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NAHB Reminds Home Buyers: Tax Credit Expiring Soon

Thursday, March 4, 2010

The National Association of Home Builders (NAHB) wants potential home buyers to be aware that they still have the opportunity to take advantage of the $8,000 first-time home buyer or $6,500 repeat buyer tax credits, as long as they act quickly--the credits expire on April 30, 2010.

"It's not too late to take advantage of the home buyer tax credit," said NAHB Chairman Bob Jones, a builder and developer in Bloomfield Hills, Mich. "There are plenty of existing homes on the market, and even though the move-in ready newly constructed homes inventory has dwindled, builders may still be able finish a home in time."

The IRS provides an additional two months beyond the deadline to close the deal. Buyers who sign a sales contract by the April 30 deadline are still eligible if they close the sale of the home by June 30, 2010.

More people than ever before are eligible for a home buyer tax credit, NAHB estimates that close to 70 percent of all potential buyers should qualify for some form of a credit.

"First-time" buyers don't have to be buying their first home ever; they are defined by the IRS as those who have not owned a principal residence in the past three years. Repeat buyers may be eligible for a new $6,500 credit, as long as they have owned and lived in their current home at least five consecutive out of the past eight years.

The current credits also increase the income limits, enabling single taxpayers with incomes up to $125,000 and married couples earning up to $225,000 to potentially qualify for a full credit.

Source: NAHB

Economy Sheds 36,000 Jobs, Weather Impact Unclear

Friday, March 5, 2010

U.S. employers cut a smaller than expected 36,000 jobs in February, leaving the unemployment rate steady at 9.7 percent, bolstering views the labor market was on the brink of creating jobs.

The Labor Department said on Friday it was unclear how the severe snowstorms, which hit much of the country last month, had impacted payrolls. Jobs losses for December and January were revised to show 35,000 fewer jobs lost than previously reported.

Analysts polled by Reuters had expected non-farm payrolls to drop 50,000 last month and the unemployment rate to edge up to 9.8 percent. The median forecast from the 20 most accurate forecasters also saw payrolls falling by 50,000, while the 10 most accurate economists predicted a 70,000 decline.

" This is encouraging news, indicating the recovery is still on track," said Gary Thayer, chief macrostrategist at Wells Fargo Advisors in St. Louis.

U.S. stock index futures rallied, while yields on government debt rose. The U.S. dollar rose against the euro
Traders bet the stronger-than-expected number might encourage the Federal Reserve to begin lifting short term interest rates from near zero later this year. Trading in U.S. short-term interest rate futures after the data was published showed investors thought the central bank would hike its benchmark interest rate by November.

" The emergency interest rate level is no longer warranted either for the markets or the economy," said Chris Rupkey, an economist at Bank of Tokyo-Mitsubishi in New York.

" The Fed is going to take out the scissors to its press statement. They will no longer be telling the global markets on March 16 that exceptionally low rates are needed for an extended period," he added, referring to the Fed's next policy-setting meeting.

Half of the job losses came from government workers, but that category is expected to see huge gains in the coming months as more workers are hired for the once-a-decade U.S. census. In February, 15,000 temporary census workers were hired.

Source: Reuters

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Poll Shows Strong Support for Government Housing Initiatives

Monday, March 1, 2010

Americans remain strongly committed to federal support for home buyers, according to a recent survey of U.S. households.

Roughly 68 percent of those polled said the government should continue to support housing, and
65 percent believe the government should be doing more to keep families from losing their homes to foreclosure.

The poll included both home owners and renters and was conducted for the National Association of Home Builders (NAHB) by RT Strategies, a non-partisan public opinion polling firm based in Washington, D.C. RT Strategies interviewed a representative sample of 1,000 adults nationwide by telephone using live interviewers on January 29-31, 2010. The sample included 170 interviews with respondents from cell-phone-only households.

Among those polled, some key groups said the government should continue to play a vital role in maintaining a healthy housing market. For example, 78 percent of all potential home buyers, including 81 percent of renters intending to buy a home in the near future, said the government should continue to support housing.

Roughly 65 percent of home owners said the government also needs to do more to keep families from losing their homes. Support for more foreclosure protection was not confined merely to current home owners. Among renters, 84 percent said the government needs to do more to helped strapped borrowers. This issue is particularly important to women, with 71 percent supporting greater foreclosure protection, compared to 58 percent of men.

Keeping families in their homes is also particularly important to first-time home buyers, as 78 percent of young adults under age 30 support greater foreclosure protection. And 69 percent of adults who are 30 to 44, the prime age range for move-up buyers, said they support more foreclosure protection.

Overall, roughly two-in-three respondents said they own their home. Among renters, about two-in-three intend to buy a home in the near future. In addition, 15 percent of current home owners intend to buy a home in the near future.

The poll asked respondents for their views regarding the Worker, Homeownership, and Business Assistance Act of 2009 that extended a tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence. The legislation, which was signed into law by President Obama in November 2009, also authorized a tax credit of up to $6,500 for qualified repeat home buyers.

Overall, 8 percent of those surveyed said they intend to take advantage of that credit, while another 24 percent who might have been interested in using the tax credit said they cannot afford to purchase a home at this time. Of the 33 percent of respondents who said they are planning to buy a home (both renters and current home owners), roughly 17 percent said they intend to use the tax credit.

Financial concerns continue to be the greatest barrier to growth in the housing market. Among renters nationwide who aspire to own their own home, 39 percent simply don't have the money to buy a home at this time, and another 20 percent said the primary obstacle is that they feel they cannot qualify for a loan. Larger economic issues also play a role, as 18 percent said that job security is the greatest obstacle they face in trying to buy a home.

Weakness in the housing market itself may be blocking some home owners who would like to buy a new home, as 29 percent of current home owners said their greatest obstacle to purchasing another home is their inability to sell their current home. Beyond that, among current home owners who aspire to buy a new home, 7 percent feel trapped by a mortgage that exceeds the value of their current home, 14 percent fear that the value of a new home might fall after they make the investment, and 13 percent say home prices are just too high to allow them to buy a new home at this time.

Even amid a housing market downturn, 40 percent of respondents said their home is their most valuable investment, twice the number who cite any other single investment - 401k accounts, savings accounts and CDs, stocks and bonds, or mutual funds - as their leading family investment.

Source: NAHB

New-Homes Sales Decline in January

Wednesday, February 24, 2010

Sales of newly built, single-family homes declined 11.2 percent in January to a seasonally adjusted annual rate of 309,000 units, the slowest pace on record, according to figures released by the U.S. Commerce Department today.

"This disappointing report highlights just how fragile the economic and housing recovery is right now, and the uncertainties that continue to weigh on consumers, particularly with regard to concerns about job security," said Bob Jones, chairman of the National Association of Home Builders (NAHB) and a home builder from Bloomfield Hills, Mich. "Even with today's exceptionally favorable home buying conditions - including low interest rates, stabilizing house prices and the availability of home buyer tax credits - many consumers simply weren't confident enough to go forward with a new-home purchase in the beginning of this year."

"While the overall economic picture has brightened somewhat, these numbers indicate that the road to a housing and economic recovery remains very uncertain. Many Americans have yet to see much evidence of improvement first-hand, and are therefore reluctant to consider a home purchase," noted NAHB Chief Economist David Crowe. "Meanwhile, competition from below-market-priced foreclosed and short-sale homes poses an additional challenge to the new-homes market right now. Although we continue to expect a boost in overall sales activity prior to the expiration of the $8,000 and $6,500 home buyer tax credits at the end of April, unseasonably poor weather across much of the country may delay the full impact of those incentives until closer to the deadline."

The Midwest was the only region of the country to register an increase in new-home sales this January, posting a 2.1 percent gain from an abnormally low December rate. The Northeast and West posted double-digit declines, of 35.1 percent and 11.9 percent, respectively, and the South posted a 9.5 percent decline.

While the overall number of new homes on the market remained virtually unchanged in January, at 234,000 units, the month's supply rose to 9.1 from 8.0 in the previous month due to January's slower sales pace.

Source: NAHB

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Home Prices Seen Stabilizing, Sales Rising

Monday, February 22, 2010

* The median forecast is for the S&P composite index of 20 metropolitan areas to be unchanged in December from November, non-seasonally adjusted, and down 3.2 percent from December 2008. This would follow a 0.2 percent November monthly decline and 5.3 percent annual drop.

* The median forecast is for a rise of about 5.3 percent in January new home sales to 360,000 annual units, following a 7.6 percent drop to 342,000 units in December.

* The median forecast is for a 1 percent rise in January existing home sales to 5.50 million units, after a 16.7 percent plunge in December

U.S. home prices probably stagnated in December, with the S&P/Case-Shiller 20-city index showing no change after a 0.2 percent November decline and a total average price plunge of about 30 percent from 2006 peaks.

The rate of annual decline also continued to improve, based on the median forecast in a Reuters poll, with a 3.2 percent drop expected to follow the 5.3 percent downturn in November.

Economists in a separate Reuters housing poll last week said the bottom had probably been reached but prices were unlikely to gain this year. The 20-city index would be unchanged in 2010 before rising 2 percent next year, the poll found.

But even stability is welcome after prices tumbled for more than three years, helping send the U.S. housing market into freefall and the economy into recession.

Housing is gaining some traction on the back of massive government aid, including buyer tax incentives that are set to end this spring.

Source: Reuters

Housing Construction Up 2.8 Percent in January

Wednesday February 17, 2010

Housing construction posted a better-than-expected increase in January which pushed activity to the highest level in six months. The solid gain raised hopes that the construction industry is beginning to mount a sustained rebound from its worst slump in decades.

The Commerce Department said Wednesday that construction of new homes and apartments rose 2.8 percent last month to a seasonally adjusted annual rate of 591,000 units. That was better than the 580,000 annual pace that economists were forecasting.

Applications for building permits, considered a good barometer of future activity, fell 4.9 percent to a rate of 621,000, but that was after two months of large increases.

In another sign of strength, Wednesday's report revised up activity in December to show builders were starting construction at an annual pace of 575,000 units during that month, much stronger than the 557,000 originally reported. Even with the upward revision, activity fell a slight 0.7 percent in December, a dip that was blamed on severe weather in many parts of the country that depressed construction activity.

Economists are hoping that housing is beginning to recover and a rebound in this area will help support the economy as it struggles to mount a sustained recovery from the deepest recession since the 1930s.

In a separate report suggesting strength, the Federal Reserve said industrial production rose 0.9 percent in January, the seventh consecutive monthly increase.

January's numbers rose in all three major categories: manufacturing, mining and energy utilities. That is the first such show of strength since August 2009.

Manufacturing rose 1.0 percent, while mining and utilities each gained 0.7 percent, the report said.
In the housing report, the strength last month was led by a 10 percent jump in activity in the Northeast and an 8.9 percent increase in the West. Construction was up a smaller 1 percent in the South and 3.2 percent in the Midwest.

The strength in January pushed construction activity up by 21.1 percent from the pace in January 2009. Last month's building rate the fastest pace since July.

Construction of single-family homes rose by 1.5 percent to a seasonally adjusted annual rate of 484,000 units while construction of multi-family units increased 9.2 percent to an annual rate of 107,000 units.

The National Association of Home Builders said Tuesday that its housing market index rose by two points to 17 in February after having fallen for two consecutive months.

That increase in sentiment was likely influenced by a number of favorable developments including a report earlier this month that the nation's unemployment rate fell in January to 9.7 percent, still high, but lower than the 10 percent of the previous month.

Source: Associated Press

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Fannie, Freddie Regulator Pitches New Housing Goals

Wednesday, February 17, 2010

The federal regulator of Fannie Mae and Freddie Mac on Wednesday proposed an overhaul of rules governing how the mortgage funding giants serve low-income homeowners while limiting their risks. The Federal Housing Finance Agency for 2010 and 2011 said it is planning goals for single-family home purchases for low income families, very low-income families and families in low-income, high minority and disaster areas.

But in a twist from past practices, the rules would prohibit Fannie Mae and Freddie Mac -- the two biggest sources of U.S. housing finance -- from using investments in Wall Street's mortgage securities to satisfy the goals.

Fannie Mae (FNM.N) and Freddie Mac (FRE.N) had aggressively purchased the so-called "private-label" securities to help fulfill government goals as Wall Street underwriters took a larger share of the U.S. mortgage business. Those mortgages contained subprime and other risky loans where rising delinquencies have triggered billions of dollars in losses.

The companies during the housing boom had to stretch to meet affordable housing goals, which lowered their standards, James Lockhart, the former head of the FHFA, said this month. Fannie Mae and Freddie Mac executives were also pushed to be more aggressive by equity investors, without any checks from debt holders who felt protected by an implicit government guarantee, he said.

The government seized control of Fannie Mae and Freddie Mac in September 2008 after losses threatened the companies' ability to stabilize a faltering housing market. Since then, the companies have required some $111 billion in support from the U.S. Treasury and have said they would need more as they administer government foreclosure prevention efforts. "FHFA does not intend for the enterprises to undertake uneconomic or high-risk activities in support of the goals, nor does it intend for the enterprises' state of conservatorship to be a justification for withdrawing support from these market segments," the FHFA said in a statement.

Affordable housing goals were previously set by the U.S. Department of Housing and Urban Development.

In addition to "benchmark" goals, Fannie Mae and Freddie Mac may also use a "market-based alternative" measure to meet their goals, the FHFA said.

Lockhart made his comments at a meeting of the American Securitization Forum in Washington, where investors and Wall Street dealers were discussing ways to restart the private mortgage bond market. More private credit is key to supporting housing as the government weans markets from its emergency supports, analysts said.

Source: Reuters

Housing Affordability Hovers Near Record-High Level for Fourth Consecutive Quarter as Economy Begins to Rebound

Wednesday February 17, 2010

Nationwide housing affordability, bolstered by favorable interest rates and low house prices, closed out the year 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 70.8 percent of all new and existing homes sold in the final quarter of 2009 were affordable to families earning the national median income of $64,000, slightly higher than the previous quarter and near the record-high 72.5 percent set during the first quarter of 2009. Affordability during the final quarter of the year was up from 62.4 percent during the fourth quarter of 2008.

"Favorable mortgage rates and sliding house prices that have now started to stabilize nationally have both contributed to a record year for housing affordability in 2009," said NAHB Chairman Bob Jones, a home builder from Bloomfield Hills, Mich. "With interest rates still hovering at low levels and the economy beginning to rebound, the federal housing tax credit will encourage even more first-time and repeat home buyers to enter the market and help further stabilize housing and the economy by creating new jobs, stimulating home sales and reducing foreclosures."

Indianapolis again was the most affordable major housing market in the country during the fourth quarter, a position the metro area now has held for four and a half years. More than 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 Detroit-Livonia-Dearborn, Mich.; Dayton, Ohio; Youngstown-Warren-Boardman, Ohio-Pa.; and Akron, Ohio.

Five smaller housing markets posted even higher affordability scores than Indianapolis, with Kokomo, Ind., which historically has had a favorable income-to-house price ratio, outscoring all others. In Kokomo, 98 percent of homes sold during the fourth quarter of 2009 were affordable to median-income earners. Other smaller housing markets near the top of the index included Monroe, Mich.; Flint, Mich.; Lima, Ohio; and Bay City, Mich., respectively.

New York-White Plains-Wayne, N.Y.-N.J., continued to lead the nation as its least affordable major housing market during the fourth quarter of 2009. The New York metro area has occupied this position for seven consecutive quarters. Slightly less than 20 percent of all homes sold during the final quarter of 2009 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 Los Angeles-Long Beach-Redwood City, Calif.

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

Source: NAHB

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Builder Confidence Improves in February

Tuesday, February 16, 2010

Builder confidence in the market for newly built, single-family homes rose two points to 17 in February as favorable home buying conditions and signs of healing in the job market helped boost the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today.

" Continued low interest rates, very attractive home prices that appear to have stabilized in many markets, and the availability of the home buyer tax credit make this an opportune time for potential purchasers," said NAHB Chairman Bob Jones, a home builder from Bloomfield Hills, Mich. "As a result, builders are slightly more optimistic that the housing recovery is finally beginning to take root."

" Builders are just beginning to see the anticipated effects of the home buyer tax credit on consumer demand," said NAHB Chief Economist David Crowe. "Meanwhile, another source of encouragement is the improving employment market, which is key to any sustainable economic or housing recovery. That said, several limiting factors are still weighing down builder expectations, including the large number of foreclosed homes on the market, the lack of available credit for new and existing projects, and inappropriately low appraisals tied to the use of distressed properties as comps."

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.

Source: NAHB

Remodeling Market Continues to Deteriorate Under Strained Economy

Wednesday, February 10, 2010

Market conditions for residential remodeling tumbled downward during the fourth quarter of 2009, according to the latest National Association of Home Builders' (NAHB) Remodeling Market Index (RMI). The current market conditions index fell to 36.4 from 39.8 in the third quarter. The index of future indicators dropped to 31.4 from 38.7 in the previous quarter.

The RMI measures remodeler perceptions of market demand for current and future residential remodeling projects. Any number below 50 indicates that more remodelers say market conditions are getting worse than report improving conditions. The RMI has been running below 50 since the final quarter of 2005.

"We're hearing many remodelers have laid off workers because they have no jobs coming in and are struggling to survive," said NAHB Remodelers Chairman Donna Shirey, CGR, CAPS, CGP, a remodeler from Issaquah, Wash. "Remodelers are pounding the pavement to find work and stay open, including taking on smaller jobs and competing with unqualified contractors."

The index for current remodeling market conditions slumped in the Northeast to 27.7 (from 33.7 in the third quarter), descended in the Midwest to 37.5 (from 43.2) and decreased in the West to 41.7 (from 47.3). In the South, the current index rose slightly to 40 (from 38.6). Major additions declined to 40 (from 41.9), and minor additions also fell to 40.7 (from 43.2). Maintenance and repair plunged to 27.1 (from 33.1).

Summary indices for future market indicators exhibit bleak expectations for the remodeling market. Calls for bids dropped to 37.5 (from 46.5 in the third quarter) and appointments for proposals slid to 34.4 (from 43.5). The backlog of jobs reduced to 31.9 (from 37.2) and the amount of work committed for the next three months fell to 21.9 (from 27.5).

"Although earlier quarters of 2009 showed tentative improvements for remodeling market conditions, remodelers have seen work fall backward at the end of the year," said NAHB Chief Economist David Crowe. "Like new home construction, remodelers are feeling the effects of consumers' uncertain job future, their level of confidence and unwillingness to spend their equity or savings. Competition from new home construction workers entering the remodeling market and unemployed contractors has stretched an already thin customer base."

Source: NAHB

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Obama Hopes to See Jobs Package in Coming Weeks

Tuesday, February 9, 2010

President Barack Obama, reaching out to lawmakers in both U.S. political parties, said on Tuesday he hoped Congress would soon deliver a package of measures to boost U.S. employment and economic growth.

" My hope is ... that both in the House (of Representatives) and the Senate, we'll see some packages moving over the next several weeks that can provide a jumpstart to hiring and start lowering the unemployment rate," Obama told reporters ahead of a meeting with Democratic and Republican party leaders.

The president, a Democrat, said there were ideas on both sides of the political spectrum that would, for example, allow the United States to lower small business tax rates to encourage hiring.
Obama also made a push for tackling the U.S. deficit -- an issue on which lawmakers from both parties hope to capitalize ahead of November elections that could change the balance of power in Congress.

" Another area where I hope we can find some agreement is on the issue of getting our deficits and debt under control. Both parties have stated their concerns about it, and I think both parties recognize that it's going to take a lot of work," Obama said.

" I have put forward the idea of a fiscal commission and I'm going to be discussing both with my Democratic and Republican colleagues how we can get that moving as quickly as possible so that we can start taking some concrete action."

Obama has said he will issue an executive order to set up the fiscal commission to study options on spending and taxes after lawmakers failed to create a congressional panel to address the issue.

The president's meeting was part of an effort by the White House to bridge differences between Republicans and Democrats, especially in the area of job creation and economic recovery, after the recent election in Massachusetts deprived Obama's party of its "super majority" in the Senate.

Source: Reuters

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

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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

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