housing data pushed U.S. stocks higher and the Nasdaq rose more than 1.0 percent while Treasury debt prices added to losses with the 30-year bond falling more than a full point. The U.S. dollar fell against the euro and rose against the yen.

" Both reports are encouraging readings. I'm particularly encouraged by new orders and spread between new orders and shipments. The manufacturing recession is over. This is not necessarily a one-month event. This suggests manufacturing activity will be picking up," said Jonathan Basile, an economist with Credit Suisse in New York.

Regional U.S. regional surveys have shown business picking up steam in August, though employment remained weak, consistent with fears the United States could be in for a "jobless recovery."

Source: Reuters

Regional Surveys Show U.S. Economy Picking Up

Monday, August 31, 2009

A cluster of regional reports on Monday showed business activity picking up steam in August, suggesting the U.S. economy is breaking free of its deep recession.

One report showed a nearly year-long plunge in economic activity in the U.S. Midwest came to a halt last month as new orders and production rose sharply, potentially a harbinger for the national economy.

Still, a top Federal Reserve policy-maker warned that the U.S. economy remains fragile and unemployment high.

The Institute for Supply Management-Chicago's business barometer rose to 50.0 in August, the dividing line between growth and contraction, from 43.4 in July. Wall Street economists had expected a rise to only 48.0.

" The Chicago PMI report is a further indication that the U.S. economy is starting to improve," said Shaun Osborne, chief currency strategist at TD Securities in Toronto.

Many strategists tied the jump in new orders to the government's "cash for clunkers" program, which got auto plants humming to meet demand for new vehicles to replace gas-guzzlers.

" We think the success of the clunker program is now lifting the index," said Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York.

The auto sector plays a larger role in the Chicago region economy than it does nationally, although the Chicago area index, which covers both the service and manufacturing sectors, is often viewed as a bellwether of national trends.

" There was a strong increase in new orders, which is critical," said Pierre Ellis, senior economist at Decision Economics in New York.

A similar index covering the heavily industrialized Milwaukee region rose to 56 in August from 45 in July, while the Dallas Federal Reserve Bank said factory activity in Texas declined at a slower pace.

Meanwhile, business activity in New York City, which tends to be driven by trends in the financial sector, expanded in August for the first time in three months, thanks to increased purchases and a slowdown in layoffs.

The National Association of Purchasing Management-New York's index of business conditions rose to 55.3 in August from 48.3 in July. Improvements in purchasing volume and employment conditions signaled the worst of the city's downturn might be ending, the group said.

The slew of regional data failed to lift the U.S. stock market, which was bogged down by weakness in financial shares and a soft tone in overseas markets. The Dow Jones industrial average was down nearly 1 percent in late morning.

Source: Reuters

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New Home Sales Blast Past Expectations

Wednesday, August 26, 2009

Sales of newly constructed homes leaped unexpectedly in July to hit their highest level since last September.

New homes sold at an annualized rate of 433,000 during the month, according to a joint report issued by the Census Bureau and Department of Housing and Urban Development.

That far exceeded analysts' forecasts and was up 9.6% from the revised 395,000 rate recorded in June. A consensus of industry experts surveyed by Briefing.com had predicted July sales of 390,000.

The news followed other positive housing market reports earlier this month, including a spike in existing home sales, home prices and affordability.

"There are many economic conditions that led to the surge," said Bob Walters, chief economist for Quicken Loans. "But certainly low mortgage rates, huge price reductions on the high inventory of new builds, and the first-time homebuyer tax credit have been instrumental in getting consumers to take the plunge into the real estate pool of opportunity."

Plus, the psychology of the market is changing, according to Peter Morici, an economics professor at the University of Maryland. "The notion that prices will drift down forever is gone," he said. "Now people are thinking the window of opportunity will not be open forever."

"Home shoppers visiting builders' model homes are more likely to purchase than earlier in the year," added Brad Hunter, chief economist for Metrostudy a real estate research and consulting firm.

It certainly is an attractive market. The median price of a new home declined again last month to $210,100, down only slightly from June but off more than 11% from July 2008.

Source: CNN/Money

Consumer Confidence Soars

Tuesday, August 25, 2009

A key measure of consumer confidence jumped much more than predicted in August, as the job market outlook and business expectations improved, said a report released Tuesday.

The Conference Board, a New York-based business research group, said Tuesday that its Consumer Confidence Index rose to 54.1 in August from an upwardly-revised 47.4 in July.

Economists were expecting the index to increase to 48, according to a Briefing.com consensus survey. The measure is closely watched because consumer spending makes up two-thirds of the nation's economic activity.

The index posted declines in June and July, but the reading "appears to be back on the mend," said Lynn Franco, a director at The Conference Board, in a prepared statement.

" Consumers were more upbeat in their short-term outlook for both the economy and the job market in August," Franco added. But the reading for income expectations rose only slightly.

Despite August's increase, the index remains at historically low levels. An overall reading above 90 indicates the economy is solid, and 100 or above signals strong growth.

The report is based on a survey mailed to a representative sample of 5,000 U.S. households. The questionnaire asks whether respondents think current business conditions are good, bad or normal, about employment conditions, as well as if they expect employment or income levels to improve or deteriorate over the next six months.

Source: CNNMoney.com

U.S. Housing, Consumer Data Show Seeds of Recovery

Tuesday, August 25, 2009

Larger-than-expected improvements in U.S. housing prices and consumer confidence on Tuesday lent new weight to signs the economy is emerging from the longest and deepest recession since the 1930s.

U.S. home prices rose for the second month in a row in June, according to a closely watched S&P index, and consumer confidence jumped in August.

In addition, President Barack Obama nominated Ben Bernanke to a second term as chairman of the Federal Reserve, removing some niggling doubt from investors' minds as the decision promised a consistent approach to monetary policy in the years ahead.

The developments helped buffer the blow of projections for the U.S. budget deficit to reach its highest level in 2009, relative to the total economy, since World War Two.

" The recession appears to be over, with consumer attitudes lagging behind broad economic developments," said Steven Wood, chief economist at Insight Economics in Danville, California.

Major U.S. equities indexes climbed to new 2009 highs on the day's events, while bond prices fell as signs of a resurgent economy reduced interest in safer investments.

The Conference Board, an industry group, said consumer confidence climbed to a reading of 54.1 in August from 47.4 in July, handily outpacing forecasts, on an improved outlook for the job market and the overall economy.

The rise sent the index to its highest level since May. Still, some analysts warned not to get carried away.

" Confidence remains well below its historical average of 95 and it has not even regained the level of 61 seen before the collapse of Lehman almost a year ago," said Paul Dales, U.S. economist at Capital Economics in Toronto.

The weak labor market remains a sticking point to recovery, and especially a revival in consumer spending. Even the Fed has conceded the likelihood of a "jobless recovery," with the unemployment rate staying high long after growth resumes.

Americans saying that jobs were "hard to get" in August dropped to 45.1 percent from 48.5 percent but those saying jobs were plentiful were just 4.2 percent.

" Most of the strength was in the 'expectations' component, so it looks like even though the near-term conditions are still a bit rocky, there is hope for the future," said Kim Rupert, managing director, global fixed income analysis, Action Economics LLC in San Francisco.

Source: Reuters

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U.S. Employers See Hires in Year Ahead

Tuesday, August 25, 2009

More than half the employers in a new poll say they plan to hire full-time employees in the next 12 months, according to research released on Tuesday that could spell relief for unemployed U.S. workers.

Four in 10 employers plan to hire contract, temporary or project workers, and another four in 10 will be hiring part-time employees, according to the survey conducted for Robert Half International, a staffing company, and CareerBuilder.com, an online career site.

The study found 53 percent of employers said they expect to hire full-time employees over the next 12 months.

Some 14.5 million U.S. workers are unemployed, according to recent U.S. government statistics.

Despite the high number of potential job applicants, six in 10 employers said they would be willing to negotiate higher pay with qualified candidates.

Many employers also reported difficulty finding skilled people to fill openings and said on average, 44 percent of the resumes they receive are from unqualified candidates.

The areas most likely to be adding jobs are technology, customer service and sales, the research found. Asked what characteristics they seek most in applicants, employers said they want multitaskers, self-starters with initiative and creative problem solvers.

When the economy improves, 28 percent of employers said they were most likely to fill entry-level jobs, and 32 percent said they would fill staff-level jobs. Only 7 percent said they would fill management jobs, only 2 percent said they would fill director jobs and 1 percent would fill executive jobs.

Forty percent of hiring managers said when the economy improves, pay raises will be their primary method for keeping their top employees.

Among employees, 49 percent said after the economy improves, the most effective way to keep them in their jobs will be pay increases, and 28 percent said they plan to ask for raises.

The survey, the fifth annual Employment Dynamics and Growth Expectations report, was conducted by telephone of 501 hiring managers and 505 workers for Robert Half International and CareerBuilder.com by International Communications Research from April 30 to May 31, 2009. The survey's overall margin of error was 4.4 percentage points.

Source: Reuters

Housing Affordability Continues to Hover Near Highest Level in 18 Years

Wednesday, August 19, 2009

Bolstered by affordable interest rates and low prices, nationwide housing affordability during the second quarter of 2009 continued to hover near its highest level since the series began 18 years ago, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) released today.

The HOI showed that 72.3 percent of all new and existing homes sold in the second quarter of 2009 were affordable to families earning the national median income of $64,000, down only slightly from the record-high 72.5 percent during the previous quarter and up from 55.0 percent during the second quarter of 2008.

"The increase in affordability -- along with the $8,000 federal tax credit for home buyers -- is stimulating demand, particularly among young, first-time buyers," said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. "But to keep the recent upturn in home sales going into next year, Congress will need to extend the tax credit for another year and make it available to all buyers in an effort to encourage activity in the trade-up market."

Robson noted that the tax credit, which expires on Nov. 30, is currently limited to just buyers purchasing their first home.

Indianapolis, once again, was the most affordable major housing market in the country during the second quarter. Almost 95 percent of all homes sold were affordable to households earning the area's median family income of $68,100. Indianapolis has now topped the affordability list 16 consecutive quarters.

Source: NAHB

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US Housing Market Could Be Facing Another Bubble: Shiller

Wednesday August 19, 2009

The housing market, which already has been battered by the worst collapse since the Great Depression, could be setting itself for another bubble, well-known economist Robert Shiller told CNBC.

With home affordability at a 40-year high, there is "absolutley" a possibility that the housing market will face another bubble in the next five years, said Shiller, an economics professor at Yale, co-founder of MacroMarkets and co-developer of the monthly Case-Shiller home price index.

" The low interest rates, the affordability is leaning that way and the ratios are back down," Shiller said in a live interview. "I get glimmers of excitement among some people, but we still have a high inventory of unsold homes, and we still have a lot of weariness because of the recent experience."

Although the most recent Case-Shiller report showed that US home prices posted their first monthly increase in almost three years, the sector-and the economy-are still a long way from recovery, Shiller said. Another round of stimulus money and revival of the credit markets is the only way the economy will shake out of this rough patch, Shiller said.

" It's clearly not over yet," he said. "It's not obvious that people are really ready to spend again. That may take years to rekindle that normalcy."

With the exception of a government-injected stimulus, the Great Depression draws a strong corollary to today's market, and Shiller fears it will struggle through a similarly slow recovery, he said. Though the stock market doubled in 1933 and rallied for about four years, unemployment numbers continued to sag and the economy didn't return to prosperity.

" That's what I worry could happen," Shiller said. "We'll have a recovery and it will be exceptionally weak for years to come."

Source: CNBC.com

Single-Family Housing Starts and Permits Rise in July

Tuesday, August 18, 2009

Production and permitting of new single-family homes continued on an upward trajectory in July, according to newly reported numbers from the U.S. Commerce Department today. Meanwhile, substantial declines on the multifamily side dragged down the overall numbers, with combined single- and multifamily starts down 1 percent to a seasonally adjusted annual rate of 581,000 units and combined single- and multifamily permits down 1.8 percent to a 560,000-unit rate.

"With the impending expiration of the first-time home buyer tax credit at the end of November, July was probably the last month in which to get homes permitted and started in time for customers to take advantage of that valuable incentive," noted Joe Robson, chairman of the National Association of Home Builders (NAHB) and a home builder from Tulsa, Okla. "Builders were responding to improved demand related to that upcoming deadline and also to the first signs of an economic recovery.
However, it remains to be seen what happens after the tax credit expires, and the severe credit crunch that has curtailed many multifamily projects is looming over single-family builders as well. Congress and the Administration need to take action now in order to maintain the momentum toward a housing and economic recovery."

"The latest report marks a fifth consecutive month of improvement in single-family housing starts and a fourth consecutive month of improvement in single-family permits," noted NAHB Chief Economist David Crowe. "This is exactly in keeping with our latest member surveys, which indicate that builders are cautiously optimistic about single-family sales conditions over the next several months. That said, the significant drop-off in multifamily construction and permitting shown in recent months' reports may be a harbinger of the financing challenges facing all home builders going forward. A severe lack of credit for acquisition, development and construction financing, along with other issues tied to low appraisals and the upcoming expiration of the first-time buyer tax credit, could derail the progress made so far. Government action is required to ensure that housing can help generate jobs and economic growth in the days ahead."

NAHB is calling on Congress to extend the first-time home buyer tax credit for another year and to offer it to all income-eligible buyers. In addition, NAHB is urging Congress to help eliminate the credit crunch, correct faulty appraisal practices and expand Net Operating Loss tax provisions that can help avoid more layoffs.

Single-family housing starts posted a 1.7 percent gain to a seasonally adjusted annual rate of 490,000 units in July, while single-family permits registered a 5.8 percent gain to 458,000 units.
Both of these were the highest levels registered since October of 2008. Meanwhile, multifamily starts tied a record low set in April of this year, falling 13.3 percent to a 91,000-unit rate. Multifamily permits fell 25.5 percent to 102,000 units.

Due largely to declining multifamily production numbers, housing starts fell in three out of four regions in July. The Northeast posted a 16.3 percent decline, while the South and West posted more moderate declines of 1.4 percent and 1.6 percent, respectively. The Midwest was the only region to report a gain, of nearly 13 percent. Meanwhile, housing permits fell 5.2 percent in the Northeast and 9.2 percent in the South, but gained 14.1 percent in the Midwest and 7 percent in the West in July.

Source: NAHB

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Builder Confidence Continues Upward in August

Monday, August 17, 2009

Builder confidence in the market for newly built, single-family homes rose one point in August to its highest level in more than a year, according to the latest reading of the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today. Building on a two-point gain in July, the HMI reached 18 this month, its highest point since June of 2008.

"Home builder expectations have been buoyed by the success of the first-time home buyer tax credit and its anticipated boost to buying activity leading up to the Nov. 30 expiration date," said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. "The question is what happens after that - whether there will be enough momentum to keep us moving toward a recovery, particularly in light of significant headwinds such as the severe credit crunch for housing production loans and inappropriate appraisal practices that are scuttling a quarter of all new-home sales. Unless Congress and the Administration focus their attention on housing right now, this improvement may well be short-lived," he said.

"One very positive aspect of today's report is the big gain registered in the component gauging home builders' expectations for the next six months," noted NAHB Chief Economist David Crowe. "This reflects anticipated sales stemming from the tax credit as well as recent signs that an economic recovery has begun. There is definitely a sense of hope among builders that the worst of the downturn is over and that a turning point is near at hand. Meaningful action by Congress could ensure that this upward momentum continues and that housing can help push the economy back onto solid ground."

NAHB is calling on Congress to extend the first-time home buyer tax credit for another year and to offer it to all income-eligible buyers. In addition, NAHB is urging Congress to help eliminate the credit crunch, correct faulty appraisal practices and expand Net Operating Loss tax provisions that can help avoid more layoffs. Each of these actions would generate thousands of new jobs and provide a much-needed boost to economic recovery. Derived from a monthly survey that NAHB has been conducting for more than 20 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as "high to very high," "average" or "low to very low." Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor.

Two out of three of the HMI's component indexes recorded substantial gains in August. The biggest boost, of 4 points, was registered by the index gauging sales expectations in the next six months, which rose to 30 this month. Meanwhile, the index gauging traffic of prospective buyers gained three points to 16 and the index gauging current sales conditions held unchanged at 16.

Regionally, all but the South recorded HMI gains in August. The Northeast posted an 8-point gain to 24, the Midwest posted a two-point gain to 16, the West posted a three-point gain to 17 and the South posted a one-point decline to 18.

Source: NAHB

Foreclosure Plague: No Cure Yet

Thursday, August 13, 2009

There were more than 360,000 properties with foreclosure filings -- including default notices, scheduled auctions and bank repossessions -- an increase of 7% from June and 32% from July 2008, according to RealtyTrac, an online marketer of foreclosed homes. In fact, one in every 355 U.S. homes had at least one filing during July.

" July marks the third time in the last five months where we've seen a new record set for foreclosure activity," said James J. Saccacio, chief executive officer of RealtyTrac. "Despite continued efforts by the federal government and state governments to patch together a safety net for distressed homeowners, we're seeing significant growth in both the initial notices of default and in the bank repossessions."

The jump occurred as several foreclosure moratoriums phased out. They were initiated by many states to give the administration's foreclosure-prevention efforts time to work. But for many help did not come: The modification and refinancing programs have met with less success than hoped.

" It's starting to reach more and more people, but we have to do better and make sure the program reaches the millions of folks we intended it to reach," said Jared Bernstein, an economics adviser to vice president Biden.

The picture would be even worse, however, without the programs.

" Each of these programs nips away at the problem of excess supply," said Doug Duncan, cheif economist for Fannie Mae, "and fights against declining prices. ... The hope is that the aggregated programs will result in less loss than would happen in the free market."

Source: CNN/Money

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America’s Strongest Housing Markets

Thursday, August 13, 2009

Which U.S. areas have the greatest growth in home values? Those markets that didn’t benefit from the housing boom.

They're easy to overlook, with home prices plunging from Manhattan to Los Angeles and almost everywhere in between. But look at the smaller metros where housing bubbles never took shape, and you'll find some of today's strongest markets.

Boulder, Colo.; Fayetteville, N.C.; Pittsburgh; Little Rock, Ark.; and other slow-but-steady metros are now among the nation's safest markets, and many of the homes in those markets continue to appreciate, if only modestly.

These are metro areas "where folks didn't bake 10% to 12% increases into their financial expectations," said Stan Humphries, chief economist at real-estate site Zillow.com. "That was a good expectation to have."

Working with data from Zillow.com, BusinessWeek came up with the strongest housing markets by ranking metro areas based on the share of single-family homes for which values rose in the second quarter, compared with the second quarter of 2008. In the top-ranked metro, Boulder, an affluent Denver suburb that is home to the University of Colorado at Boulder, 59.39% of homes appreciated during the past year, and the median home value rose 2.12% on a year-over-year basis.

The 10 strongest U.S. housing markets:
1. Boulder, Colo.
2. Spartanburg, S.C.
3. New Orleans
4. Binghamton, N.Y.
5. Fayetteville, N.C.
6. Pittsburgh
7. Little Rock, Ark.
8. Gainesville, Ga.
9. Burlington, N.C.
10. Oklahoma City

Source: BusinessWeek

Home Prices Fall a Record 15.6%

Wednesday, August 12, 2009

Median home prices fell a record 15.6% during the three months ended June 30, compared to the same period in 2008, according to an industry report.

There is good news though: The survey from the National Association of Realtors reported the median home price rose 4% compared to the first quarter of 2009 -- to $174,100 from $167,300.

The increase in median price was not a surprise, representing, as it did, the traditionally strong spring selling season. But the jump did offer the prospect that the worst of the price declines may be behind us.

" With low interest rates, lower home prices and a first-time buyer tax credit, we've been seeing healthy increases in home sales, which are a hopeful sign for the economy," said Lawrence Yun, NAR's chief economist.

In the vast majority of metro areas -- 129 out of 155 -- median prices dropped year-over-year. Some of the decline can be traced to an increase in the percentage of foreclosures and short sales. They accounted for 36% of all transactions during the quarter.

These "distressed properties" are usually sold at discounts of at least 15% compared with traditional sales.

Patrick Newport, a real estate analyst for IHS Global Insight, while admitting the year-over-year results are still awful, said recent evidence indicates that prices are stabilizing.

" The state sales data show sales picking up across the country," he said.

Newport expects prices and sales to trend down again, especially when the impact of the first-time homebuyers tax credit starts to fade. The credit ends December 1. "Afterward, sales will take a hit," he said.

His forecast is for prices to drop another 5% this year, driven down by added inventory as the foreclosure plague continues to worsen.

Source: CNN/Money

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Mortgage Applications Drop as Loan Rates Rise

Wednesday, August 12, 2009

U.S. mortgage applications fell last week, reflecting a drop in demand for home refinancing loans as interest rates soared to their highest levels since June, data from an industry group showed on Wednesday.

Applications for loans to buy homes, an early indicator of sales, rose slightly. Tepid interest in purchase loans does not bode well for the hard-hit U.S. housing market, which has been showing signs of stabilization.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended August 7 decreased 3.5 percent to 499.0.

Celia Chen, senior director of housing economics at Moody's Economy.com in West Chester, Pennsylvania, said higher interest rates on mortgages tend to depress home buying, but that demand is not as sensitive to changes in rates as it is in refinancing activity.

" Even though mortgage rates are rising, they still remain quite affordable," she said.

" The bigger obstacle to home buying is job losses and tight qualifying conditions for borrowing," she said.

With the U.S. unemployment rate at 9.4 percent, many potential home buyers who have lost or who fear they may lose their jobs remain sidelined even though home affordability has improved significantly.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 5.38 percent, up 0.21 percentage point from the previous week. It was the highest rate since the week ended June 19 and significantly above the all-time low of 4.61 percent set in the week ended March 27. The survey has been conducted weekly since 1990.

Interest rates a year ago were at 6.57 percent.

Mortgage rates were above 5 percent for an 11th straight week. Some experts say rates at 5 percent and below are needed to make a significant impact on home loan demand.

The MBA's seasonally adjusted purchase index rose 1.1 percent to 267.2, the third, albeit small, gain in the last four weeks.

The four-week moving average of mortgage applications, which smooths the volatile weekly figures, was down 0.7 percent.

Source: Reuters

Home and Garden Expo Centers open in Arizona

Tuesday, August 11, 2009

Home and Garden Expo Center, a new retail format featuring hundreds of local independent building, remodeling, interior design and landscaping companies, opened in three Arizona locations on July 11.

The Expos Centers, located in Central Phoenix, Scottsdale and Peoria, are designed to serve customers year-round. A fourth location is scheduled to open in East Valley, Ariz., later this year.

The centers feature dozens of booths representing categories like countertops, outdoor furniture, landscaping products, closet systems, water softening and filtration systems, spiral stair cases and sunrooms.

The Peoria and Scottsdale facilities are each 40,000 sq. ft., while the Central Phoenix location has 36,500 sq. ft. of space. Each center features 200-plus companies, and only four companies are allowed to display per category per location.

The Expo Centers will also rent space to other organizations, including organizers of car shows, bridal shows and furniture auctions.

Source: Home Channel New

U.S. recession seen ending in third quarter

Monday, August 10, 2009

The worst U.S. recession since the Great Depression will probably end in the third quarter, but uncertainty exists over the speed and duration of the economic recovery, according to the most recent survey of private economists.

The Blue Chip Economic Indicators survey of private economists released on Monday showed about 90 percent of the respondents surveyed believe the economic downturn will be declared to have ended this quarter.

This upbeat assessment followed recent government data showing gross domestic product (GDP) contracted at a shallow 1.0 percent rate in the second quarter after sinking 6.4 percent in the January-March quarter.

Recent data, including housing and key labor market indicators, have suggested a bottoming in the recession and the economy close to turning the corner. The economy slipped into recession in December 2007.

The Blue Chip survey's findings are broadly in line with a Reuters poll published last month, which predicted growth in the third quarter, though a brisk pace of expansion was not expected until late 2010.

" Debate now centers on the speed, strength and durability of the recovery," the survey said.

It showed nearly two-thirds of respondents believed the economy was set for a U-shaped recovery, marked by below-trend growth in gross domestic product before stronger growth took hold in the second half of 2010.

About 17 percent of the respondents anticipated a V-shaped rebound, where growth pulled back to its trend rate on a sustained basis, while the same percentage fretted that a W-shaped recovery could follow, the survey showed.

" In their view, GDP growth will pop higher for a quarter or two only to falter again before a lasting recovery takes hold," the survey said.

Source: Reuters

Builders Call on Congress to Extend and Enhance Home Buyer Tax Credit

Monday, August 10, 2009

To help create jobs and set the stage for a strong recovery, the National Association of Home Builders (NAHB) today called on Congress to extend and enhance the $8,000 first-time home buyer tax credit due to expire on December 1.

Specifically, NAHB is asking Congress to extend the home buyer tax credit program through November 30, 2010 and make it available to all buyers of principal residences.

"If Congress acts to extend the tax credit program, it would spur 383,000 additional home sales, including 80,000 housing starts, creating nearly 350,000 jobs over the coming year," said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. "That's good for the economy and good for America."

Although there have been some signs of economic stabilization in recent weeks, the unemployment rate is rapidly approaching double-digits. Without a concerted focus on the housing sector, which comprises more than 15 percent of the GDP, any hope for a recovery could fade.

"At best, it looks like a jobless recovery once it gets underway," said Robson. "This is why Congress needs to take bold, meaningful action now."

In addition to extending the tax credit, Robson said home builders will be meeting with their lawmakers in their home districts during the August congressional recess and urging them to:

- Correct a faulty appraisal process.

- Improve housing credit conditions.

- Co-sponsor Net Operating Loss (NOL) relief legislation in the House and Senate.

Taken together, these four issues - extending the $8,000 home buyer tax credit for one year and making it eligible for all home buyers; bringing common sense to the appraisal process; urging banking regulators to ease AD&C credit; and passing the NOL carryback legislation - will not only create needed jobs for American workers quickly, but also stimulate demand for goods and services throughout Main Street America.

Source: NAHB

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Jobless Claims Point to Stabilizing Labor Mart

Thursday, August 6, 2009

The number of U.S. workers filing new claims for jobless benefits fell sharply last week, a government report showed on Thursday, boosting views the labor market and the economy were stabilizing.

Initial claims for state unemployment insurance fell 38,000 to a seasonally adjusted 550,000 in the week ended August 1 from 588,000 the prior week, the Labor Department said.

A Labor Department official described the period under review as "uneventful" and said it appeared the distortions to the weekly data caused by the auto plant closures were out of the way. Analysts polled by Reuters had forecast new claims to edge down to 580,000 last week.

U.S. stock index futures extended gains on the data, while government bond prices slipped.

" The claims data are another sign that the recession could be behind us," said Kevin Flanagan, fixed-income strategist at Global Wealth Management, Morgan Stanley in Purchase, New York.

" I am optimistic that a recovery is in the process of beginning, but we will need to see continued improvement in claims going through (below) the 500,000 level before the consumer is willing to come on board and be part of the recovery."

Analysts said the report also bodes well for July non-farm payrolls data due on Friday.

" We should see a decline of 300,000. It's a big step in the right direction in the labor market," said Lindsey Piegza, market analyst at FTN Financial in New York.

A Reuters survey forecast 320,000 workers lost their jobs last month, which would be the least for any month since September when employers cut 321,000 jobs.

The jobless rate was seen climbing to 9.6 percent -- the highest since June 1983 -- from 9.5 percent in June, as employers remain reluctant to hire because of depressed demand.

Labor market weakness is casting a shadow over the economy's recovery prospects from the worst recession in over 60 years as high unemployment exerts pressure on incomes, severely curtailing households' spending capacity. Consumer spending is the main driver of U.S. economic activity.

Source: Reuters

Mortgage Demand Boosted by Refinancing as Rates Drop

Wednesday, August 5, 2009

Demand for U.S. home loans rose last week as a decline in 30-year fixed mortgage rates to a three-week low boosted applications for refinancing, the Mortgage Bankers Association said on Wednesday.

Average 30-year mortgage rates fell 0.19 percentage point to 5.17 percent in the week ended July 31, the lowest since 5.05 percent in the July 10 week.

The drop in borrowing costs pushed refinance applications up 7.2 percent to 1,996.7 last week, lifting total loan requests by 4.4 percent to 517.3, based on the industry group's seasonally adjusted indexes.

Although the refi gauge has jumped 35 percent from its June low, it remains well below the 6,000 level that it had topped for five weeks around the time 30-year mortgage rates sank to a record low of 4.61 percent in March.

Purchase loan requests, which have been stuck in a narrow range for months, rose just 0.9 percent last week to 264.4.

Despite a handful of surprisingly upbeat sales and price reports indicating a bottom, a swift rebound in the worst housing market since the Great Depression is not on the horizon, industry analysts agree.

" Most folks are hopeful, based on all the numbers we've been seeing, that we've got a floor here and we're going to start seeing a long, slow recovery," said Jonathan Corr, chief strategy officer at Pleasanton, California-based mortgage software provider Ellie Mae.

" We can't march around in victory yet, but we're starting to see the light at the end of the tunnel," he added.

A break from persistently gloomy housing news, including record foreclosures and a toppling in average home prices by more than 32 percent in three years, has emerged in the past few weeks from government and industry measures.

Source: Reuters

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Consumer Spending Rises in June, Incomes Fall

Tuesday, August 4, 2009

U.S. consumer spending rose slightly more than expected in June, a government report showed on Tuesday, likely pushed up by higher gasoline prices, and incomes saw their biggest drop in four-and-a-half years.

The Commerce Department said spending rose 0.4 percent, boosted by expenditures on nondurable goods, after a revised 0.1 percent increase in May, which was previously reported as a 0.3 percent rise.

That compared to market expectations for a 0.3 percent increase in spending, which accounts for over two-thirds of U.S. economic activity. However, adjusted for inflation, spending fell 0.1 percent after being flat in May.

" I think the data shows that consumer confidence appears to be bottoming and turning higher, though headwinds from job losses remain a significant hurdle," said Alan Gayle, senior investment strategist at Ridgeworth Investments in Richmond, Virginia.

Personal incomes declined 1.3 percent in June, however, as the effects of one-time government stimulus checks in May wore off, and U.S. stock index futures extended losses after the report while government bond prices rose.

The drop in personal income was the biggest decrease since January 2005 and was larger than market expectations for a 1.0 percent drop.

" It's obviously a modestly sharper decline than had been expected, but it's very much affected by the unwinding of the transfer payments from the Obama administration stimulus plan," said Hugh Johnson, chief investment officer at Johnson Illington Advisors in Albany, New York.

" The good news is that personal spending rose," he said.

Spending on nondurable goods rose 1.7 percent in June after a 0.1 percent rise in May. Spending on services also was up slightly, but consumption of durable goods, like appliances and cars, fell 0.2 percent.

High unemployment, reduced access to credit and sagging house prices are undermining personal incomes, hurting consumer spending.

A government report last Friday showed spending fell at a 1.2 percent rate in the second quarter, after rising 0.6 percent in the January-March period.

While the recession's grip on the economy appears to be slackening, consumers remain reluctant to open their wallets, opting instead to save any extra income. This has raised concerns that the economic recovery will be tepid.

Real disposable income tumbled 1.8 percent in June, the largest decline since last June, the Commerce Department said. The decline in income saw a decrease in savings during the month.

Savings fell to an annual rate of $505 billion, with the saving rate slipping to 4.6 percent versus 6.2 percent in May. A measure of inflation closely watched by the Federal Reserve, the year-on-year personal consumption expenditures index excluding food and energy rose 1.5 percent after a 1.6 percent increase in May.

Source: Reuters

Pending Home Sales Index Rises Again in June

Tuesday, August 4, 2009

Pending U.S. home sales rose in June for the fifth straight month, another encouraging sign of life for the embattled U.S. housing market, the National Association of Realtors reported Tuesday.

For June, the Realtors group said its pending home sales index rose 3.6 percent to 94.6, from an upwardly revised reading of 91.3 in May. The last time there were five consecutive monthly gains was July 2003.

The results were far better than analysts expected. Economists surveyed by Thomson Reuters expected the index to come in at 91.2.

The report tracks signed contracts to purchase previously owned homes and is considered a barometer for future home sales. Typically there is a one- to two- month lag between a sales contract and a completed deal.

The jump in pending home sales coincides with other positive trends in the residential real estate market.

" The housing market is healing and the patient is getting healthier at an accelerating pace," said economist Joel L. Naroff, president of Naroff Economic Advisors Inc.

For the first time in five years, home resales have risen for three months in a row, increasing almost 4 percent in June. Low prices, attractive mortgage rates and a first-time homebuyers tax credit of up to $8,000 have kick-started sales.

" Because housing is so affordable in today's market, job security and the first-time buyer tax credit are bigger factors in influencing home sales," said Lawrence Yun, the Realtors group's chief economist, in a statement.

Also Tuesday, homebuilder D.R. Horton Inc. said its fiscal third-quarter losses shrank from the year-ago period, as it took smaller charges against the falling values of its land and unsold homes.

D.R. Horton's results followed similar numbers from Pulte Homes Inc. and Centex Corp., which reported quarterly earnings Monday that showed new-home orders picked up during the first half of the year.

Yun said he expects existing home sales to gradually rise over the balance of the year, with conditions varying around the country.

" It appears home sales are on a sounder footing and inventory is gradually being absorbed," he said.

Regionally, the pending home sales index jumped 7.1 percent to 100.7 in the South and 2.9 percent to 100.4 in the West. The index inched up 0.4 percent to 81.2 in the Northeast, and up 0.8 percent to 89.9 in the Midwest.

Source: Associated Press

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Mortgage Aid Program Helping Fraction of Borrowers

Tuesday, August 4, 2009

The government's $50 billion program to ease the foreclosure crisis is helping only a tiny fraction of struggling homeowners.

As of July, only 9 percent of eligible borrowers had seen their mortgage payments reduced. And a progress report on the plan Tuesday showed that 10 lenders had not changed a single loan.

Both Bank of America Corp. and Wells Fargo & Co. -- which have received billions in federal bailout money -- were below average. BofA, which did not immediately comment, modified 4 percent of eligible loans, and Wells Fargo 6 percent. And Wachovia Corp., which was taken over by Wells Fargo last December, modified just 2 percent.

" We know we've fallen short of our customer service goals in some cases," Mike Heid, co-president of Wells Fargo's mortgage unit, said in a statement. The company aims to sign up most borrowers for the Obama plan with one phone call and plans to send customers a trial offer within two days.
Foreclosures, meanwhile, continue to rise. About 1.5 million households received at least one foreclosure-related notice in the first half of this year, according to RealtyTrac Inc.

" There are certainly more foreclosures going on in the country then there are modifications -- by a long shot," said Bruce Dorpalen, director of housing counseling at Acorn Housing, a nonprofit housing group. He said his group has intervened to prevent about 500 foreclosure sales in cases where borrowers wanted to be considered for the Obama plan.

There are 38 companies participating in the program, and some noticeable holdouts that control 15 percent of outstanding mortgages. Litton Loan Servicing, owned by Goldman Sachs and HomEq Servicing, owned by Barclays PLC, have yet to join.

So far, more than 400,000 offers have been extended to 2.7 million eligible borrowers who are more than two months behind on their payments. More than 235,000 of those borrowers have enrolled in three-month trials.

" We think they could have ramped up better, faster, more consistently and done a better job serving borrowers and bringing stabilization to the broader mortgage markets and economy," said Michael Barr, the Treasury Department's assistant secretary for financial institutions. "We expect them to do more."

Source: Associated Press

The Pain is Starting to Ease - GDP Report

Friday, July 31, 2009

The latest Consumer Confidence Index, released Tuesday from the Conference Board, reported that consumer confidence has dropped for the second straight month.

In July, the index fell to 46.6 in July, from 49.3 in June.

The Consumer Confidence Index, based on the Conference Board’s Consumer Confidence Survey, consists of the Present Situation Index, which decreased from an adjusted score of 25 in June to 23.4 in July, and the Expectations Index, which decreased from 65.5 in June to 62 in July.

The percentage of consumers rating current business conditions as “bad” increased from an adjusted 45.3% in June to 46.3% in July, although the percentage rating current business conditions as “good” increased from an adjusted 8.1% to 9.1%.

The percentage of consumers who think jobs are hard to get increased from 44.8% to 48.1%, while those who think jobs are “plentiful” decreased from 4.5% to 3.6%.

The percentage of consumers anticipating an improvement in business conditions during the next six months decreased from an adjusted 20.9% to 18%. In addition, those expecting conditions to worsen also decreased from an adjusted 20.4% to 18.9%.

Consumers had a mixed view of the short-term future of the labor market. The percentage of consumers expecting more jobs in the months ahead decreased to an adjusted 17.5% to 15%, while those expecting fewer jobs decreased as well, from an adjusted 27.6% to 26.3%.

Lynn Franco, director of the Conference Board Consumer Research Center, said the most recent consumer confidence figures demonstrate continuing weakness in the U.S. economy.

“ Consumer confidence, which had rebounded strongly in late spring, has faded in the last two months,” said Franco. “The decline in the Present Situation Index was caused primarily by a worsening job market. The decline in the Expectations Index was more the result of an increase in the proportion of consumers expecting no change in business and labor market conditions.”

More consumers are pessimistic about their income expectations, which does not bode well for spending in the months ahead, added Franco.

Source: Home Channel News

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Recovery Signs in Housing Market Stir Some Hope

Thursday, July 30, 2009

After a plunge lasting three years, houses have finally become cheap enough to lure buyers. That, in turn, is stabilizing prices, generating hope that the real estate market is beginning to recover.

Eight cities, including Chicago, Cleveland, Denver and San Francisco, showed price increases in May, up from four in April and one in March, according to data released Tuesday. Two other cities, Charlotte, N.C., and New York, were flat.

For the first time since early 2007, a composite index of 20 major cities was virtually flat, instead of down.

" We've found the bottom," said Mark Fleming, chief economist for First American CoreLogic, a data firm.

The release of the surprisingly strong Case-Shiller Price Index, compiled by Standard & Poor's, followed earlier reports that sales of existing homes rose last month for the third consecutive time, while sales of new homes rose in June by the largest percentage in eight years.

All of these improvements are tentative, and come after a relentless decline that knocked more than half the value off houses in the worst-hit cities.

Some skeptics say they believe the market is merely pausing before it resumes falling and that much of the life in the market is coming from speculators. Even the most enthusiastic analysts acknowledge that rising unemployment, another leap in foreclosures or a significant jump in interest rates could snuff out progress.

Still, hope is growing in some quarters that the worst has passed.

Recession is over, economy is recovering — let's look forward and stop the backward-looking focus," John E. Silvia, the Wells Fargo chief economist, wrote Tuesday in a research note.

Source: CNN/Money

Home Prices Up for 1st Time in 3 Years

Tuesday, July 28, 2009

The value of U.S. homes grew on a monthly basis in May for the first time in nearly three years, according to 20-city index released Tuesday.

The month-over-month increase was 0.5%, according to the report from financial data company Standard & Poor's and economists Case-Shiller. It was the first increase in the monthly index since July 2006.

On an annual basis, home prices in the 20 cities fell 17.1%, but it was the second straight month that the year-over-year decline lessened.

" This could be an indication that home price declines are finally stabilizing," said David Blitzer, chairman of the index committee S&P, in a prepared statement.

While acknowledging that the report was good news, Mark Zandi, chief economist for Moody's Economy.com, downplayed the importance of a single month's statistics.

" I think it's a temporary respite," he said. "It reflects the recent decline in foreclosure sales, and prices will continue to fall over the next several months."

Robert Shiller, the Yale economist who co-founded the index and who's famous for warning that the housing boom was, in fact, a bubble, said the decrease in foreclosure sales does show up in the index statistics as a plus for home prices. That's one reason he did not want to sound too optimistic; foreclosures could take off again.

" And we could get more economic bad news, but it does look encouraging," he said.

He added that he thought that Washington's efforts have boosted the nation's spirits, an important factor for the housing market.

" The government has done a lot to support the housing market," he said. "Confidence has improved. People are talking about 'green shoots.' People are thinking it's time the recession came to an end. The stock market is up."

Source: CNNMoney.com

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Consumer Confidence Index Falls to 46.6 in July

Tuesday, July 28, 2009

The latest Consumer Confidence Index, released Tuesday from the Conference Board, reported that consumer confidence has dropped for the second straight month.

In July, the index fell to 46.6 in July, from 49.3 in June.

The Consumer Confidence Index, based on the Conference Board’s Consumer Confidence Survey, consists of the Present Situation Index, which decreased from an adjusted score of 25 in June to 23.4 in July, and the Expectations Index, which decreased from 65.5 in June to 62 in July.

The percentage of consumers rating current business conditions as “bad” increased from an adjusted 45.3% in June to 46.3% in July, although the percentage rating current business conditions as “good” increased from an adjusted 8.1% to 9.1%.

The percentage of consumers who think jobs are hard to get increased from 44.8% to 48.1%, while those who think jobs are “plentiful” decreased from 4.5% to 3.6%.

The percentage of consumers anticipating an improvement in business conditions during the next six months decreased from an adjusted 20.9% to 18%. In addition, those expecting conditions to worsen also decreased from an adjusted 20.4% to 18.9%.

Consumers had a mixed view of the short-term future of the labor market. The percentage of consumers expecting more jobs in the months ahead decreased to an adjusted 17.5% to 15%, while those expecting fewer jobs decreased as well, from an adjusted 27.6% to 26.3%.

Lynn Franco, director of the Conference Board Consumer Research Center, said the most recent consumer confidence figures demonstrate continuing weakness in the U.S. economy.

“ Consumer confidence, which had rebounded strongly in late spring, has faded in the last two months,” said Franco. “The decline in the Present Situation Index was caused primarily by a worsening job market. The decline in the Expectations Index was more the result of an increase in the proportion of consumers expecting no change in business and labor market conditions.”

More consumers are pessimistic about their income expectations, which does not bode well for spending in the months ahead, added Franco.

Source: Home Channel News

Affluent Americans Spending On Outdoor Improvements, Study Says

Monday, July 27, 2009

Affluent Americans -- or those making $100,000 or more annually -- are spending more on their outdoor living spaces, according to a study by Unity Marketing.

Spending by this group on outdoor living luxuries rose 22.6% from 2007 to 2008, and the trend has continued in the first quarter of 2009, with spending up 33% over the same quarter last year.

The Unity Marketing report -- called A Trend Report on the Market for Outdoor Living Products -- is based on quarterly surveys among 1,000 to 1,200 affluent consumers conducted in 2007, 2008 and the first quarter of 2009.

Benefiting most from increased spending on outdoor living goods are big-box home improvement stores like Home Depot and Lowe’s, where the average amount spent by affluent shoppers surged 24% in the first quarter of 2009 compared with the same period last year.

“ In the current recession, affluent consumers are investing more in luxuries for their homes and less on experiences, such as dining and travel,” says Pam Danziger, president of Unity Marketing, commenting on the company’s latest survey of luxury consumers. “Opportunities abound for marketers and retailers that tap into the product categories where affluents are still willing to indulge, like the outdoor living areas of their homes.”

Source: Home Channel News

New Home Sales: 'Really Good News

Monday, July 27, 2009

Sales of newly constructed single-family homes spiked 11% in June to an annualized rate of 384,000 homes, according to a report released Monday.

The gain over May was much greater than expected. A consensus of housing industry analysts had forecast seasonally adjusted sales of 352,000, according to Breifing.com.

However, sales are still 21% below the levels of a year ago, when new homes sold in June at an annualized rate of 488,000, according to the report released by the U.S. Department of Housing and Urban Development. Four years ago, during the height of the housing boom, the sales rate for June was 1,374,000, nearly three-and-a-half times higher than last month.

Still, the report was very positive, according to Peter Morici, an economics professor at the University of Maryland who had forecast June sales to be at the 350,000 level. "That is really good news. Considering what's going on in existing home sales, with all the foreclosure activity sending down home prices, for new homes to jump like that is a good indicator that the economy is bottoming out."

Builders have been more optimistic about market conditions and this report should further buoy their spirits. An index of builder confidence from the National Association of Home Builders (NAHB) rose to 17 this month after languishing in single-digit territory.

In June, they began building single-family housing units at an annualized rate of 470,000, a 14.4% jump over May.

Pat Newport, a housing industry analyst for IHS Global Insight, also deemed the report very good news -- but is uncertain how Obama's $8,000 tax credit for first-time homebuyers will affect the longer view.

" I only wonder how much of the increase is coming from rising demand from new homebuyers," he said. "The tax credit is boosting demand, but what will happen when it goes away in December?"

Source: CNN/Money

U.S. Existing Home Sales Rise in Sign Housing Healing

Thursday, July 23, 2009

U.S. existing home sales notched their third monthly rise in June in a sign the housing industry was slowly healing, but new jobless claims rose last week in a move distorted by unusual seasonal layoffs.

U.S. stocks pushed sharply higher on the home sales data, with the Dow Jones industrial average (DJI:^DJI - News) adding over 100 points as investors took heart that a turn in the housing market would underwrite a broader economic recovery this year.

The National Association of Realtors said on Thursday that sales in June rose 3.6 percent to an annual rate of 4.89 million units, from a downwardly revised 4.72 million pace in May. Last month's reading compared with forecasts for a 4.84 million unit annual pace.

The NAR said it was the first time the industry had experienced three straight months of gain since early 2004, providing hope the higher data indicate an underlying trend.

" Overall, the news is positive. We have increasing home sales for the third straight month, declining inventory and although prices fell, they declined at a less steep pace," Lawrence Yun, NAR chief economist, told a press conference.

" The housing market is healing after four years of recession," he said.

The inventory of existing homes for sale declined 0.7 percent to 3.82 million in June. The median national home price fell 15.4 percent to $181,800 from the same period a year ago. But this was up 4.0 percent compared with the month before and the highest reading since October.

" The months supply of home for resale is coming down and home prices are falling at a slower pace overall providing more evidence that the housing market is stabilizing," said Torsten Slok, a senior economist at Deutsche Bank in New York.

Source: Reuters

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Appraisal and AD&C Problems Hampering Housing Recovery, Builders Tell Congress

Thursday, July 23, 2009

The National Association of Home Builders (NAHB) told Congress today that inappropriate appraisal practices and the acquisition, development and construction (AD&C) lending crisis that has choked off credit for home builders threaten to prolong the current housing and economic downturn.

Testifying before the House Small Business Subcommittee on Finance and Tax, NAHB Chairman Joe Robson, a home builder from Tulsa, Okla., said these two issues "are placing enormous pressure on home builders' bottom lines and, for many, endangering their ability to survive the economic downturn. Additional credit resources could be extremely helpful to them and other small businesses to bridge the divide and survive to the eventual economic recovery."

While there are several signs that the housing market may now be at or near bottom - new and existing home sales have stabilized, the inventory of unsold homes continues to fall and single-family housing starts have posted four consecutive monthly gains - Robson said the appraisal and credit crunch problems are headwinds that continue to buffet any significant housing recovery.

"The inappropriate use of distressed and foreclosed sales as comparables in determining new home values is needlessly driving down home prices and forestalling an economic recovery," he said, citing a recent NAHB survey that found 26 percent of builders are losing sales because appraisals on their homes are coming in below the contract sales price.

These appraisal practices are a major contributing factor to the current AD&C credit crisis. Falling appraised values for land and subdivisions under development have led some financial institutions to stop lending to developers and builders, to demand additional equity and even to call performing loans.

NAHB is calling on housing and federal financial regulators to adopt clear, concise regulatory guidelines that will allow appraisers to develop realistic valuations based on sales that are truly comparable.

To maximize the ability of the Small Business Administration (SBA) to help home builders and other small businesses to gain access to credit, NAHB recommends increasing funding and the loan size for the America's Recovery Capital loan program. This program offers small businesses guaranteed deferred-payment, interest-free loans of up to $35,000 that can be used to pay principal and interest on existing loans; qualify small business debt, including mortgages; and for other purposes. The $255 million program continues through Sept. 30, 2010 or until the funding is exhausted.

NAHB also supports proposed improvements to the SBA 7(a) program, which provides capital for a range of purposes, including construction and supplies, to increase the participation of non-traditional lenders in SBA programs.

Finally, Robson commended the committee's proposal to establish a supplemental loan assistance program to complement the lending initiatives currently administered by the SBA. A primary objective of this program would be to target businesses with capital needs in excess of $10 million.

"Like all small businesses, home builders vary in size and many would find much greater benefit from a program that would expand and increase loans for businesses with higher capital needs," said Robson.

Source: NAHB

Bernanke: Economy Better, But ...

Tuesday, July 21, 2009

Federal Reserve Chairman Ben Bernanke told lawmakers Tuesday that the economy has started to show signs of stabilization, although he cautioned that improvement is uncertain and likely to be gradual going forward.

The head of the central bank, appearing before the House Financial Services Committee in his semi-annual testimony on the state of the economy, forecast a relatively sluggish recovery.

Bernanke said the unemployment rate would be higher than preferred levels until at least 2012. But he added that steps taken by the Fed to pump money into the economy have started to pay benefits.

" The pace of decline appears to have slowed significantly, and final demand and production have shown tentative signs of stabilization," he said.

But at the same time he cautioned that even with improvements, "financial conditions remain stressed, and many households and businesses are finding credit difficult to obtain."

Bernanke repeated the Fed's recent forecast that the economy would grow in the second half of this year, and picking up steam over time. He said he expects employers to start adding jobs either later this year or early next year but said it would take time for labor markets to return to normal.

" I want to be clear we have a very long haul here," he said. "Unemployment will stay high for quite some time. It's not going to feel like a very strong economy."

But Bernanke stopped short of endorsing some proposals for Congress to pass an additional round of economic stimulus -- at least at this time.

Source: CNN/Money

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Housing Starts and Permits up Strongly in June

Friday, July 17.2009

Nationwide housing starts and permits posted substantial gains in June as home builders responded to improved market conditions and the impending expiration of the first-time buyer tax credit, according to data released by the U.S. Commerce Department today. Commerce reported a 3.6 percent gain in overall housing starts to a seasonally adjusted annual rate of 582,000 units and an 8.7 percent gain in permit issuance to 563,000 units.

"The upcoming expiration of the first-time home buyer tax credit on December 1st is encouraging some builders to get homes started now so that they can be completed in time for clients to take advantage of this attractive buying incentive," said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. "However, there is still much concern about the difficulty of financing new-home production and continuing weakness in the job market."

"Today's report was in keeping with our forecasts for some glimmers of improvement on the single-family side in the second quarter, and also with the results of our latest builder surveys," said NAHB Chief Economist David Crowe. "Many remain very cautious, however, in the face of the severe tightening of credit for acquisition, development and construction financing and increased instances of low appraisals tied to improper use of distressed properties as comps, both of which threaten to derail a housing and economic recovery going forward."

Source: NAHB

Builder Confidence Rises Two Points in July

Thursday, July 16, 2009

Builder confidence in the market for newly built, single-family homes notched up two points in July to its highest level since September 2008, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today. The HMI rose two points to 17 in July as builders saw an improvement in current sales conditions but continued to express concerns about the future.

"Builders are seeing slightly better sales conditions this month as consumers take advantage of the first-time buyer tax credit, low interest rates and attractive home prices, but many remain quite concerned about the road that lies ahead," said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. "A true recovery in the housing market and overall economy cannot take place until the continuing foreclosure crisis is abated and a decent flow of credit is restored to housing production. Meanwhile, the stalled jobs market is a major concern to builders and potential home buyers alike."

"Although today's HMI is positive news that helps confirm the market is bouncing around a bottom, the gain was entirely contained in the component gauging current sales conditions, while the component gauging sales expectations for the next six months remained virtually flat for a fourth consecutive month," noted NAHB Chief Economist David Crowe. "Builders recognize the recovery is going to be a slow one and that we are facing a number of substantial negative forces." For example, said Crowe, a quarter of all new-home sales are falling through due to appraisal issues that are tied to the use of distressed and foreclosed properties as comps. "This is a tremendous obstacle for a housing market that is struggling to get back on its feet, as is the lack of available credit for acquisition, development and construction financing."

Source: NAHB

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Apartments and Condos Bring Jobs, Econonomic Benifits to Cities

Thursday, July 16, 2009

A new report from the National Association of Home Builders (NAHB) will enable city and county leaders to paint a clearer picture of the positive impact of building new multifamily communities.

Using a proprietary modeling method, the report found that the development of apartment and condo communities generates significant economic benefits for municipalities long after the building process has been completed.

"As employment and tax revenues plummet nationwide and local governments continue to seek ways to enhance the fiscal health of their communities, this new report should enhance local planning efforts," said NAHB Chairman Joe Robson, a builder and developer from Tulsa, Okla.

The report explains how a typical development of either 100 rental apartments or 100 condominiums affects income and employment figures for 16 sample industries and local government, as well as detailed information about the new construction's effect on taxes and government revenue.

During its first year of construction, a typical 100-unit apartment community will generate $7.9 million in local business owners' income, wages and salaries; $827,000 in taxes; and other revenue and 122 jobs.

A similarly-sized condominium community would do even more, with $20.9 million in owners' income and local wages and salaries, $2.2 million in public revenue and 319 jobs.

"To fully understand the positive impact of multifamily construction, it's important to recognize the economic ripple effects and ongoing benefits to the community at large," Robson continued. "Local governments now have a great resource they can use to enhance their land use policies."

And both apartments and condos continue to deliver benefits to the local area for years to come. Each year, the construction of 100 multifamily units could generate $2.3 million to $2.9 million in business income; $395,000 to $705,000 in taxes and other revenue; and 32 and 49 people jobs.

"There is continued demand for close-in housing in major metro areas, and apartments and condos not only can fill that need, but also can help jumpstart local economies," said NAHB Chief Economist David Crowe. "The initial impact and the ongoing ripple effect from added employment and tax revenue can make encouraging multifamily development a winning strategy for local governments."

Mortgage Rates Fall Again

Thursday, July 16, 2009

Rates for 30-year home loans dropped for the third-straight week, inching toward a record low reached earlier this year, Freddie Mac said Thursday.

The average rate for 30-year fixed mortgages was 5.14 percent this week, down from 5.2 percent last week. Last year at this time, the average rate for a 30-year mortgage averaged 6.26 percent, Freddie Mac said.

Falling mortgage rates can spur refinance activity, which increased as rates on 30-year mortgages fell to a record low of 4.78 percent in April.

But rates then rose as high as 5.6 percent in June after yields on long-term government debt -- closely tied to mortgage rates -- climbed as investors worried that the huge surplus of government debt hitting the market could trigger inflation.

Since then, the yield on the 10-year Treasury note has fallen back from an eight-month high of 4.01 percent reached in June to 3.53 percent on Thursday.

Frank Nothaft, Freddie Mac's chief economist, said rate reductions over the past five weeks translate into monthly savings of $56 on a $200,000 mortgage.

Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.

This week, the average rate on a 15-year fixed-rate mortgage fell to 4.63 percent, down from 4.69 percent last week, according to Freddie Mac.

Average rates on five-year, adjustable-rate mortgages were 4.83 percent, up just a bit from 4.82 percent a week earlier. Rates on one-year, adjustable-rate mortgages fell to 4.76 percent from 4.82 percent.

The rates do not include add-on fees known as points. The nationwide fee averaged 0.7 point for 30-year and 15-year fixed rate mortgages, and five year adjustable rate mortgages. The fee for one-year adjustable rate mortgages was 0.5 point.

Source: Associated Press

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Jobless Claims at 6-Month Low

Thursday, July 16, 2009

-- The number of Americans filing initial unemployment insurance claims fell to the lowest level in six months, according to government data released Thursday -- but the drop may be attributable to quirks in the auto industry rather than improvement in the economy.

There were 522,000 initial jobless claims filed in the week ended July 11, down 47,000 to from a revised-up 569,000 the previous week, the Labor Department said. The number of claims was the lowest since the 488,000 claims reported in the week ended Jan. 3, a week that included the New Year holiday.

The number was much less than the consensus estimate of 553,000 from economists surveyed by Briefing.com.

The 4-week moving average of initial claims was 584,500, down 22,500 from the previous week's revised average of 607,000.

Weekly data tend to be volatile this time of year, said a Labor Department analyst, who asked not to be identified. The data are seasonally adjusted, and government statisticians try to predict the timing of auto industry layoffs, many of which usually occur in the first two weeks of July.

But in this "abnormal year," many of the auto and manufacturing layoffs occurred earlier in the year, the analyst said.

" The annual auto retooling shutdowns almost certainly explain the sudden dive in claims," agreed Ian Shepherdson, economist at High Frequency Economics, in a research note. "The shutdowns happen every year, but GM (GMGMQ) and Chrysler started early this year."

Shepherdson said he expected a "hefty rebound" in new claims over the next few weeks, as "the latest numbers are just far too good to be true."

Source: CNN/Money

Consumer Prices Jump, Industrial Production Falls

Wednesday, July 15, 2009

Consumer prices shot up in June by the largest amount in 11 months, reflecting the biggest jump in gasoline prices in nearly five years.

The Labor Department said Wednesday that inflation at the consumer level rose by 0.7 percent last month, slightly higher than the 0.6 percent increase that economists were expecting. It was the biggest one-month gain since a 0.7 percent increase last July.

The big jump was seen as a temporary blip, however. Inflation is not expected to be a problem any time soon given a severe recession which is keeping a lid on wage pressures.

The Federal Reserve reported Wednesday that industrial production fell 0.4 percent in June as the recession crimped output for a wide range of manufactured goods including cars, machinery and household appliances. However, the decline was not as severe as the 1.4 percent plunge in May, a possible sign that the recession is easing its grip.

Underscoring the low threat of accelerating inflation, prices in June compared to a year ago were actually down by 1.4 percent, the biggest year-over-year decline in nearly six decades.

Core inflation, which excludes food and energy, posted a moderate 0.2 percent rise in June, slightly higher than the 0.1 percent rise that economists had expected.

The absence of an inflation threat has allowed the Federal Reserve to drive a key interest rate to a record low in an effort to fight a severe recession which is already the longest since World War II. The central bank pushed its target for the federal funds rate to near zero in December and it is expected to remain there until the nation's unemployment rate, currently at a 26-year high of 9.5 percent, stops rising.

The 0.7 percent jump in the Consumer Price Index in June followed three months of moderation including a small 0.1 percent rise in May.

The upward surge was driven by a 7.4 percent rise in energy prices, reflecting a 17.3 percent increase in gasoline prices, the biggest one-month jump in gas prices since a 20.9 percent spurt in September 2005 after Hurricane Katrina had shut Gulf Coast refineries.

Analysts are looking for gasoline and other energy costs to retreat in coming months. Already, gasoline pump prices are down by about a dime since the start of July.

Food costs edged up a small 0.1 percent in June, held back by a big drop in the cost of dairy products.
The 0.2 percent rise in core inflation left the core inflation rate rising by a moderate 1.7 percent over the past 12 months, reflecting the downward pressure on costs coming from the prolonged recession.

For June, new car prices jumped by 0.7 percent and clothing costs were also up 0.7 percent. However, those gains ere offset by a 0.6 percent drop in airline fares. Price increases were also moderate in the health area with medical care edging up by 0.2 percent, the smallest gain in three months.

Source: Associated Press

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Here Comes the Recovery. Honest.

Tuesday, July 14, 2009

After several months of growing optimism about the state of the economy, suddenly there's a lot of concern that a recovery has come off the tracks.

A June employment report included an unexpected jump in job losses. That was followed by last week's report of a nearly 5% decline in June year-over-year sales at major retailers other than discounter Wal-Mart Stores (WMT, Fortune 500), which no longer releases monthly results.

The gloomier economic outlook has hurt stocks, and prompted talk among some economists and policymakers about whether a new round of economic stimulus is needed to get the economy growing sooner.

But there are still many economists who believe the early signs of a turnaround in the economy are there -- and growing.

They're not saying the recession that started 19 months ago is already over. But many believe the economy will reach bottom and finally start to improve as soon as late summer. Some even believe employers could again start adding jobs before the end of this year.

" It would have certainly been better if the jobs report had continued to show improvement," said Lakshman Achuthan, managing director of Economic Cycle Research Institute, which specializes in calling when the economy will turn from recession to recovery and back again. "The fact that after a few steps forward we had a step back doesn't negate the indicators pointing to a recovery this summer."

Reasons for encouragement: There are several factors accounting for these economists' optimism.

They say that business inventories have been cut so deep that production will need to start to resume simply to keep minimal supply of product on shelves.

In the auto industry, for example, General Motors is restarting six of its assembly lines Monday after what was typically a two-week summer shutdown was extended to up to three months this year.

Chrysler Group also had its own extended shutdown as it went through the bankruptcy process. Ford Motor (F, Fortune 500), after cutting production plans repeatedly, recently announced it was increasing third-quarter production by 25,000 to deal with low inventories of some of its more popular vehicles.

The same kind of inventory bounce back is likely to be seen in many other industries, according to the economists who see a recovery sooner rather than later. They say much of the drop in gross domestic product, the broad measure of the nation's economic activity, at the end of 2008 and the first three months of 2009 came from businesses slamming the brakes on production due to excess inventories.

" If you just stop cutting inventory, you add $80 to $90 billion to GDP. That's pretty impressive," said Robert Brusca of FAO Economics.

The severe job cutting done by businesses over the past year is another reason some economists are expecting a bounceback sooner rather than later. They say the low employment levels should help corporate income rebound relatively quickly once demand starts to build again.

Thomson Reuters is forecasting two more quarters of double-digit percentage earnings declines in the second and third quarter, but a 187% jump in income among S&P 500 companies in the fourth quarter as they move to put the year-earlier losses behind them. That could be a key to employers hiring again, according to some economists.

" You have a super-lean corporate sector that should be able to generate earnings fairly quickly," said Joseph Carson, chief economist at AllianceBernstein. "You usually need the health of the corporate sector to flow to the labor markets, and I think that's the way this is playing out."

Jump in confidence: The Conference Board's CEO Confidence Index released last week showed a huge jump, with nearly 55% of business leaders expecting economic conditions to improve in the next six months, up from only about 17% in the previous reading three months ago.

Lynn Franco, director of the business research group's consumer research center, said that kind of jump in CEO confidence is a good predictor that spending on capital spending is about to increase, even if management will be more cautious about hiring again.

But businesses might not be the only ones poised to start spending again. Many economists believe there is pent-up demand among consumers that will cause a rebound in spending, once confidence in the labor market stabilizes.

" Even people with jobs have been pulling back on spending, concerned they're going to be next," said Brusca. "I think the people with jobs will spend a little more freely when they're less concerned about the economy."

Achuthan said two factors giving him hope are that the financial stimulus bill passed earlier this year has yet to have much effect on spending and jobs, and that credit markets are still constrained by troubled assets due to the problems in the housing market and foreclosures. He said it's possible both those things could change quickly before the end of the year.

" If the stimulus dollars start to hit, and the financial system starts to behave more normally, there is a wall of money that will begin to flow through the economy," he said.

Source: CNN/Money

Another Bubble” In Housing? It Could Happen, Says Yale’s Robert Shiller

Monday, July 13, 2009

The slowing rate of decline in home prices is likely to continue but the housing market is "still in an abysmal situation," says Robert Shiller, a professor of economics at Yale. The co-creator of the S&P Case-Shiller Index, which tracks national housing prices, says the housing market could "languish for many years," due to the "huge inventory" of unsold holds, "shadow inventory" of homes kept off the market by banks and other potential sellers, and "a lot of financial problems."

But incredibly, the author of Animal Spirits (with George Akerlof), The Subprime Solution and Irrational Exuberance believes "there could be another bubble" in housing, once the excess inventory is worked off. "This is not my more probable scenario [but] people have gotten very speculative in their attitudes toward housing," he says.

Shiller cites Boston as one area for a potential echo-bubble in housing, noting its typically volatile market did not fall in the past two years as dramatically as "more bubbly" cities like Phoenix. The professor and bubble expert isn't predicting it, but the fact he's even mulling the possibility is eye-opening, to say the least.

Source: Yahoo Finance

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Faulty Appraisal Process Harming Housing and the Economy

Monday, July 13, 2009

Twenty-six percent of builders are seeing signed sales contracts fall through the cracks because appraisals on their homes are coming in below the contract sales price, according to a nationwide survey conducted by the National Association of Home Builders (NAHB).

"Home builders are increasingly concerned that inappropriate appraisal practices are needlessly driving down home values. This, in turn, is slowing new home sales, causing more workers to lose their jobs and putting a drag on the economic recovery," said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla.

The survey showed that nearly 60 percent of the builders are reporting that inadequate appraisals are causing serious problems in the market, with the biggest problem being comparables of new single-family homes that are too often based on foreclosures and distressed sales.

"Lost home sales are killing jobs, deepening the housing slump and hurting local economic activity," said Robson, adding that construction of 100 single-family homes adds 324 local jobs, $21.1 million in local income and $2.2 million in taxes and other revenue for local governments with the first year.

Of those who are reporting appraisal problems, 54 percent said that the appraisal amount was actually less than the cost of building the home.

Robson said that foreclosure and distressed sales should not be used without appropriate adjustments to reflect the expenditure that would be required to bring them up to the condition and quality that represents a reasonable alternative for the home buyer.

In what Robson called a step in the right direction, Freddie Mac on July 10 issued a Guide Bulletin publicly stating that it does not require appraisers to use Real Estate Owned, foreclosures or short sales in selecting comparable sales to provide an accurate opinion on home values based on market data. Freddie further stipulated that appraisers must "certify that comparable sales chosen are those most similar to the subject property."

While the appraisal practices currently in use are taking a heavy toll on the housing market, they are also further exacerbating economic distress by affecting the availability of acquisition, development and construction (AD&C) credit.

Falling appraised values for land and subdivisions under development have led some financial institutions to stop lending to developers and builders, to demand additional equity and even to call performing loans, Robson said.

"If the spigot for housing production loans is cut off, there can be no housing recovery, and this has major implications for the economy as a whole," said Robson.
NAHB is calling on housing and federal financial regulators to adopt clear, concise regulatory guidance that will allow appraisers to develop realistic valuations based on sales that are truly comparable.

In neighborhoods where the comps include a large number of short sales or foreclosures, appraisers should have the option of expanding the geographic area or extending the time frame for eligible sales to get a more representative picture of the value of homes sold in the area.

"You can't compare a well-constructed new home with a foreclosed property that has been vacant for months and was probably neglected for a long time before it was vacated," said Robson. "Acting now to establish proper regulatory guidelines for those who use distressed or foreclosed properties as comps when determining home values will help to stabilize home prices and home sales and put people back to work."

Source: NAHB

NAHB Applauds Senate Confirmation of Stevens as FHA Commissioner

Monday, July 13, 2009

The National Association of Home Builders (NAHB) today applauded Senate confirmation of David Stevens as head of the Federal Housing Administration (FHA).

"During this time of market uncertainty, NAHB believes that it is essential to have a strong and experienced leader at the FHA and David Stevens is the right man for the job," said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. "His strong background in the financial services, real estate and mortgage industries makes him uniquely qualified to take on the extensive challenges facing the FHA and the housing industry. NAHB looks forward to working with Mr. Stevens and HUD in 2009 and beyond to put housing back on a growth path."

Since October 2008, Stevens served as president and chief operating officer of the Washington, D.C.-based real estate firm of Long & Foster. He joined Long & Foster in 2006 to lead the company's affiliated businesses, including its mortgage, title and insurance division.

Source: NAHB

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Fewer Than Expected File for Unemployment

Thursday, July 9, 2009

The number of Americans filing initial unemployment claims fell sharply last week, while those filing ongoing claims rose to another all-time high, according to government data released Thursday.

There were 565,000 initial jobless claims filed in the week ended July 4, down 52,000 from a revised 617,000 the previous week, the Labor Department said.

It was the lowest number since January and was below the consensus estimate of 603,000 from economists surveyed by Briefing.com.

Analysts said last week's drop was distorted by a change in the pattern of seasonal layoffs in the automotive industry.

Initial claims typically spike in July as automakers idle certain manufacturing plants, and the Labor Department adjusts its data for such seasonal factors.

However, many plant closures occurred early this year, said Mark Vitner, an economist at Wacovia Economics Group.

On a non-seasonally adjusted basis, initial claims were 577,506.

" The improvement in first week of July was exaggerated by the timing of plant closures," Vitner said. "This is something we're going to be dealing with throughout the month."

Meanwhile, the number of people requesting continued jobless benefits rose to a record high, indicating that the labor market remains weak.

The government said continuing claims rose to 6,883,000 in the week ended June 27, the most recent data available.

That's an increase of 159,000 from the previous week's revised total of 6,724,000 and was the highest reading since the Labor Department began keeping records in 1967.

The 4-week moving average of continuing claims rose 12,000 to 6,769,000.

The ongoing rise in continuing claims suggests that more workers are struggling to re-enter the work force.

" While layoffs have toped out, hiring has not picked up," Vitner said. "The increase in unemployment rate going forward will be more a result of lack of hiring rather than layoffs," he said.

Source: CNN/Money

NAHB Headquarters Garners Fifth Energy Star

Tuesday, June 30, 2009

The National Association of Home Builders (NAHB) has earned its fifth ENERGY STAR designation for the National Housing Center, the downtown Washington, D.C. office building that serves as the association's headquarters.

The designation recognizes buildings that conserve natural resources while providing a comfortable and healthy environment for employees and visitors.

Since the building was significantly expanded and renovated in 2001, the Housing Center's property manager, Transwestern, has continued to fine-tune the details of the original energy-efficient construction project. Attention to the operation and maintenance of the building is the key to holding the line on energy use and utility costs, said NAHB President and Chief Executive Officer Jerry Howard.

"We believe that it's important to make today's building stock as efficient as possible, and these improvements demonstrate how we put these values into practice," Howard said.

To earn its fifth designation, Transwestern engineers continued to install occupancy sensors in common areas so the lights turn on only when the room is in use. Low-flow aerators were installed in all restroom sinks as well as additional insulation around the perimeter of the building.

Transwestern staff also regularly inspects and maintains the heating and air conditioning equipment used in the building to optimize its performance and prolong its life, Howard said. The Housing Center's continued ENERGY STAR designations save money and energy while they also send a strong signal regarding housing industry support for voluntary energy guidelines, he added.

NAHB has also made landscaping improvements around the building, adding more plants and greenery to help absorb storm water runoff and keep it out of the city's drainage system - not an ENERGY STAR requirement, but another way to reduce the environmental impact of the National Housing Center.

"Many of our members build homes with appliances, windows and doors, and heating and cooling systems that meet the ENERGY STAR guidelines. In fact, 840,000 ENERGY STAR-rated homes have been constructed in the past 15 years," Howard noted. "These home builders' business practices show how NAHB members are at the forefront of green building - and that's reflected in how we operate our national headquarters."

A plaque recognizing the ENERGY STAR achievement has been posted near the building's entrance.

Source: NAHB

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H.R. 2998 Not the Answer to a Secure Energy Future, Says NAHB

Friday, June 26, 2009

American home buyers deserve a more equitable solution than the American Clean Energy and Security Act as Congress moves to cut our nation's energy use, says the National Association of Home Builders (NAHB).

"The hard truth is that we can't build our way out of this problem," said NAHB Chairman Joe Robson, a builder and developer in Tulsa, Okla. "We need to make sure our utilities more efficiently generate and transmit power. We need to make our existing housing stock more energy efficient. We need to reduce our 'plug load' - home appliances, televisions and computers - and make these products more energy efficient. This bill's focus on new home construction won't get us very far at all."

The House of Representatives on June 26 passed H.R. 2998, sweeping legislation that requires new homes to be built 30 percent more energy efficiently than mandated in the 2006 International Energy Conservation Code. That number increases to 50 percent by 2014 and then increases 5 percent every three years.

"That's simply too far, too fast," Robson said. "The market is not geared up to supply the necessary materials and equipment, and that's going to drive up costs. The result will be fewer working-class families in these new energy-efficient homes. They'll be relegated to older, less efficient housing stock and face ever higher utility bills."

According to the U.S. Department of Energy, homes are responsible for about 21 percent of the energy consumed each year. "Forcing more regulation on a fraction of those homes just won't move the needle," Robson said.

Nor does H.R. 2998 do much to address the more than 94 million homes built before 1991, when energy efficiency codes became the norm. The bill misses the mark because older, inefficient homes are the source of the vast majority of energy loss associated with buildings.

However, home builders and remodelers can and do play an important part in helping to reduce the nation's energy dependence, Robson pointed out. "The NAHB National Green Building Program is educating our builders and their customers and providing stringent, third-party certification for all green homes," he said. "Our members are eager to go green because that's what their customers want, and building in energy efficiency is a very important part of sustainable construction."

Robson called on Congress to create more balance in the final legislation by taking a page from solutions that already have reaped great benefits - such as this year's tax breaks for energy-efficient appliance, window and insulation purchases that can spur home owners to make needed changes to their homes. A more reasonable goal, such as a 30 percent increase in residential energy efficiency by 2012, a resolution unanimously passed by the NAHB Board of Directors, makes more sense, he said.

"This isn't about making it easier on builders. It's about coming up with a solution that makes sense and takes a balanced approach - not one that looks only to new buildings for energy reductions," Robson said. "We are at a particularly fragile point in our economic recovery, and saddling home buyers with additional costs makes it even more difficult to get a mortgage when credit is already tight.

"Let's look at ways to recover the energy lost in utility transmission. Let's incentivize innovation in renewable energy. Not only can we not afford such drastic change to new home construction, but more importantly, we cannot afford to wait for new homes to solve this problem," Robson said.

Source: NAHB

Is the Dollar Doomed?

Friday, June 26, 2009

Don't look now. But the dollar is starting to weaken again against the euro, pound and yen, leading some to wonder if its days as the world's No. 1 currency are numbered.

The euro was trading at about $1.406 on Friday morning, near a two-week high. Though the euro is still more than 10% below last summer's all time-high of $1.6037, the dollar's recent sharp slide has some concerned.

On Friday, Chinese officials reiterated calls for a so-called super-sovereign reserve currency that could supplant the dollar. China's opinion has obvious weight considering that it is the largest owner of U.S. Treasurys.

But the talk of the dollar's imminent demise appears, as Mark Twain once wrote, to be greatly exaggerated, according to some currency strategists.

"Talk of moving away from the dollar as a reserve is overblown. There will still be a lot of faith in the dollar in bad economic times," said Dan Cook, senior market analyst with IG Markets in Chicago.

"The world is still looking to the U.S. to get out of this turmoil. Most blame the U.S. for getting the world into this mess after all."

Surprisingly, continued economic weakness is probably good news for the dollar because it could lead foreign investors to rush back into the dollar as a safe haven.

Cook said that much of the rise in other currencies has been at the expense of the dollar because it showed that investors were starting to believe that the global economy was on the mend.

In other words, they didn't need the dollar anymore. But Cook said that the dollar could quickly rebound if next week's jobs report for the month of June shows a continued spike in the unemployment rate.

Even though stock market investors cheered the May job report, which showed that the pace of job losses was decelerating, Cook said that investors might not be so forgiving if the official unemployment rate inches closer to the psychologically important level of double-digit status.

The unemployment rate hit 9.4% in May and economists are forecasting a rate of 9.6% for June, according to Briefing.com.

" Next week's jobs numbers could be huge. If the numbers are worse than expected, that could lead to sustained strength for the dollar," Cook said. "Until the U.S. consumer is really back in the game, it will be difficult for a recovery to happen, especially if the unemployment rate is heading toward 10%."

Source: CNN/Money

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Retail Gas drops Every Day This Week; Oil Follows Wall Street and Falls Below $70

Friday, June 26, 2009

Retail gas prices fell every day this week, easing off their summer peak of $2.693 a gallon as U.S. storage facilities swelled with unused supplies.

At the pump, the national average for gasoline dropped less than a penny Friday to $2.658 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service.

A gallon of gas added an average of 22.4 cents in the past month as prices surged for 54 straight days. But it's still cheaper than last year, when prices spiked above $4.

Source: Associated Press

Consumer Sentiment Rises in June: Survey

Friday, June 26, 2009

U.S. consumer confidence rose in June to the highest since February 2008, as expectations grew that the worst economic recession since the Great Depression may be ending, a survey showed on Friday.

The Reuters/University of Michigan Surveys of Consumers said its final index of confidence for June was at 70.8 from 68.7 in May, equaling February 2008's reading.

This was above economists' median expectation for a reading of 69.0, according to a Reuters poll.
The index of consumer expectations edged lower, though, to 69.2 in June from 69.4 last month.

Since the November 2008 low of 55.3, the sentiment index has gained 15.5 points, recouping about one-third of the loss posted since the peak in January 2007.

" Such a sizable gain has usually indicated that an end to the economic downturn is on the horizon, as consumers begin to increase their spending on houses, vehicles, and large household durables," the Reuters/University of Michigan Surveys of Consumers said in a statement.

Source: Reuters

Economy Shrinks at 5.5% Rate

Thursday, June 25, 2009

The U.S. economy shrank at an annual pace of 5.5% in the first quarter, the government said Thursday, a slower pace of decline than previously reported but still the second largest quarterly drop in 27 years.

Economists had expected a 5.7% drop, according to a consensus estimate from Briefing.com.

The first quarter of 2009 marked the third quarter in a row that the economy contracted. It was the second worst drop in the measure since the early 1980s -- behind only the fourth quarter of 2008, when GDP plunged at an annual pace of 6.3%.

The government initially reported in April that gross domestic product -- the broadest measure of the nation's economic activity -- fell at an annual rate of 6.1% in the first quarter. In its first revision, the government said that GDP declined at an annual pace of 5.7%.

Each quarter, the government revises the GDP twice. Thursday's report marked the final revision.

Inventories, imports: The decline in GDP was less severe than initially reported because of a downward revision to imports and an upward revision to inventory investments, the Commerce Department said. If the economy is spending less on another country's goods and spending more to build its own stockpiles, then productivity is higher, working to pump up the GDP.

Imports of goods and services decreased 36.4% in the first quarter, a sharper decline than the 34.1% drop in imports that was previously reported.

Business inventories fell by $87.1 billion in the first quarter, a less severe drop off than the $91.4 billion decrease reported in the first revision. As a result, the subtraction to the annual rate of GDP growth was 2.2 percentage points, rather than 2.34. Businesses cut their inventory levels in the face of falling demand.

The drawdown in inventories will prove to be a catalyst for production in coming quarters, said John Silvia, chief economist at Wachovia. "The key going forward is that we have cleared out a lot of extra inventories."

Source: CNN/Money

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Don't Hold Your Breath: Mortgage Rates Below 5% Are Gone for Good

Thursday, June 25, 2009

Waiting for mortgage rates to once again fall below 5%? Don’t bother. Greg McBride, senior financial analyst at Bankrate.com, says those days are gone for good. But, it doesn’t mean you’ve missed your chance to act.

Last week, the average 30-year mortgage rate was still a relatively low 5.38%, according to Freddie Mac.

Also, don’t forget there’s always the risk of even higher rates in the near future. As McBride puts it, “It’s like someone sets a table in front of you with a stack of cash. You have to grab the money while it’s there.” He’s got a point. A $400,000 mortgage at 6% costs just shy of $2,400 a month. That same mortgage with 5.35% rate: $2,240 – a savings of $160 a month.

If you’re in the market to buy, prices are also in your favor. Median home values are down more than 16% compared to this time last year. Buying a house is like getting married, MacBride says, “You’ve got to be in it for the long haul and have to be ready for the financial commitment.” If you can say, “I do” on both accounts than the market may have already bottomed for you.

Source: Yahoo Finance

New-Home Sales Virtually Flat in May

Wednesday, June 24, 2009

Sales of newly built, single-family homes in May held virtually even with the previous month, declining less than one percentage point to a seasonally adjusted annual rate of 342,000 units, according to data released by the U.S. Commerce Department today.

"In the midst of the prime home buying season, builders report that a number of factors are limiting new-home sales. These include consumer concerns about job security, potential buyers' inability to sell their existing homes, and problems with appraisals coming in too low," said Joe Robson, chairman of the National Association of Home Builders (NAHB) and a home builder from Tulsa, Okla. "The latter issue is directly related to the use of distressed properties (foreclosures and short sales) as comps, which disproportionately impacts assessed values of nearby homes."

"Today's report provides further evidence that the recovery is going to be a slow one as the housing market continues to bump along, trying to find a bottom," added NAHB Chief Economist David Crowe. "The good news is that, even as the sales pace leveled in May, inventories of unsold new homes continued to shrink for a 25th consecutive month - a trend that is helping bring supply and demand into better alignment and thereby setting the stage for an eventual market recovery."

New-home sales declined 0.6 percent to a seasonally adjusted annual pace of 342,000 units in May. Meanwhile, the number of new homes for sale fell 2.3 percent to 292,000, which is a 10.2-month supply at the current sales pace.

Regionally, the decline in new-home sales was entirely focused on the South, where sales fell 8.5 percent for the month. Meanwhile, sales of new homes gained 1.3 percent in the West and posted double-digit gains of 28.6 percent and 18.6 percent in the Northeast and Midwest, respectively.

Source: NAHB

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Durable Goods Orders Up in May; New Home Sales Dip

Wednesday June 24, 2009

Orders to U.S. factories for manufactured goods from computers to aircraft surged in May for a second straight month. And a gauge of business investment rose last month by the most in nearly five years.

Together, the data Wednesday signal that the recession could be at or near a bottom.

Yet new-home sales fell unexpectedly last month. It was a reminder that any recovery in the housing market will be long and slow.

Even so, investors focused on the positive news on durable-good orders and business investment, before Federal Reserve policymakers announce their decision on interest rates Wednesday afternoon.

The Dow Jones industrial average added about 80 points in midmorning trading. Broader stock averages also surged more than 1 percent.

The Commerce Department said demand for durable goods rose 1.8 percent last month, far better than the 0.6 percent decline that economists expected. It matched the rise in April, with both months posting the best performance since December 2007, when the recession began.

Orders for non-defense capital goods, a proxy for business investment plans, jumped 4.8 percent, the biggest increase since September 2004. That could signal that businesses have stopped trimming their investment spending.

The back-to-back monthly gains in orders for durable goods -- items expected to last at least three years -- were further evidence that a dismal stretch for U.S. manufacturers may be nearing an end. But analysts say any sustained rebound is months away.

" This is a pretty good report and welcome news in the hard-pressed (capital expenditure) sector," M. Cary Leahey, an economist at New York-based consulting firm Decision Economics, wrote in a research note.
Still, new new-home sales dropped 0.6 percent in May to a seasonally adjusted annual rate of 342,000, from a downwardly revised April rate of 344,000.

Economists had expected a sales pace of 360,000 last month, according to Thomson Reuters. Sales were down nearly 33 percent from May last year.

The median sales price, $221,600, was down 3.4 percent from a year earlier but up 4.2 percent from April.

American companies have been forced to trim millions of workers as they struggle with the longest U.S. recession since World War II. U.S. businesses also have suffered from a sharp drop in exports as many overseas markets struggle with their own downturns.

Source: Associated Press

Home Sales Rise - While Prices Fall 17%

Tuesday, June 23, 2009

Existing home sales rose in May, as increasingly affordable home prices and a first-time tax credit attracted hesitant buyers.

The National Association of Realtors reported that existing home sales ticked up 2.4% last month to a seasonally adjusted annual rate of 4.77 million million units compared to the downwardly-revised rate of 4.66 million in April.

The sales missed expert forecasts of 4.82 million annual units, according to a consensus estimate of analysts compiled by Briefing.com, and are off 3.6% from the 4.95 million-unit pace 12 months ago.

The median price of homes sold in May was just $173,000, a 16.8% year-over-year drop.

Low mortgage rates and affordable home prices helped draw in hesitant buyers, said Lawrence Yun, NAR chief economist, in a prepared statement.

Yun said another likely boost was the $8,000 tax credit, which the Obama administration made available for qualified first-time home buyers.

The slight sales increase helped reduced some of the supply of homes on the market. Total housing inventory fell 3.5% to 3.8 million existing homes for sale. That's a 9.6-month supply, down from a 10.1-month supply in April.

Source: CNN/Money

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Where Housing Will Be in 2012

Friday, June 19, 2009

Home prices are likely to fall for the next year, then stabilize, with a rebound in 2012 as the overall economy takes off again.

Americans have not seen a boring housing market since the last millennium. You know -- the average, ordinary kind of market where supply just about matches demand, prices are steady, and real estate ceases to be a topic of daily conversation. Instead, we've had six years of upside craziness followed by three years of downside terror. Now we're in a tug-of-war between those who think we've finally found a bottom and those who are convinced that the overhang of unsold homes is going to push prices considerably lower.

By 2012 we may finally get back to blissful boredom. With any luck, three years should be long enough for the U.S. economy to recover and for the nation's housing inventory to shrink to more normal levels. At that point, housing will return to its old ways, with prices governed not by national mood swings and global credit crises but by local issues ranging from zoning to immigration to job growth.

Prices? While they're likely to keep falling a while longer under the weight of foreclosures, the market is definitely closer to the bottom than the top. "We expect prices to drop for another year and then stabilize before starting to rise with incomes," says Standard & Poor's Chief Economist David Wyss. Moody's Economy.com predicts the S&P/Case-Shiller U.S. National Home Price Index, maintained by data specialist Fiserv, will fall about 16% this year before regaining ground. Based on the National Association of Realtors national median home price of $180,000 for the fourth quarter of 2008, that would mean a median of $152,000 at the end of 2009 and then a rebound to $179,000 by the end of 2012.

The economy should be growing briskly again by 2012, according to Moody's Economy.com. In May the firm predicted gross domestic product would shrink 3% this year before growing 1.4% in 2010, 4.7% in 2011, and a robust 5.8% in 2012. It's also looking for home buying and building to return to their pre-bubble paces -- no higher and no lower -- by 2012.

Even if the economy performs as projected, there's still plenty that could go wrong in the housing market. Because conditions have been so unusual, "it's very hard for the model to extrapolate, based on past experiences, what's going to happen this time," says Moody's Economy.com Senior Economist Celia Chen. In a study of global real estate markets, economists Kenneth Rogoff of Harvard University and Carmen Reinhart of the University of Maryland found that home prices fall for an average of six years after a major financial crisis. That would put the U.S. bottom in 2012, or later.

Another risk is that potential buyers will stay out of the housing market, no longer trusting in home appreciation to do their saving for them. Writes David Rosenberg, the former Merrill Lynch economist who is now chief economist at Toronto-based asset management firm Gluskin Sheff & Associates: "Baby boomers are still in the discovery process on oversized real estate being more of a ball and chain than a viable retirement investment asset." Rosenberg also is concerned that an aging population won't need the kind of big houses erected during the boom. "The high end of the market will be in a bear phase," Rosenberg says in an interview.

So much has gone wrong with housing lately that it's easy to imagine worst-case scenarios. But in the more likely case, the market will fall some more, bounce off its lows, then gradually start growing.

Source: Business Week

Jobless Rate Rises in Nearly All States

Friday, June 19, 2009

Forty-eight states and the District of Columbia recorded unemployment rate increases in May, the government reported Friday. One state registered a rate decrease, and one state had no rate change.

Over the year, jobless rates were higher in all 50 states and the District of Columbia.

Michigan once again led the nation with a 14.1% jobless rate, up from 12.9% a month earlier, followed again by Oregon at 12.4%, up from 12% in April. Thirteen states have rates above 10%.

Vermont recorded no change in its rate, while Nebraska's rate declined by 0.1 percentage point to 4.4%.

Nebraska and North Dakota tied for the lowest unemployment rates in the nation.

The national unemployment rate rose to a 26-year high of 9.4% in May.

Nonfarm payroll employment decreased in 39 states and increased in 11 states and the District of Columbia in May. The largest over-the-month decrease in jobs occurred in California, followed by Florida, Texas, and Michigan.

The spike comes a month after the unemployment rate declined in 21 states in April.

Source: CNN/Money

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Mortgage Rates Decline

Thursday, June 18, 2009

Thirty-year fixed-rate mortgages (FRMs) averaged 5.38% for the week ending June 18, down from last week's average of 5.59%, according to Freddie Mac. Last year at this time, the 30-year FRM averaged 6.42%. The 15-year FRM averaged 4.89% this week, down from last week's average of 5.06%. A year ago at this time, the 15-year FRM averaged 6.02%. One-year adjustable-rate mortgages (ARMs) averaged 4.95% this week, down from last week's average of 5.04%. At this time last year, the one-year ARM averaged 5.19%.

Mortgage Applications Continue to Decline

Wednesday, June 17, 2009

The Mortgage Bankers Association's Index of Mortgage Applications was at a reading of 514 for the week ending June 12, a decrease of 15.8% from the previous week. The refinance component of the index decreased 23.3%, while the purchase component decreased 3.5%. The refinance share of mortgage activity decreased to 54.1% of total applications, from 59.4% the previous week.

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Consumer Prices Rise Less Than Expected in May

Wednesday, June 17, 2009

Consumer prices rose less than expected in May and posted the steepest annual drop in 59 years, according to government data released Wednesday, fresh evidence that the recession is keeping inflation in check.

Low prices will make it easier for the Federal Reserve at its meeting next week to keep a key short-term interest rate near zero, where it has been since December. Bond prices ticked up earlier this month on concerns that signs of an improving economy would force the Fed to raise rates later this year.

But most economists consider a rate increase unlikely until next year.

Still, as higher government spending pushes this year's deficit toward a record of nearly $1.85 trillion, many economists warn that inflation could be a threat in two to three years.

" Inflation may be coming, but it's not here yet and likely won't be for some time," Richard Moody, chief economist at Forward Capital, wrote in a note to clients.

Source: Associated Press

BMHC Files for Chapter 11

Tuesday, June 16, 2009

Boise, Idaho-based BMHC announced early Tuesday morning that it filed a plan of reorganization under Chapter 11 of the U.S. Bankruptcy Code. BMHC will reduce its outstanding funded debt, establish a new revolving credit facility and lower annual interest expenses once the plan kicks in.

In a statement released this morning, the company said it "plans to continue to operate as usual while it restructures its balance sheet and will honor all of its commitments to customers. All of the company's locations are open today and are continuing to serve customers in the normal course."

The move punctuates a difficult period for the pro dealer that seemed to rise and fall with the fate of the biggest builders. In the first quarter of 2009, the company posted a net loss of $45.2 million, compared with a $33.9 million loss in the same quarter of 2008. For all of last year, the company reported a net loss of $215 million.

The company, which ranked fifth on the 2008 Home Channel News Pro Dealer Scoreboard, closed 42 outlets and consolidated 15 locations last year. In fiscal 2008, BMHC had sales of $1.3 billion.

BMHC pointed to commitments for $80 million in debtor-in-possession financing.

The agreement with lenders, plus "the fact that our new financing is coming from existing lenders, is a sign that our business partners have confidence in our strength as a company and our long-term potential," said chairman and CEO Robert Mellor.

Source: Home Channel News

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Stock to Exit Chapter 11

Tuesday, June 16, 2009

Stock Building Supply has announced the confirmation of its Chapter 11 reorganization plan by the U.S.

Bankruptcy Court for the District of Delaware. The court order paves the way for the Raleigh, N.C.-based company to emerge from bankruptcy protection in the coming weeks, the announcement said.

The post-Chapter 11 firm will be a joint venture between The Gores Group (owning 51%) and former parent company Wolseley (a 49% stake). As part of the transaction, Gores has committed to invest $75 million in Stock and provide a $125 million revolving credit bridge facility. Stock has also arranged $100 million debtor-in-possession financing from Wolseley, but to date, this credit line has not been drawn upon.

Since Stock’s Chapter 11 filing and joint venture agreement on May 5, the company has closed more than 80 locations across the country. According to court papers, many of these involved broken leases or facilities that are now up for sale. The company has reportedly pulled out of Colorado, Wyoming, Idaho, Utah, Montana, Minnesota and Wisconsin.

“ The court’s confirmation of our plan is a major milestone in the recapitalization of our business,” said Joe Appelmann, Stock’s president and CEO. “We have taken a very hard look at our business, taking proactive steps to reshape the company and realign it with the current market reality.”

Source: Home Channel News

U.S. Housing Starts Soared in May

Tuesday, June 16, 2009

U.S. builders broke ground on more houses than forecast in May, offering a sign that the industry's slump, now in its fourth year, may be approaching an end.

The 17 percent increase in housing starts to an annual rate of 532,000 followed a 454,000 pace the prior month, the Commerce Department said today in Washington. Building permits, an indicator of future construction, also rose more than estimated.

Lower prices and tax incentives are attracting buyers, potentially laying the groundwork for housing to rebound and reduce its drag on the economy. Still, rising unemployment is causing many Americans to hold off on big purchases and foreclosures continue to mount, so a sustained homebuilding recovery may take longer to emerge, analysts say.

Its fair to say that we have found a bottom in housing, though the concern is that the bottom is at a very low level, said Zach Pandl, an economist at Nomura Securities International Inc. in New York. We have a long way to go to reach more normal levels of activity.

Housing starts were projected to rise to a 485,000 annual pace, after a previously reported 458,000 the prior month, according to the median forecast of 71 economists surveyed by Bloomberg News. Estimates ranged from 450,000 to 600,000. Permits rose 4 percent to a 518,000 pace from a 498,000 rate the previous month. They were forecast to increase to a 508,000 annual rate.

Construction of single-family homes rose 7.5 percent to a 401,000 rate, the third straight monthly gain. Work on multifamily homes, such as townhouses and apartment buildings, jumped 62 percent to an annual rate of 131,000.

Source: Bloomberg News

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FHA Issues Condo Project Approval Guidance

Monday June 15, 2009

New regulatory guidance designed to streamline the Federal Housing Administration's approval process for condominiums nationwide is expected to have an immediate impact in the state of Michigan, where single-family projects are frequently developed under a condominium structure, according to the National Association of Home Builders (NAHB).

While most of the new rules announced on June 12 by the U.S. Department of Housing and Urban Development will not take effect until October 1, a provision that eliminates the need for FHA approval of "site condominiums" that are prevalent in Michigan, but may also exist in other states, will take effect immediately, opening the door for thousands of home buyers to use low-downpayment FHA financing to purchase new single-family homes.

"With FHA loans becoming an increasingly significant share of the market, this new rule will help home builders in Michigan and other areas to sell more new homes to buyers who are having difficulty obtaining conventional financing," said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. "We are hopeful this will provide a much-needed boost to struggling housing markets such as Michigan's."

In addition, HUD's Mortgagee Letter 2009-19 authorizes certain FHA-approved lenders to review and approve condo projects internally. It also streamlines the environmental review requirement for condo projects while setting presale and owner-occupancy requirements at 50 percent.

With the economic downturn and an acute shortage of low-downpayment mortgage money, FHA has become increasingly popular among young buyers. Under the FHA program, consumers can put down as little as 3.5 percent on the purchase of their home

Source: NAHB

Builder Caution Reflects Fragile Housing Market in June

Monday June 15, 2009

Indicating that single-family home builders remain cautious and concerned about the fragile state of today's economy and housing market, the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) declined one point to 15 in June.

" The outlook for home sales has improved somewhat in recent months, due largely to implementation of the first-time home buyer tax credit and gains in housing affordability," said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. "However, looking forward, home builders are facing a few headwinds, including expiration of the tax credit at the end of November; a recent upturn in interest rates; and especially the continuing lack of credit for housing production loans."

"As expected, the housing market continues to bump along trying to find a bottom," said NAHB Chief Economist David Crowe. "Meanwhile, builders are taking their cue from consumers, who remain uncertain about the economy and their own situation. Builders are also finding it difficult to complete a sale because customers cannot sell their existing homes."

Endowment Grand Will Help Students Enter Workforce with Professional Designations

Friday, June 12, 2009

The National Housing Endowment (NHE) has awarded an $82,784 grant to the National Association of Home Builders (NAHB) and the Home Builders Institute (HBI) to create a program that will provide professional designations to students graduating with residential construction management degrees.

"Through grants such as this, the National Housing Endowment works to help the residential construction industry develop more effective approaches to home building and to ensure there is an ample and well-trained supply of future workers and leaders," said Endowment Chairman F. Gary Garczynski, 2002 NAHB president and a home builder from Woodbridge, Va.

The programs will be modeled after a 2008 joint effort with Purdue University that was created through an NHE Homebuilding Education Leadership Program (HELP) grant. NAHB and HBI worked with the university's residential construction management program faculty to integrate NAHB/ HBI course content into existing university curriculum that would then qualify participating students to earn a Certified Green Professional (CGP), Certified Aging-in-Place Specialist (CAPS), or a Residential Construction Superintendent (RCS) designation upon graduation. Eight Purdue University students are slated to earn a professional designation in 2009.

M. M. "Mike" Weiss, GMR, GMB, CAPS, ARCS, chairman of HBI and a home builder from Carmel, Ind., said, "By enabling graduates to enter the workforce with an NAHB professional designation, we are nurturing the future of our industry and providing these students with a competitive advantage for highly sought-after jobs in the housing sector."

The grant funds will be used to create a similar program at universities that offer housing industry-related degrees and maintain an active NAHB Student Chapter. They will help cover a portion of the fees for students enrolling in the program and expenses for faculty to participate in NAHB's Train the Trainer course.

"These students will improve their skills through on-the-job experience and build relationships with local home building industry professionals prior to entering the workforce," said Benjamin Graham, GMB, chair of NAHB's education committee and a home builder from Middleburg, Va. "Potential employers will also recognize their commitment to a career in the industry and to continued professional growth."

Source: NAHB

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Green Act the Right Approach for Affordable, Sustainable Homes, Says NAHB

Thursday, June 11, 2009

In testimony before Congress today, the National Association of Home Builders (NAHB) praised H.R. 2336, the GREEN Act of 2009, which sets new green building and sustainability benchmarks for properties that get financial assistance from the federal Department of Housing and Urban Development.

But NAHB President Jerry Howard also left members with a warning: H.R. 2454, the other major piece of climate change legislation now before Congress, includes requirements that conflict with H.R. 2336 - making the GREEN Act obsolete before it's even signed.

"I am hopeful that this Subcommittee will be able to restore the balance necessary to truly incentivize green building and preserve affordability as the debate over climate change continues," Howard said. "It would be terribly disappointing to see the good faith effort and collaborative work on the GREEN Act displaced with unworkable federal mandates as envisioned in H.R. 2454."

Howard told lawmakers on the House Subcommittee on Housing and Community Opportunity that the association's members agree with the bill's approach, which will ensure cost-effective energy-efficiency improvements to HUD-financed homes.

In accompanying written testimony, Howard detailed the strides NAHB members have made toward the creation of more sustainable housing stock and the education, certification and training programs the association has launched to further that growth.

"We have a major role to play in the manner in which energy efficiency and sustainable technologies are introduced into the housing stock," Howard said. "Despite the downturn, NAHB has not wavered in its commitment to promoting green building and energy efficiency in a manner that is affordable and effective, and legitimately improves energy efficiency for the next generation of housing."

Howard asked Congress to rework some sections of GREEN Act's text: It is unclear in the current draft whether new efficiency requirements apply to Federal Housing Authority-financed home purchases as well as to direct subsidy programs or competitive grants.

"The scope of the GREEN Act and the new programs that it creates is ambitious, but the intent is thoughtful and NAHB hopes that the resources will ultimately be available to develop the programs into effective tools to promote sustainable principles," he said.

Source: NAHB

Statement from NAHB Chairmant Joe Robson on Enhancing the Home Buyer Tax Credit

Thursday, June 11, 2009

The following statement was issued by Joe Robson, chairman of the National Association of Home Builders (NAHB), in regard to enhancing the home buyer tax credit:

"The National Association of Home Builders supports the Business Roundtable's efforts to promote policies that will stimulate housing demand. NAHB looks forward to working with all interested parties in the business community, on Capitol Hill and in the Obama Administration to foster new ideas and policies that will help to get housing and the economy back on track, particularly at a time when the recovery is facing a number of significant challenges.

"Due to expire at the end of November, the current $8,000 first-time home buyer tax credit has proved to be an effective policy targeted toward a specific demographic group that is showing tangible results. Enhancing this credit would help to stoke the economic engine at a key point in our recovery.

"When the debate begins in earnest, we look forward to working with Congress to consider all appropriate tax measures to restore the health of housing and the nation's economy."

Source: NAHB

Material Stops 2,000-Degree Fires -- But Not in California

Thursday, June 11, 2009

An eco-friendly building material might have saved some of the 80 homes destroyed in a recent wildfire in Southern California. But it can't be used there.

The masonry material, called autoclaved aerated concrete or AAC, can withstand a 2,000-degree fire for four hours, according to Underwriters Laboratories' test results.

" I just think the material's awesome. There's nothing like it," said Doug Edwards, an architect whose Edwards Design Group designs and builds green homes in the Scottsdale, Arizona, area. "It's the best building material in the world."

AAC is a mixture of sand, water, lime, portland cement and aluminum powder that is formed into blocks and cured in an autoclave, a sort of industrial pressure cooker. It has been used in Europe, where it was invented, for more than 70 years.

Besides being fire-resistant, AAC also deadens sound, is energy efficient, is impervious to termites, is bulletproof and waterproof, generates no waste in its creation, and can be recycled, its fans say.

A sort of concrete bread, it's full of tiny air pockets, making it one-fifth the weight of traditional concrete, which means more can be transported with less use of fuel. Workers can cut it and shape it with hand tools, and its thermal qualities significantly lower energy use, experts say.

Exton Quinn, an architect who fled her Santa Barbara, California, home as wildfires approached in early May, learned about the material at a green building seminar.

It's a natural insulator, it's completely nontoxic, it's just absolutely fabulous," she said. "And with our homes going up here, we should be building with this. ... The idea that we can't build with a fireproof material, I think, is insane."

But in California, wildfires aren't the only concern. Small earthquakes are part of daily life in many areas, and stronger ones occur fairly frequently. And that's the regulators' problem with AAC.

" Autoclaved aerated concrete cannot be used to resist seismic forces because it has not been seismically tested," said David Walls, executive director of the California Building Standards Commission in Sacramento. The restriction is based on guidelines from the National Earthquake Hazards Reduction Program, he said.

The next International Building Code, slated to take effect in 2011, will permit use of AAC in more places that have minimal seismic activity, Walls said. But even under those somewhat relaxed standards, most of California would not qualify, he added.

Advocates for the product say California's qualms are baseless -- and political.

" We've done all the testing, and the testing showed the material works fine in any seismic area," said Felipe Babbitt, a Mesa, Arizona, engineer who helped develop code standards for AAC block. "It has not been approved by California not because it can't perform, but because they have not done a thorough review of the testing data and are not convinced that it performs."

California's standards are no different from those of other states, Walls insisted.

" We base ours off the national model code. For the most part, for private buildings in California, we do not add any extra stuff," he said. "So it would be strictly based on what is the national standard."

That's not entirely true, Babbitt said.

California is the only state that adopted the 2006 International Building Code without the companion housing code that includes acceptance of AAC in seismic areas, he said. The two documents were meant to be applied in tandem, he said.

" A lot of it's politics," Babbitt said. "Everybody's protecting their own interests. You've got the wood industry protecting theirs, you've got the steel protecting theirs, and the AAC is just going up against all these people."

The AAC industry hasn't been around long enough yet to earn its place in the code, he said. Wood, on the other hand, faces no challenge despite its obvious vulnerability to wind, fire, flood, pests, mold and earthquakes, he said.

" Each state has different code adoption laws and processes," Walls responded by e-mail. "I cannot explain what or why any other state makes their choices. I can tell you that California has never adopted a residential code."

Source: CNN

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Statement from NAHB Chairman Joe Robson on Enhancing the Home Buyer Tax Credit

Thursday, June 11, 2009

The following statement was issued by Joe Robson, chairman of the National Association of Home Builders (NAHB), in regard to enhancing the home buyer tax credit:

"The National Association of Home Builders supports the Business Roundtable's efforts to promote policies that will stimulate housing demand. NAHB looks forward to working with all interested parties in the business community, on Capitol Hill and in the Obama Administration to foster new ideas and policies that will help to get housing and the economy back on track, particularly at a time when the recovery is facing a number of significant challenges.

"Due to expire at the end of November, the current $8,000 first-time home buyer tax credit has proved to be an effective policy targeted toward a specific demographic group that is showing tangible results. Enhancing this credit would help to stoke the economic engine at a key point in our recovery.

"When the debate begins in earnest, we look forward to working with Congress to consider all appropriate tax measures to restore the health of housing and the nation's economy."

Source: NAHB

Green Act the Right Approach for Affordable. Sustainable Homes, Says NAHB

Thursday, June 11, 2009

In testimony before Congress today, the National Association of Home Builders (NAHB) praised H.R. 2336, the GREEN Act of 2009, which sets new green building and sustainability benchmarks for properties that get financial assistance from the federal Department of Housing and Urban Development.

But NAHB President Jerry Howard also left members with a warning: H.R. 2454, the other major piece of climate change legislation now before Congress, includes requirements that conflict with H.R. 2336 - making the GREEN Act obsolete before it's even signed.

"I am hopeful that this Subcommittee will be able to restore the balance necessary to truly incentivize green building and preserve affordability as the debate over climate change continues," Howard said. "It would be terribly disappointing to see the good faith effort and collaborative work on the GREEN Act displaced with unworkable federal mandates as envisioned in H.R. 2454."

Howard told lawmakers on the House Subcommittee on Housing and Community Opportunity that the association's members agree with the bill's approach, which will ensure cost-effective energy-efficiency improvements to HUD-financed homes.

In accompanying written testimony, Howard detailed the strides NAHB members have made toward the creation of more sustainable housing stock and the education, certification and training programs the association has launched to further that growth.

"We have a major role to play in the manner in which energy efficiency and sustainable technologies are introduced into the housing stock," Howard said. "Despite the downturn, NAHB has not wavered in its commitment to promoting green building and energy efficiency in a manner that is affordable and effective, and legitimately improves energy efficiency for the next generation of housing."

Howard asked Congress to rework some sections of GREEN Act's text: It is unclear in the current draft whether new efficiency requirements apply to Federal Housing Authority-financed home purchases as well as to direct subsidy programs or competitive grants.

"The scope of the GREEN Act and the new programs that it creates is ambitious, but the intent is thoughtful and NAHB hopes that the resources will ultimately be available to develop the programs into effective tools to promote sustainable principles," he said.

Source: NAHB

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FHA Tax Credit Monetization Helps Home Buyers With Upfront Costs

Tuesday June 9, 2009

First-time home buyers who would otherwise qualify for the $8,000 tax credit, but don't have the money for a down payment or closing fees, may now be able to get a loan to help cover those upfront costs.

The U.S. Department of Housing and Urban Development (HUD) announced on May 29 that the Federal Housing Administration (FHA) will allow state housing finance agencies to provide second mortgages "monetizing" the tax credit so that borrowers can use the funds toward their down payments and closing costs for the purchase of homes with FHA-insured mortgage loans.

"This is great news for thousands of families who want to take advantage of today's low interest rates, competitive prices, great selection and the federal tax credit that is only available until Nov. 30, but could not save enough money for a down payment and closing costs," said National Association of Home Builders Chairman Joe Robson, a home builder from Tulsa, Okla.

HUD also announced that FHA-approved lenders may purchase the tax credit from the home buyer in advance, so that the home buyer can use the funds for closing costs or to make a down payment in addition to the 3.5 percent minimum. Home buyers who go directly to FHA-approved lenders will still need to come up with the 3.5 percent minimum down payment that is required for an FHA-insured loan.

Home buyers previously would be able to use the funds from the tax credit only after filing their federal tax returns and had to come up with the pre-purchase costs on their own.

NAHB estimates that 40,000 more homes will be purchased due to the new FHA monetization program, in addition to the 160,000 sales already expected as a result of the tax credit.

Source: NAHB

Builders Serving Active Adult Home Buyer Market See More Consumer Interest

Thursday, June 4, 2009

Builders of single-family housing for the active adult home buyer market reported an increase in traffic of prospective buyers during the first quarter of this year, according to the 55+ Housing Market Index (55+ HMI) released today by the National Association of Home Builders (NAHB). The component measuring traffic rose to 14, up from nine in the last quarter. The reported sales component, however, dropped five index points to 12 from the previous quarter's 17. The drop in the reported sales component pushed the overall 55+ HMI down from 16 to 14.

"A strong and growing number of retirees and empty-nest households are interested in either downsizing or moving to a more user-friendly home - especially if it's near their existing community," said David Crowe, NAHB's chief economist. "But the current market still presents significant obstacles to homeowners who need to sell an existing home before buying a more appropriate one. That situation is holding many mature consumers back from moving."

Source: NAHB

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Job Losses Slow Dramatically

Friday, June 5, 2009

Job losses slowed dramatically in May, according to the latest government reading on the battered labor market, even as the unemployment rate rose to a 26-year high. But some experts cautioned that the job market remains weak.

Employers cut 345,000 jobs from their payrolls in the month, down from the revised decline of 504,000 jobs in April.

This was the fewest jobs lost in a month since last September, when the bankruptcy of Lehman Brothers caused a crisis in U.S. financial markets and choked off credit for many businesses. Economists surveyed by Briefing.com had forecast a loss of 520,000 jobs in May.

There were still widespread job losses, as most sectors of the economy, including manufacturing, construction, retail, and business and professional services posted declines in jobs.

But there were also some signs of growth, notably in education and health services, as well as the leisure and hospitality sector. Nearly one third of industries added jobs during the month, the highest level of gains since last October.

Still, the unemployment rate rose to 9.4% from 8.9% in April. Economists expected unemployment would increase to 9.2%.

Strangely enough, economists said the rise in unemployment is partly a sign of an improved jobs outlook. That's because people who had stopped looking for work started looking once again, and thus were classified as unemployed rather than "not in the labor force" - which is how the Labor Department counts most discouraged workers.

" As conditions improve more people flock to the labor market," said Robert Brusca of FAO Economics. He believes the economy is poised to start adding jobs before the end of this year.

" Jobs are doing what they do at the end of recessions and in early recoveries," he said. "No one can be optimistic enough to catch the turn when it comes."

But other economists cautioned that even though it was a better-than-expected jobs report, there are still signs of weakness.

Kurt Karl, chief economist at Swiss Re, said he doesn't expect a monthly gain in jobs until at least the middle of 2010. With employers still cutting jobs and hours, he said consumers won't have enough money to spur an economic recovery in the near term.

" I think things are turning for the better. But it's a disappointingly slow turn," he said. "Consumers can't consume more with this kind of picture."

Karl pointed out that the loss of 345,000 jobs in a month was worse than any one-month drop in the previous three recessions. There have now been 6 million jobs lost since the start of 2008, with nearly half of them occurring in the first five months of this year.

" That 345,000, while an improvement, is still a lot of jobs," he said. "We're not out of the woods yet."

Source: CNN/Money

Bolstering GSE's Key to Future of Nation's Housing Finance System

Thursday, June 4, 2009

In contemplating the future status of housing government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, the National Association of Home Builders (NAHB) yesterday told Congress it is critical for the federal government to provide a backstop to the housing finance system to ensure a reliable and adequate flow of affordable housing credit.

Testifying before the House Subcommittee on Capital Markets, Insurance and Government-Sponsored Enterprises, NAHB Chairman Joe Robson, a home builder from Tulsa, Okla., said that NAHB supports changes to the structure and operations of Fannie Mae and Freddie Mac to enable them to support mortgage market liquidity and address affordable housing finance needs without creating excessive taxpayer risk.

"NAHB believes that the federal backstop must be a permanent fixture in order to ensure a consistent supply of mortgage liquidity, as well as to allow rapid and effective responses to market dislocations and crises. It has been clearly demonstrated that the private sector, unaided, is not capable of consistently fulfilling this role," said Robson.

"Fannie Mae and Freddie Mac should be recast, retaining federal backing but limited primarily to providing credit enhancement of mortgage-backed securities," he added. "Limited portfolio capacity should be permitted to accommodate mortgages and housing-related investments that do not have a secondary market outlet, although Fannie Mae and Freddie Mac should have the flexibility to support the mortgage market in times of crisis, such as the conditions we are currently experiencing."

NAHB outlined several principles for federal government support and structure of the housing finance system:

- The federal government must provide a permanent backstop to the housing finance system in order to ensure available and affordable mortgage credit in all geographic areas and under all economic circumstances.

- Secondary market entities (Fannie Mae, Freddie Mac and the Federal Home Loan Banks) should retain sufficient federal backing to allow them to reduce mortgage rates and fees.

- Fannie Mae and Freddie Mac should focus on the core business of securitizing mortgages and limited portfolio capacity should be permitted to accommodate mortgage and housing-related investments that do not have a secondary market outlet, including acquisition, development and construction (AD&C) loans.

- Fannie Mae and Freddie Mac must have the authority and ability to provide reliable liquidity to the mortgage markets during times of stress, which requires flexibility in terms of portfolio composition and size over the mortgage credit cycle, or with changing conditions in the secondary mortgage markets.

- Secondary market entities must be adequately capitalized.

- The secondary market must have a private sector component with risk shared by participants/shareholders, with governance by a board that includes public interest, housing industry and shareholder representatives.

- Flexibility in pursuing new mortgage programs and products should be balanced with accountability and safety and soundness.

Robson stressed that these changes should not proceed until the current financial turmoil passes and the markets return to more normal conditions.

Source: NAHB

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Pending Home Sales Rise 6.7 Percent in April

Tuesday, June 2, 2009

The number of U.S. homebuyers who agreed to purchase a previously occupied home in April posted the largest monthly jump in nearly eight years, a sign that sales are finally coming to life after a long and painful slump.

The National Association of Realtors said Tuesday its seasonally adjusted index of sales contracts signed in April surged 6.7 percent to 90.3, far exceeding analysts' forecasts. It was the biggest monthly jump since October 2001, when pending sales rose 9.2 percent.

Economists were encouraged by the report, and stock indexes advanced modestly.

" This is yet another positive indication that the bottoming process is forming," Jennifer Lee, an economist at BMO Capital Markets, wrote in a note to clients. "Now if only prices would stabilize."
Economists surveyed by Thomson Reuters expected the index would edge up to 85 from a reading of 84.6 in March. Typically there is a one- to two-month lag between a contract and a done deal, so the index is a barometer for future existing home sales.

In early trading, the Dow Jones industrial average added about 20 points to 8,741, and at times traded above 8,776.39, its finish for 2008.

Still, some economists wonder whether rising mortgage rates will dampen home sales. Nationwide average rates for 30-year-fixed rate mortgages are around 5.3 percent this week compared with about 5 percent a week earlier, according to Bankrate.com.

And analysts cautioned prices will take longer to stabilize, because of the glut of unsold properties on the market.

" Even if sales volumes rebound, home prices will keep falling under the weight of the massive inventory overhang," wrote Ian Shepherdson, chief U.S. economist at High Frequency Economics.
The Realtors' index was 3.2 percent above last year's levels and has risen for three straight months after hitting a record low in January. A nearly 33 percent sales increase in the Northeast and a 9.8 percent jump in the Midwest led the overall surge. Sales contracts rose 1.8 percent in April from a month earlier in the West, but fell 0.2 percent in the South.

The big boost likely reflects the impact of a new $8,000 tax credit for first-time homebuyers that was included in the economic stimulus bill signed by President Barack Obama in February. Since buyers need to finish their purchases by Nov. 30 to claim the credit, "we expect greater activity in the months ahead," Lawrence Yun, the Realtors' chief economist, said in a statement.

Source: Associated Press

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US Consumer Spending Dips; Savings Rate Surges

Monday, June 1, 2009

Frugal U.S. consumers trimmed spending in April -- although by less than expected -- as rising unemployment kept pocketbooks in check and motivated Americans to save.

With income growth far outpacing spending, Americans' personal savings rate zoomed to 5.7 percent, the highest since February 1995, the Commerce Department reported Monday.

Consumer spending dipped 0.1 percent in April. That was slightly less than the 0.2 percent reduction economists were expecting, although it marked the second straight month that consumers cut back. The pullback came after a burst of buying at the start of the year as shoppers took advantage of deeply discounted merchandise and other promotion.

Americans' incomes -- the fuel for future spending -- jumped by 0.5 percent, following two straight months of declines. The improvement in April was due to tax cuts and benefit payments flowing from President Barack Obama's stimulus package, the government noted. Wages and salaries, however, were flat in April.

Source: Associated Press

Hud Secretary Donovan Unveils Details of Plan to Monetize Home Buyer Tax Credit

Friday, May 29, 2009

In a speech before the National Association of Home Builders (NAHB) Board of Directors, HUD Secretary Shaun Donovan today unveiled new rules that will help spur the housing market by allowing consumers to use the $8,000 first-time home buyer tax credit to help cover the costs of closing on an FHA-insured home.

"We believe this is a real win for everyone," said Donovan. "Today, the Obama Administration is taking another important step toward accelerating the recovery of the nation's housing market. Families will now be able to apply their anticipated tax credit toward their home purchase right away."

" With the spring home buying season in full bloom, Secretary Donovan's move to enable buyers to access the tax credit at the time of closing could not have come at a better time," said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. "This new rule will further encourage state housing finance agencies to develop programs to monetize the tax credit."

Source: NAHB

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April New US Home Sales Inch Upward

Thursday May 28, 2009

Sales of newly built U.S. homes were flat in April, but are now 7 percent above the rock-bottom lows of January, another indication the three-year housing downturn could be ending.

The Commerce Department said Thursday that sales rose 0.3 percent in April to a seasonally adjusted annual rate of 352,000. But the increase came from a downwardly revised rate of 351,000 in March.

" It's still tough to be a builder," wrote economist Joel Naroff of Naroff Economic Advisors. "New home sales remain near the bottom."

The median sales price fell to $209,700, down almost 15 percent drop from a year earlier, but up nearly 4 percent from March. Prices are likely to remain weak for months as builders try to price their stock of unsold homes against bargain-priced foreclosures.

There were 297,000 new homes for sale at the end of April, down 4 percent from 310,000 in March and the lowest number of properties on the market in nearly eight years. At the current sluggish sales pace, it would take more than 10 months to exhaust the supply of new homes on the market.

" We aren't seeing a huge upswing in market conditions, but we aren't seeing things fall apart again, either," wrote Mike Larson, real estate analyst at Weiss Research.

But the competition from foreclosures continues unabated.

A record 12 percent of homeowners with a mortgage are behind on their payments or in foreclosure as the housing crisis spreads to borrowers with good credit, the Mortgage Bankers Association said Thursday.

The foreclosure rate on prime fixed-rate loans doubled in the last year, and now represents the largest share of new foreclosures.

The pain, however, is spreading throughout the U.S. as job losses take their toll. The number of newly laid off people requesting jobless benefits fell last week, the government said Thursday, but the number of people receiving unemployment benefits was the highest on record. These borrowers are harder for lenders to help with loan modifications.

Source: Associated Press

New-Home Inventories Continue Shrinking in April

Thu