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U.S. Reaches Mortgage Settlement With Top Banks

Thursday, February 9, 2012

The biggest U.S. banks will provide about $25 billion in relief to distressed homeowners, as state and federal officials hold lenders responsible for taking illegal shortcuts during foreclosures and for other deceptive practices.

The settlement announced on Thursday seals more than a year of negotiations after evidence emerged late in 2010 that banks robosigned thousands of foreclosure documents without properly reviewing paperwork.

The Obama administration hopes the settlement will open a new avenue for housing relief because it will force the banks to write down mortgages at a time when roughly one in four borrowers owe more on their mortgage than their home is worth.

Principal reductions have been done on a voluntary basis by banks, often on a limited basis.

The deal resolves civil government lawsuits over faulty foreclosures and servicing misconduct.

The banks involved in the deal are Bank of America Corp, Wells Fargo & Co, JPMorgan Chase & Co, Citigroup Inc and Ally Financial Inc.

Although the deal with 49 states is the largest joint federal-state settlement ever obtained, the amount is miniscule compared to the declines in home values and the banks still face a host of other mortgage-related lawsuits.

"The bottom line about this settlement, is it's okay, it's a step forward, it's a step in the right direction. But let's not kid ourselves, there's a hell of a lot more that needs to be done," said Ira Rheingold, executive director of the National Association of Consumer Advocates.

The deal does little to ease bank investor fears, industry analysts said.

"We believe any initial euphoria over the deal will quickly fade as investors realize the flood of additional mortgage-related litigation that the major banks face," said Guggenheim Partners analyst Jaret Seiberg in a note on Thursday.

The U.S. Justice Department, the Department of Housing and Urban Development, and a handful of state attorneys general announced the deal at a news conference in Washington. Some large states, such as California and New York, joined at the last minute.

"This historic settlement will provide immediate relief to homeowners - forcing banks to reduce the principal balance on many loans, refinance loans for underwater borrowers, and pay billions of dollars to states and consumers," said HUD Secretary Shaun Donovan.

Source: Reuters

Employment Rise Little Help to Construction Workers

Tuesday, February 7, 2012

The recent national upturn in job growth has not reached the construction industry, where unemployment rose from 16% in December to 17.7% in January. Those looking for work outpaced the 21,000 new construction jobs created, according to a statement released by the Laborers' International Union of North America.

“While we're encouraged to see the President's efforts are moving our country in the right direction, today's jobs report reveals more is needed to close the gap between those looking for work in construction and the number of new jobs being created in the industry,” said LIUNA president Terry O’ Sullivan. “Job growth is not happening fast enough.

“With 1.4 million men and women ready, willing and able to go to work building this country, there is no better time for Congress to take action by passing a highway bill that fully invests in America's crumbling roads, bridges and transit systems,” he added.

Source: Home Channel News

List of Improving Housing Markets Expands to Nearly 100

Monday, February 6, 2012

The list of housing markets showing measurable improvement expanded by 29 metros in February to include a total of 98 entries on the National Association of Home Builders/First American Improving Markets Index (IMI), released today. Thirty-six states are now represented by at least one market on the list.

The index identifies metropolitan areas that have shown improvement from their respective troughs in housing permits, employment and house prices for at least six consecutive months. The February index adds some metropolitan areas that have been particularly weak; this is due to the fact that the IMI measures improvement from a bottom, and some of the hardest hit markets are showing signs of coming off of extreme lows. Keeping this in mind, notable new entrants to list in February include Miami, Fla; Boston; Detroit; Kansas City, Mo.; Portland, Ore.; Memphis, Tenn.; and Salt Lake City.

"The number of improving housing markets has risen for six consecutive months, and 36 states now have at least one metropolitan area on the list," noted NAHB Chairman Bob Nielsen, a home builder from Reno, Nev. "This indicates that despite the many challenges that continue to drag on a housing recovery - including the tight lending environment for builders and buyers - improving conditions are slowly but surely spreading from one housing market to the next."

"While many of the markets on the February IMI are far from fully recovered, the index points out where employment, home prices and housing production are no longer retreating and have held above their lowest recession troughs for six months or more," said NAHB Chief Economist David Crowe. "This is a sign that a large cross section of the country is starting to turn the corner as local economic conditions stabilize."

"The fact that there are nearly 100 markets now on the improving list shows that the momentum is building for a housing recovery and that more buyers and sellers are starting to feel confident enough to return to the market," said Kurt Pfotenhauer, vice chairman of First American Title Insurance Company.

The IMI is designed to track housing markets throughout the country that are showing signs of improving economic health. The index measures three sets of independent monthly data to get a mark on the top improving Metropolitan Statistical Areas. The three indicators that are analyzed are employment growth from the Bureau of Labor Statistics, house price appreciation from Freddie Mac, and single-family housing permit growth from the U.S. Census Bureau. NAHB uses the latest available data from these sources to generate a list of improving markets. A metropolitan area must see improvement in all three areas for at least six months following their respective troughs before being included on the improving markets list.

Seven markets dropped from the NAHB/First American Improving Markets Index in February as they experienced softening house prices. These metros include San Jose, Calif.; Washington, D.C.; Kankakee, Ill.; New Orleans; Worcester, Mass.; Jackson, Miss.; and Sherman, Tex.

Source: NAHB

Construction Spending Rose 1.5 Percent in December with Housing and Government Both Up

Friday,February 1, 2012

Builders increased their spending in December for the fifth consecutive month, ending a weak construction year on a hopeful note.

Spending on construction projects rose 1.5 percent in December after a revised 0.4 percent gain in November, the Commerce Department said Wednesday That pushed spending to a seasonally adjusted annual rate of $816.4 billion, the highest level in 20 months.

The gains coincide with other signs that show the troubled housing industry may be improving. Homebuilders are more confident after seeing more interest from would-be buyers. Single-family home construction rose in the final three months of last year. And home sales ticked up at the end of last year.

Still, spending on all construction projects for 2011 was just $787.4 billion. That’s 2 percent lower than the previous year and roughly half the level economists consider healthy. Last year was the worst year on record for single-family home construction, according to government data released last month.

Analysts say it could be years before the industry returns to full health.

Residential construction rose 0.8 percent in December on the strength of single-family homes. Nonresidential building jumped 3.3 percent, led by factory construction. Government spending rose 0.5 percent.

Builders broke ground on more homes in each of the last three months of last year. The increase in residential construction contributed to annual growth of 2.8 percent in the October-December quarter.

Still, residential construction fell at an annual rate of 1.4 percent last year, the sixth straight year of decline. The economy expanded just 1.7 percent last year, roughly half the growth rate in 2010.

The construction industry was hit hard by the housing bust and has had trouble recovering since the recession ended more than two years ago.

Severe budget problems have squeezed state and local governments. The federal government has come under pressure to control soaring budget deficits. Both have put pressure on government construction spending.

Private builders haven’t fared much better. While their spending increased, they have scaled back on construction plans and are working from depressed levels.

Residential construction in December rose to a seasonally adjusted $241.2 billion, 4.9 percent higher than a year ago. The strength in December came from a 1.5 percent rise in single-family construction. Apartment building dropped 0.3 percent.

Nonresidential building increase pushed that sector to a seasonally adjusted annual rate of $288.5 billion, 11.4 percent above the December 2010 level. Strength in December came from gains in factory construction, power plants and communication. Those increases helped to offset declines in hotel construction and office building.

Spending on government projects increased to $286.6 billion, a figure that was 2.5 percent lower than December 2010. For December, state and local building activity rose 0.5 percent while the federal government saw construction spending increase 0.3 percent.

About 302,000 new homes were sold last year, making 2011 the worst sales year on records dating back to 1963. That coincides with a report last month that said 2011 was the weakest year for single-family home construction on record.

Still, sales of new homes rose in the final quarter of 2011, as did sales of previously occupied homes. Homebuilders are slightly more hopeful because more people are saying they might consider buying this year.

And mortgage rates have never been cheaper.

Source: Associated Press

Obama Calls for $5-10 Billion for Home Refinancing

Wednesday, Februart 1, 2012

President Barack Obama on Wednesday called on Congress to approve a $5 billion to $10 billion effort to help U.S. homeowners refinance as part of a wider package of proposals to shore up the depressed housing market.

Obama had sketched out the proposals in his State of the Union address last week, including a tax on banks to pay for the plan that Republicans quickly rejected.

The White House offered more details on Wednesday ahead of a speech by Obama to expand on his initiative, which some Republicans have derided as an election-year ploy.

Nearly 11 million Americans are underwater on their mortgages, meaning they owe more than their homes are worth. Millions more have lost homes to repossession in states that will be up for grabs in 2012.

"Now, the truth is, it will take more time than any of us would like for the housing market to recover from this crisis," Obama said in a speech in Falls Church, Virginia. "We need to do everything in our power to repair the damage and make responsible families whole."

The White House is seeking to contrast Obama's stance with that of Republican presidential front-runner Mitt Romney, who has said U.S. foreclosures should be allowed to run their course.

The next contest in the state-by-state battle for the Republican nomination is in Nevada, the state with the highest rate of foreclosure filings for the past five years.

The White House said the refinance program would be run by the Federal Housing Administration. The FHA has already been hard hit by rising defaults on mortgages it had insured, and its cash reserves reached a record low last year.

Many Republicans are likely to resist a larger role for the agency out of concerns taxpayers could be left on the hook for losses.

Obama's proposal, which needs congressional approval, would be open to borrowers who have been current on their payments for the last six months and have no more than one missed payment in the prior six months.

The administration also wants to broaden its Home Affordable Refinance Program, which seeks to provide refinancing options to underwater borrowers who have no equity in their homes.

The White House said the housing regulator which oversees Fannie Mae and Freddie Mac has exhausted its efforts to make HARP more widely accessible to lenders and borrowers, and now it will ask Congress to make changes. Among those requested changes, it will seek to eliminate the costs of appraisals.

Source: Reuters

Home Prices Post Steep Decline in November

Tuesday, January 31, 2012

Home prices posted a steep, month-over-month drop in November, falling 1.3%, according to the latest S&P/Case-Shiller 20-city report. Prices fell in 19 of the 20 cities the index covers.

Prices are down 3.7% from a year ago, and off 32.8% since they peaked in the summer of 2006. The index is currently only 0.6% above its March, 2011 low.

"Despite continued low interest rates and better real GDP growth in the fourth quarter, home prices continue to fall," said David Blitzer, spokesman for S&P.

Phoenix, one of the hardest hit metro areas in the country, was the only place to record a gain in November. Prices there rose 0.6% month-over-month but are down 3.6% from a year ago.

Home prices in Chicago posted the steepest decline of any city on the index, falling 3.4% month-over-month. Atlanta prices were down 2.5% and Detroit prices fell 2.4%.

The drop in home prices was more than housing bear Peter Morici, professor at the University of Maryland Smith School of Business, anticipated. He had forecast a 0.8% drop.

"We've had more robust sales activity in the housing market lately," he said.

Morici thinks recent home price weakness stems at least partially from the fact that more sellers have accepted the weak market conditions and are putting their homes up for sale. Retirees and other home owners had postponed sales, trying to wait out the decline.

"Sooner or later, you have to get rid of that house," he said.

Pat Newport, a housing market analyst for IHS Global Insight, agrees that's part of the story.

"People are a lot more flexible on price than they were three years ago," he said. "They're willing to lower their asking prices to move their houses."

He thinks a bigger contributor to the market malaise is sales of properties in foreclosure. Many homes sold these days are either short sales or homes that were repossessed from mortgage borrowers who could not pay their loans.

"That probably explains the steep declines in Atlanta," said Newport. "That city has a large number of foreclosed properties.

Source: CNN Money

Obama Lays Out Plan to Investigate Mortgage Meltdown

Monday, January 30, 2012

Following up on a promise he made in his Jan. 10 State of the Union Address, President Obama revealed some of the details of the latest effort to investigate -- and punish those responsible for -- the mortgage meltdown that helped trigger the housing crisis. A team of 55 attorneys and investigators will try to coordinate existing probes, now largely the work of individual state attorney generals who are looking into foreclosures and highly risky mortgage-backed securities.

New York Attorney General Eric Schneiderman will co-chair the joint state-federal task force. The group will also include officials from the U.S. Justice Department, the Department of Housing and Urban Development, the Consumer Financial Protection Bureau, the U.S. Treasury Department and the Federal Bureau of Investigation.

In the crosshairs will be five of the nation's largest financial institutions -- Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Ally Financial (formerly GMAC)--that have come under fire from state attorney generals for their foreclosure practices. Another line of inquiry is the bundling of risky mortgages into bonds and securities that were later sold to investors, helping to trigger the nation’s economic meltdown. The Residential Mortgage-Backed Securities Working Group, as the task force is being called, will be looking at whether the banks committed securities or mortgage fraud and need to make restitution to their alleged victims.

Source: Home Channel News

Remodeling Index Hits Five-Year High

Friday, January 27, 2012

The National Association of Home Builders' (NAHB) Remodeling Market Index (RMI) reported a 46.6% jump in activity in the fourth quarter of 2011, compared with the third quarter, marking its highest level in five years.

In the fourth quarter, the RMI component measuring current market conditions rose to 48.4 from 43.0 in the previous quarter. Future indicators of remodeling business were also positive, increasing to 44.8 from 40.4 in the third quarter.

An RMI below 50 indicates that more remodelers reported market activity is lower (compared with the prior quarter) than reported it is higher.

"As more consumers remain in their homes rather than move in this economy, remodelers benefited from a gradual increase in home improvement activity, taking us to a five-year high," said NAHB remodelers chairman Bob Peterson, a remodeler from Ft. Collins, Colo. "2011 ended on a strong note for the remodeling industry."

All four regions of the country benefited from the gains between the third and fourth quarters of 2011. The RMI reported higher market activity in two important categories: major additions at 52.3 (from 45.2) and minor additions at 50.1 (from 45.7).

Two of the indices reported a level over 50: calls for bids at 50.7 (from 45.4) and appointments for proposals at 50.1 (from 43.3), while work committed for the next three months only rose to 31.5 (from 29.9).

"With several key components above 50, the latest RMI provides reason for guarded optimism going forward," said NAHB chief economist David Crowe. "The residential remodeling market has been improving gradually, mirroring the trend in other segments of the housing market. Stringent lending requirements and economic uncertainty continue to be a drag on demand, but we expect a modest growth in remodeling activity to continue throughout 2012."

Source: Home Channel News

U.S. Economy Growing Faster, but Still Struggling

Friday, January 27, 2012

The United States economy picked up speed at the end of 2011 as businesses substantially built up their inventories and consumers increased their spending.

Gross domestic product, the broadest measure of the nation's economic health, grew at a 2.8% annual rate in the last three months of the year, the Commerce Department said.

While that's a major improvement from 1.8% in the prior quarter, and the fastest since the second quarter of 2010, it still fell short of economists' expectations of 3.2% and sent stock futures falling.

Signs of weakness
While the number appeared to come in strong, there were still signs of overall weakness, and economists remain cautious about the outlook for the economy.

One reason is that the bulk of the growth came from just one area: businesses building up their stock of goods. Private businesses increased inventories $56 billion in the fourth quarter, following a decrease of $2 billion in the third quarter.

An increase on that front can be seen as a double-edged sword. On one hand, it can be a sign of confidence in the economy. When firms predict greater purchases in the future, they build up their inventories.

On the other hand, if consumers don't end up buying as much as firms had hoped, that can be a drag on GDP.
"How much of the inventory increases were intended and how much were unintended? " said Bruce Yandle, an economics professor at the Mercatus Center at George Mason University. "There may be something here to be concerned about."

After subtracting the change in private inventories from the data, the report showed GDP grew only 0.8% in the fourth quarter, compared with 3.2% in the third.

Consumer spending picked up to a 2% annual rate from 1.7% in the prior quarter. While the quarter included holiday spending, the government adjusts the GDP figures to try to account for seasonal trends.

Meanwhile, business investment in equipment and software, which had been a strong driver of growth earlier in the year, slowed in the quarter. Cuts in state and local government dragged on economic growth for the sixth quarter in a row.

While economic growth overall picked up at the end of 2011, doubts remain about whether the recovery can keep building momentum.

"This will be the strongest gain in GDP as the economy is likely to return to a 2% to 2.5% pace for the year ahead," John Silvia, Wells Fargo chief economist, said in a note.

For the full year, GDP grew 1.7% in 2011, a substantial slowdown from 3% growth in 2010.

Source: CNN Money

New Home Sales Fall in December

Thursday, January 26, 2012

New single-family home sales unexpectedly fell in December for the first time in four months and the median home price dropped, dampening some of the hopes the housing sector will boost the economy this year.

The Commerce Department said on Thursday sales decreased 2.2 percent to a seasonally adjusted 307,000-unit annual rate.

Economists polled by Reuters had forecast sales at a 320,000-unit rate. November's sales pace was revised slightly lower.

The housing market remains constrained by high unemployment, falling prices and an oversupply of unsold homes following a bust that triggered the 2007-09 recession.

Sales fell in two of the country's four regions, including a 10.1 percent drop in the South, where most new homes were sold.

The median sales price for a new home fell 2.5 percent to $210,300 last month, the biggest drop in four months. Compared to December last year, the median price was down 12.8 percent.

There were a record low 157,000 new homes on the market last month and at December's sales pace, it would take 6.1 months to clear them, up from 6.0 months in November.

For all of 2011, sales were down 6.2 percent from the prior year, with 302,000 new single-family homes being sold.

Source: Reuters

Realtors Point to Market in Recovery Mode

Friday, January 20, 2012

Existing-home sales increased to a seasonally adjusted annual rate of 4.61 million in December, up 5.0% from a downwardly revised November.

The results released Friday morning by the National Association of Realtors (NAR) marked the third consecutive month of existing-home sales gains. The latest figure from December is also 3.6% higher than the 4.45 million-unit level reported in December 2010.

“The pattern of home sales in recent months demonstrates a market in recovery,” said Lawrence Yun, NAR chief economist. “Record-low mortgage interest rates, job growth and bargain home prices are giving more consumers the confidence they need to enter the market.”

For the full year 2011, existing-home sales increased 1.7% to 4.26 million, the NAR reported.

Regionally, existing-home sales in the Northeast jumped 10.7% to an annual pace of 620,000 in December and are 3.3% above a year ago. The median price in the Northeast was $231,300, which is 2.7% below December 2010.

Existing-home sales in the Midwest rose 8.3% in December to a level of 1.04 million and are 9.5% above December 2010. The median price in the Midwest was $129,100, down 7.9% from a year ago.

In the South, existing-home sales increased 2.9% to an annual level of 1.76 million in December and are 3.5% above a year ago. The median price in the South was $146,900, down 1.1% from December 2010.

Existing-home sales in the West rose 2.6% to an annual pace of 1.19 million in December but are 0.8% below December 2010. The median price in the West was $205,200, up 0.3% from a year ago.

Source: Home Channer News

Housing Starts Breakdown: Midwest Gains

Thursday January 19, 2012

Thursday's housing reports produced a variety of negative headlines. For instance: "U.S. Home Construction has worst year ever," wrote the Canadian Broadcasting Corporation; and "December ends third poor year for home building," wrote the Chicago Sun-Times.

But the numbers from the New Residential Construction report had fuel for optimists as well. It was the first year in three years that total starts exceeded 600,000. Plus, while the full-year single-family number was the lowest ever (428,600), the December rate was up for the month and well up for the year.

For home channel businesses, the national numbers are far less important than the health of a particular market in which the business operates. Thursday's report added some regional color to the numbers.

The Midwest was the big gainer of the four U.S. regions -- with December total starts up 54.8% from the previous month and up 121.5% from the previous year. Single-family starts in the Midwest also surged -- up 31.9% from last month and up 65.5% from December 2010.

The biggest declines appeared in the Northeast, where starts declined 41.2% in December compared with November.

Also compared with November, single-family starts increased 3.4% in the South and remained flat in the West.

Source: Home Channer News

Single-Family Housing Starts Increase in December

Thursday, January 19, 2012

According to the Commerce Department's tally, December's total housing starts were down from November, but single-family starts were at the highest rate in 21 months.

December housing starts were at a seasonally adjusted annual rate of 657,000, down 4.1% from the November pace of 685,000. But compared with last year, total starts are up 24.9%.

While total starts faltered in December, the single-family numbers gave some optimism for a home improvement and housing industry hungry for growth. On a single-family basis, starts in December were at a rate of 470,000, up 4.4% from November and up 11.6% from December 2010. The December number was the strongest since April 2010.

Building permits were at a rate of 679,000, essentially flat from November but up 7.8% from December 2010.

For the full year, an estimated 606,900 housing units were started in the United States, up 3.4% from the 2010 figure of 586,900. However, single-family starts declined in 2011 to 428,600 for the full year, down 9.0% from 2010.

The 2011 single-family figure is the lowest on record.

Source: Home Channer News

Builder Confidence Rises Fourth Consecutive Time in January

Wednesday, January 18, 2012

Builder confidence in the market for newly built, single-family homes continued to climb for a fourth consecutive month in January, rising four points to 25 on the NAHB/Wells Fargo Housing Market Index (HMI), released today.

This is the highest level the index has attained since June of 2007.

"Builder confidence has now risen four months in a row, with the latest uptick being universally represented across every index component and region," noted Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. "This good news comes on the heels of several months of gains in single-family housing starts and sales, and is yet another indication of the gradual but steady improvement that is beginning to take hold in an increasing number of housing markets nationwide -- and that has been shown by our Improving Markets Index. Policymakers must now take every precaution to avoid derailing this nascent recovery."

"Builders are seeing greater interest among potential buyers as employment and consumer confidence slowly improve in a growing number of markets, and this has helped to move the confidence gauge up from near-historic lows in the first half of 2011," noted NAHB Chief Economist David Crowe. "That said, caution remains the word of the day as many builders continue to voice concerns about potential clients being unable to qualify for an affordable mortgage, appraisals coming through below construction cost, and the continuing flow of foreclosed properties hitting the market."

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 from each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

Each of the HMI's three component indexes registered a fourth consecutive month of improvement in January. The component gauging current sales conditions rose three points to 25, which was its highest point since June of 2007. The component gauging sales expectations in the next six months also rose three points, to 29 -- its highest point since September 2009. And the component gauging traffic of prospective buyers rose three points to 21, its highest point since June of 2007.

The HMI also posted gains in all four regions in January, including a nine-point gain to 23 in the Northeast, a one-point gain to 24 in the Midwest, a two-point gain to 27 in the South and a five-point gain to 21 in the West.

Source: NAHB

Rate on 30-Year Mortgage Down to Record 3.91 PCT.

Thursday, January 5, 2012

2012 looks to be another year of opportunity for the few who can afford to buy or refinance a home.

The average rate on the 30-year fixed mortgage fell to 3.91 percent this week, Freddie Mac said Thursday. That matches the record low reached two weeks ago.

The average on the 15-year fixed mortgage ticked down to 3.23 percent from 3.24 percent. That's up from 3.21 percent two weeks, also a record low.

Mortgage rates are lower because they tend to track the yield on the 10-year Treasury note, which fell below 2 percent this week. They could fall even lower this year if the Fed launches another round of bond purchases, as some economists expect.

Still, cheap mortgage rates have done little too boost the depressed housing market. For eight straight weeks at the end of 2011, the average fixed mortgage rates hovered around 4 percent. Yet many Americans either can't take advantage of the rates or have already done so.

High unemployment and scant wage gains have made it harder for many people to qualify for loans. Many don't want to sink money into a home that they fear could lose value over the next few years.

Previously occupied homes are selling just slightly ahead of 2010's dismal pace. New-home sales in 2011 will likely be the worst year on records going back half a century.

Builders are hopeful that the low rates could boost sales next year. Low mortgage rates were cited as a key reason the National Association of Home Builders survey of builder sentiment rose in December to its highest level in more than a year.

But so far, rates are having no major impact. Mortgage applications have fallen slightly in recent weeks, according to the Mortgage Bankers Association.

To calculate the average rates, Freddie Mac surveys lenders across the country Monday through Wednesday of each week. The average rates don't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for the 30-year loan rose to 0.8 from 0.7; the average on the 15-year fixed mortgage was unchanged at 0.8.

For the five-year adjustable loan, the average rate declined to 2.86 percent from 2.88 percent. The average on the one-year adjustable loan rose to 2.80 percent from 2.78 percent.

The average fee on the five-year adjustable loan rose to 0.7 from 0.6; the average on the one-year adjustable-rate loan was unchanged at 0.6.

Source: Associated Press

Construction Spending Rises in November

Tuesday, January 3, 2012

Construction spending during November 2011 rose 1.2% over the previous month, according to an estimate released by the Department of Commerce, which posted a seasonally adjusted annual rate of $807.1 billion. The increase was the third in four months and followed a revised 0.2% drop in October.

The November figure is slightly higher (0.5%) than November 2010’s construction spending estimate of $803.0 billion.

For the first 11 months of 2011, construction spending amounted to $724.8 billion, which is 2.5% below the $743.6 billion for the same period in 2010, according to government estimates.

Residential construction rose 2.0% in November 2011, at a seasonally adjusted annual rate of $243.7 billion compared to the revised October estimate of $238.9 billion. Nonresidential construction was at a seasonally adjusted annual rate of $278.6 billion in November, nearly the same as the revised October estimate of $278.5 billion.

In year-over-year figures, residential construction rose 3.4% between November 2011 and November 2010. Residential construction includes both single and multi-family dwellings.

Source: Home Channer News

Pending Sales Hit Highest Level in 19 Months

Thursday, December 29, 2011

Pending home sales continued to gain in November and reached the highest level in 19 months, according to the National Association of Realtors.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, increased 7.3% to 100.1 in November from an upwardly revised 93.3 in October and is 5.9% above November 2010 when it stood at 94.5. The October upward revision resulted in a 10.4% monthly gain.

The last time the index was higher was in April 2010 when it reached 111.5 as buyers rushed to beat the deadline for the home buyer tax credit. The data reflects contracts but not closings.

Lawrence Yun, NAR chief economist, said the gains may result partially from delayed transactions. “Housing affordability conditions are at a record high and there is a pent-up demand from buyers who’ve been on the sidelines, but contract failures have been running unusually high. Some of the increase in pending home sales appears to be from buyers recommitting after an initial contract ran into problems, often with the mortgage,” he said.

“November is doing reasonably well in comparison with the past year. The sustained rise in contract activity suggests that closed existing-home sales, which are the important final economic impact figures, should continue to improve in the months ahead,” Yun added.

Pending home sales are not affected by the recently published re-benchmarking of existing-home sales because the index uses a different methodology based directly on contract signings, and is adjusted for seasonality.

The PHSI in the Northeast rose 8.1% to 77.1 in November but is 0.3% below November 2010. In the Midwest the index increased 3.3% to 91.6 in November and is 9.5% above a year ago. Pending home sales in the South rose 4.3 percent in November to an index of 103.8 and remain 8.7% above November 2010. In the West the index surged 14.9% to 121.2 in November and is 2.9% higher than a year ago.

Source: Home Channer News

Existing-Home Sales Increase 4.0%

Thursday, December 22, 2011

Existing-home sales rose again in November and remain above a year ago, according to the National Association of Realtors (NAR).

The November figure came in at a seasonally adjusted annual rate of 4.42 million, up 4.0% from October's pace, and up 12.2% from November 2010.

“Sales reached the highest mark in 10 months and are 34% above the cyclical low point in mid-2010 -- a genuine sustained sales recovery appears to be developing,” said Lawrence Yun, NAR chief economist. “We’ve seen healthy gains in contract activity, so it looks like more people are realizing the great opportunity that exists in today’s market for buyers with long-term plans.”

Also released were periodic benchmark revisions with downward adjustments to sales and inventory data since 2007, led by a decline in for-sale-by-owners.

Source: Home Channer News

NAR Revises its Home Sales Figures

Thursday, December 22, 2011

After analyzing several years of data, the National Association of Realtors (NAR) has announced that it overestimated the number of existing homes sold between 2007 and 2010 by 14.3%. This means that 2.9 million fewer homes were sold in the United States during that time period than previously thought.

The NAR said the benchmarking study, typically done every 10 years, was undertaken after real estate groups began questioning some of the trade organizatio's monthly home sales reports. A series of errors led to over-counting home sales, including relying on data from the Multiple Listing Service (MLS) and outdated 2000 U.S. Census numbers.

NAR chief economist Lawrence Yun said the downward shift in the numbers indicates that the housing market took a deeper dive than initially estimated.

But the new report, completed with the help of the government, economists and real estate groups, contained some good news. According to the NAR, the inventory of unsold homes is lower than initially thought, which can increase demand among buyers. For November of 2011, 2.58 million single-family homes and condos were for sale, down 18.1% from a year ago.

Source: Home Channer News

Builder Confidence Rises for the Third Consecutive Month

Monday, December 19, 2011

Builder confidence in the market for newly built, single-family homes edged up two points from a downwardly revised number to 21 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for December, released today. This marks a third consecutive month in which builder confidence has improved, and brings the index to its highest point since May of 2010.

"While builder confidence remains low, the consistent gains registered over the past several months are an indication that pockets of recovery are slowly starting to emerge in scattered housing markets," said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. "However, the difficulties that both builders and buyers continue to experience in accessing credit for new homes are holding back potential sales even in areas where economic conditions are improving."

"This is the first time that builder confidence has improved for three consecutive months since mid-2009, which signifies a legitimate though slowly emerging upward trend," said NAHB Chief Economist David Crowe. "While large inventories of foreclosed properties continue to plague the most distressed markets and consumer worries about job security and the challenges of selling an existing home remain significant factors, builders are reporting more inquiries and more interest among potential buyers than they have seen in previous months."

Each of the HMI's three component indexes registered a third consecutive month of improvement in December. The component gauging current sales conditions rose two points in the latest month to 22, while the component gauging sales expectations in the next six months edged up one point to 26. The component gauging traffic of prospective buyers gained three points to 18, which is its highest level since May of 2008.

Builder confidence primarily gained strength in the South in December, where a four-point gain to 25 brought that region's HMI score to its highest level since March of 2008. A one-point gain to 16 was registered in the West, while the Midwest held unchanged at 24 and the Northeast slipped one point to 15.

Source: NAHB

U.S. Housing Heals Even as its Damage Widens

Sunday, December 18, 2011

The U.S. housing market, once the epicenter of the global financial collapse that spawned today's European debt crisis, is on the verge of delivering some positive news.

For the first time since 2005, U.S. residential construction looks set to expand a little next year, and it could add one- or two-tenths of a percentage point to GDP growth in 2012 -- a mere sliver, but one that would add to the picture of a slowly healing U.S. economy.

Every scrap of extra support would help the United States withstand the spreading damage from the crisis in the euro zone, which threatens to push a global slowdown into a deeper and more dangerous recession.

China is slowing quickly as its red-hot property market cools and exports to the European Union, its largest trade partner, sink after years of double-digit growth. Its factory sector has contracted for two months in a row and foreign investment in China is falling.

Brazil also has stalled and India is contracting sharply. Worldwide, 48 central banks have cut interest rates in the last three months to counter the slump. IMF Managing Director Christine Lagarde last week called economic prospects "quite gloomy."

"There is no economy in the world, whether low-income countries, emerging markets, middle-income countries or super-advanced economies, that will be immune to the crisis that we see not only unfolding but escalating," Lagarde said.

Liquidity and credit, the lifeblood of commerce, are tightening in some markets as European banks retrench to rebuild capital severely dented by the falling value of their euro-zone sovereign debt holdings. Investors are scrambling for safety by buying U.S. assets, which is pushing up the U.S. dollar. Gold, oil and other commodities are slumping.

"In such an ugly contest, the U.S. dollar wins the least-ugly award," said GaveKal Research Ltd., a Hong Kong-based investment research firm.

Amid the turmoil, any signal that the American economy is gaining muscle would support this dollar-friendly trend.

A batch of data next week could confirm the housing market has bottomed.

Ian Shepherdson at High Frequency Economics points to several factors that suggest a turning point. The inventory of new homes is at a record low of 162,000 properties. If demand perks up, supply would look tight in 2012. The stock of unsold existing homes also is smaller than previously thought, which would support further growth.

The National Association of Home Builders sentiment index indicates optimism is improving. It has risen steadily since June to a level last seen in April 2010, when a taxpayer credit encouraged home buying. Additionally, the S&P Home Builders Index has jumped more than 20 percent this quarter.

Lastly, Shepherdson said, mortgage lenders have loosened down payment requirements, which would allow far more people to qualify to buy.

"The preconditions for a rise in (loan) volumes are in place, and I have been bearish for six years," he said, predicting residential investment will add a few tenths of a percentage point to GDP growth next year.

"Residential investment is no longer a drag on growth. That said, it is so small," said Ellen Zentner, economist at Nomura, which forecasts 2.3 percent U.S. growth next year with 0.1 percentage point from housing.

Construction of rental units already is climbing, a trend expected to continue next year.

But a sustained upturn requires several other elements -- a strong jobs market, income growth and positive economic sentiment.

The labor market is strengthening, but personal income has failed to keep up with inflation. Data on Friday is expected to show growth eased again after a 0.4 percent gain in October.

Without these supporting factors in place, housing demand will remain weak, even with mortgage rates near historic lows.

Bob Walters, chief economist at Quicken Loans, a $29 billion lender, is highly cautious and at best sees the market heading sideways in 2012. "What is happening is we are slowly curing. The problem is it is a multi-year process," he said.

The NAHB builders' sentiment index for December on Monday is seen holding at 20. Shepherdson said if it rises, it would be "quite a big deal" and suggest strength in new housing starts. November starts data on Tuesday is expected to show an increase of around 1 percent.

A report on previously owned home sales on Wednesday is forecast to show a 1.8 percent gain, while data on new home sales on Friday is also seen rising.

Otherwise, the week is shortened by early closings on Friday for the Christmas holiday, and there is a paucity of data.

From the euro zone, a reading on consumer confidence on Wednesday is expected to continue falling, and in Asia, the Bank of Japan on Wednesday is seen remaining on hold after cutting its growth outlook last month.

Source: Reuters

Twenty Metros Join List of Improving Housing Markets Index in December

Tuesday, December 6, 2011

The number of improving housing markets continued to expand for a fourth consecutive month in December, rising from 30 to 41 on the latest National Association of Home Builders/First American Improving Markets Index (IMI), released today. The December list featured 20 new additions, including several major markets such as Washington, D.C.; San Jose, Calif.; and Toledo, Ohio. Meanwhile, nine smaller markets dropped off the list, primarily due to softer house prices.The index identifies metropolitan areas that have shown improvement from their respective troughs in housing permits, employment and house prices for at least six consecutive months. New entrants to the list in December include the following:

Ann Arbor, MI
Athens, GA
Boulder, CO
Burlington, VT
Canton, OH
Charleston, WV
Danville, VA
Fort Wayne, IN
Grand Forks, ND
Jackson, MS
Kingsport, TN
Laredo, TX
Lincoln, NE
Muncie, IN
Muskegon, MI
San Jose, CA
Scranton, PA
Toledo, OH
Washington, DC
Winchester, VA

"The increases we continue to see in the number and geographic diversity of improving metros are quite encouraging, and evidence of the fact that all housing markets are dependent on uniquely local factors," said NAHB Chairman Bob Nielsen, a home builder from Reno, Nev. He noted that as of December, a total of 21 states and the District of Columbia are represented on the improving markets list -- up from14 states represented in November.

"The December IMI results are very much in keeping with the latest government housing data and our own builder surveys, which have shown modest signs of improvement in certain individual markets where employment is gaining and distressed properties are not as numerous," said NAHB Chief Economist David Crowe. "These gradual improvements are now becoming evident not just in small, energy-producing metros that have previously dominated the IMI, but also in several larger markets and areas with more diverse economies."

The nine markets that dropped off the IMI in December include Alexandria, La.; Fairbanks, Alaska; Hinesville, Ga.; Houma, La.; Jonesboro, Ark.; Lima, Ohio; Pine Bluff, Ark.; Sumter, S.C. and Waco, Tex. All but two of these metros fell from the list due to softening house prices. The exceptions to the rule were Jonesboro and Waco, where declines were registered in employment and single-family housing permits, respectively.

The total list of improving housing markets in December, as defined by the IMI, includes the following 41 entries (listed alphabetically by state):

Anchorage, AK
San Jose, CA
Boulder, CO
Fort Collins, CO
Washington, DC
Athens, GA
Davenport, IA
Waterloo, IA
Kankakee, IL
Fort Wayne, IN
Muncie, IN
Monroe, LA
New Orleans, LA
Ann Arbor, MI
Muskegon, MI
Jackson, MS
Fayetteville, NC
Winston-Salem, NC
Bismarck, ND
Grand Forks, ND
Lincoln, NE
Canton, OH
Toledo, OH
Pittsburgh, PA
Scranton, PA
Williamsport, PA
Kingsport, TN
Amarillo, TX
Corpus Christi, TX
Laredo, TX
McAllen, TX
Midland, TX
Odessa, TX
Sherman, TX
Tyler, TX
Danville, VA
Winchester, VA
Burlington, VT
Charleston, WV
Casper, WY
Cheyenne, WY

The IMI is designed to track housing markets throughout the country that are showing signs of improving economic health. The index measures three sets of independent monthly data to get a mark on the top improving Metropolitan Statistical Areas. The three indicators that are analyzed are employment growth from the Bureau of Labor Statistics, house price appreciation from Freddie Mac, and single-family housing permit growth from the U.S.

Census Bureau. NAHB uses the latest available data from these sources to generate a list of improving markets. A metro area must see improvement in all three areas for at least six months following their respective troughs before being included on the improving markets list.

Source: NAHB

Jobless Rate Drops to 8.6 Percent, Hiring Picks Up

Friday, December 2, 2011

The unemployment rate fell to a 2-1/2 year low of 8.6 percent in November and companies stepped up hiring, further evidence the economic recovery was gaining momentum.

Nonfarm payrolls increased 120,000 last month, the Labor Department said on Friday, in line with economists' expectations for a gain of 122,000.

The relative strength of the report was also bolstered by revisions to the employment counts for September and October to show 72,000 more jobs created than previously reported.

While part of the decline in the unemployment rate from 9.0 percent in October was due to people leaving the labor force, the household survey from which the jobless rate is derived also showed solid gains in employment
The unemployment rate had been expected to hold at 9 percent. It last dropped by 0.4 percentage point in January.

"The really good news is that employment has grown for four months running -- in large steps. There was a solid increase in private employment. Everything there looks steady, but clearly healthy and positive," said Pierre Ellis, a senior economist at Decision Economics in New York.

However, retail accounted for more than a third all new private sector jobs in November.

U.S. stock index futures added gains after the report, while Treasury debt prices briefly extended losses and interest rate futures held steady. The dollar extended gains versus the yen.

The report is unlikely to take much pressure off President Barack Obama, whose economic stewardship will face the judgment of voters next November. The outlook for the U.S. economy is also being threatened by Europe's deepening financial crisis.

The report could temper the appetite among some Federal Reserve officials to ease monetary policy further.
In forecasts released earlier this month, the Fed said the jobless rate would likely average 9 percent to 9.1 percent in the fourth quarter. It did not expect it to drop to an 8.5 percent to 8.7 percent range until late next year.

Data ranging from manufacturing to retail sales suggest the growth pace could top 3 percent in the fourth quarter, in contrast to China, where growth is cooling and the euro zone, which many economists believe is already in recession.

While the economy's growth pace appears to have accelerated from the third quarter's 2 percent annual rate, unemployment remains too high.

At the same time, U.S. fiscal policy is set to tighten in the new year, even if lawmakers extend a payroll tax cut.

Taken together, some analysts believe the headwinds facing the U.S. economy will lead the Fed to ease monetary policy further by buying more bonds.

"We still have a very long way to go. I would favor the Fed going for a third round of quantitative easing," said Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pennsylvania. "It's the only powerful tool left, even though it's losing some of its bang."

Analysts say the economy needs to create at least 125,000 jobs every month just to keep the unemployment rate steady.

But there are reasons to be cautiously optimistic.

While the government's survey of employers has shown a still tepid pace of job growth, its separate poll of households that is used to calculate the unemployment rate has shown robust jobs gains for four straight month.

At the same time, a broad measure of unemployment that includes people who want to work but have given up looking for jobs and those working only part time for economic reasons dropped to a 2-1/2 year low of 15.6 percent in November from 16.2 percent in October.

Source: Reuters

New-Home Data Hits Bottom, Probably

Thursday, December 1, 2011

A report from Global Hunter Securities describes the new-home market as "finally forming a bottom."

Based on the number of new homes available for sale, the months required to sell them and the total new homes for sale, there's some good news, according to Global Hunter Securities: "We believe the new-home market is finally forming a bottom."

In a research paper, GHS analyst Richard Hastings wrote: "The number of new homes sold per month remains quite low by historical comparisons, at about 25,000 units per month on average (not seasonally adjusted). The number of new homes available for sales hit an all-time record low at 162,000 units in October (unadjusted). Based on our interpretation of the Census data, we believe the industry's ability to move inventory and to balance new project commitments to market demand all point to improvements in the new-home market for sales and construction."

Source: Home Channel News

Home Prices Fall to 2003 Levels; When Will Housing Hit Bottom?

Wednesday, Nov 30, 2011

If you're in the market to buy a home, Tuesday's housing report may be good news.

But if you're a homeowner trying to sell, it's hard not to get discouraged by Tuesday's numbers.

According to Standard & Poor's Case-Shiller home-price index, September prices fell 0.6% from August and are down 3.9% compared to a year ago. The index, a widely followed gauge of the housing market, measures prices in 20 major U.S. metropolitan cities. Home prices in August were revised down to 0.3% from an initial reading of zero.

There's no question this is a buyer's market. Sellers are forced to take steep discounts on their homes and interest rates for 30-year fixed mortgages are at historic lows. On Monday The Daily Ticker discussed how renting has become extremely expensive compared to buying a home in a growing number of U.S. cities. In fact, it's never been a better time to buy a home in the past 15 years as it is now, according to a Wall Street Journal survey,
CoreLogic, a data analysis company, released its newest figures on the housing market: 22.1% or 10.7 million homes with mortgages were underwater in the third quarter — that is, the amount owed on the home is greater than the property's value. Last quarter was a slight improvement from the second quarter's reading of 10.9 million homes underwater, but it still raises the possibility of more foreclosures to come next year.

Fusion IQ's Barry Ritholtz sat down with Aaron to discuss the depressed housing market and the most recent S&P Case-Shiller numbers, which he said should come as no surprise.

Housing is "maybe in its fifth inning," he said, using baseball terms to track the progress of the beleaguered market. A recovery can't be expected until there's been a "cleansing" — i.e. a clearing out of misallocated capital.

The bleak employment picture has also stymied a housing market rebound. Americans need to sell their homes — in most cases below the purchase price — before relocating for a new job. For those who can afford to purchase property, banks have become highly selective when approving mortgage loans.

Source: Yahoo Finance

Pending Home Sales Deliver Positive Data

Wednesday, November 30, 2011

The Pending Home Sales index from the National Association of Realtors (NAR) rose in October on both a month-to-month and year-over-year basis.

The forward-looking indicator based on contract signings, jumpe 10.4% to an index of 93.3 in October, compared to a reading of 84.5 in September. The latest figure is up 9.2% compared to October 2010.

"Home sales have been plodding along at a sub-par level while interest rates are hovering at record lows and there is a pent-up demand from buyers who normally would have entered the market in recent years," said Lawrence Yun, NAR chief economist. "We hope this is indicates more buyers are taking advantage of the excellent affordability conditions."

Source: Home Channel News

Contracts to Buy Homes Rose Sharply in May

Wednesday November 29, 2011

The number of people who signed contracts to buy homes rose sharply in May, pushed higher by an influx of spring buying.

The National Association of Realtors said Wednesday that its index of sales agreements for previously occupied homes rose 8.2 percent last month, to a reading of 88.8. That followed April's seven-month low of 82.1.

A reading of 100 is considered healthy by economists. The last time the index reached that level was in April 2010, the final month when buyers could qualify for a federal tax credit. Signings are now 17 percent above June's reading of 75.9, the lowest figure since the housing market went bust nearly four years ago.

Contract signings are typically a reliable indicator of where the housing market is headed. That's because there's usually a one- to two-month lag between a sales contract and a completed deal.

But the Realtors group says a growing number of buyers have cancelled contracts ahead of closings after appraisals showed the homes were worth less than they bid. A sale isn't final until a mortgage is closed.

Homes are now the most affordable they've been in years. But bargain prices and super-low mortgage rates have done little to boost sales. Economists say it could be several years before the nation's housing market recovers.

Sales of previously occupied homes sank in May to a seasonally adjusted annual rate of 4.81 million homes. That's far below the 6 million sales per year that economists say is typical in healthier times. And it's not much better than the 4.91 million homes sold last year, the worst showing in 13 years.

Contract signings in May increased in every region of the country: It rose 12.9 percent in the West, 10.5 percent in the Midwest, 7.3 percent in the Northeast and 4.1 percent in the South.

The trade group said Wednesday's report "implies that home values in many localities are or will soon be stabilizing."

Still, high unemployment, hard-to-get loans and a lingering fear that home prices will just keep falling are keeping many Americans from buying homes. And waves of foreclosures could soon hit the housing market soon as more Americans default on their mortgages.

Prices rose in 13 of the 20 cities tracked by the Standard & Poor's/Case-Shiller home-price index, according to the April report released Tuesday. The increase in April was the first rise since July.

But the positive data came with a notable caveat: The figures weren't adjusted for seasonal factors, such as the buying that normally picks up in spring. Once the numbers are adjusted, prices actually fell in April.

Source: Associated Press

New-Home Sales Rise 1.3 Percent in October

Monday, November 28, 2011

Sales of newly built, single-family homes inched up 1.3 percent to a seasonally adjusted annual rate of 307,000 units in October, according to newly released data from the U.S. Commerce Department. The gain is from a downwardly revised rate in the previous month, and marks the best pace of new-home sales activity since this May.

"Builders have been seeing some marginal improvement in sales activity over the past few months, particularly in select markets where consumer confidence is higher due to improved economic conditions," said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. "While this trend is encouraging, overall sales activity is still well below normal due to the effects of overly tight credit conditions for builders and buyers, the continued flow of distressed properties on the market, and inaccurate appraisal values on new homes."

"Today's report is right in line with our forecast for modest and gradual improvement in sales activity through the remainder of the year," said NAHB Chief Economist David Crowe. "Particularly encouraging is the fact that builders continue to hold down their inventories to match the current sales rate, with the number of new homes for sale now down to a sustainable, 6.3-month supply."

Regionally, new-home sales held unchanged in the Northeast and gained 22.2 percent in the Midwest and 14.9 percent in the West in October. The South was the only region to post a decline, of 9.5 percent.

Meanwhile, the nationwide inventory of new homes for sale held at an all-time record low of just 162,000 units in October, which is a 6.3-month supply at the current sales pace.

Source: NAHB

Household Debt Falls by 0.6% in Third Quarter

Monday, November 28, 2011

Household debt in the U.S. declined by 0.6 percent in the third quarter as mortgage balances shrank, according to a survey by the Federal Reserve Bank of New York.

Consumer indebtedness fell by $60 billion from the end of June to $11.66 trillion on Sept. 30, according to a quarterly report on household debt and credit released today by the district bank. Mortgage balances declined by about $114 billion, or 1.3 percent.

"Households continue to try and deleverage in the wake of a challenging economic environment and large declines in home values," Andrew Haughwout, vice president in the Research and Statistics Group at the New York Fed, said in a statement. "However, our findings also provide evidence that consumer credit demand continues to increase, a positive sign for consumer sentiment."

Retail sales during Thanksgiving weekend climbed 16 percent, and shoppers spent $398.62 on average, up from $365.34 a year earlier, the National Retail Federation said yesterday, citing a survey from BIGresearch.

Web sales on Black Friday surged 26 percent to $816 million and 18 percent to $479 million on Thanksgiving Day, said ComScore, a Reston, Virginia-based research firm.

Consumer Spending
Consumer spending, which accounts for about 70 percent of the economy, grew at a 2.3 percent annual rate in the third quarter, the fastest pace of 2011, the Commerce Department said Nov. 22. The nation's savings rate fell, suggesting some consumers used their nest eggs to keep spending. In October, consumer spending rose less than forecast as Americans used the largest gain in incomes in seven months to rebuild savings.

Borrowings on home equity lines of credit increased by $14 billion, or 2.3 percent, the New York Fed survey showed. Consumer indebtedness excluding mortgages and home-equity lines rose 1.3 percent to $2.62 trillion.

U.S. stocks rose, snapping a seven-day decline in the Standard & Poor's 500 Index, on Thanksgiving retail sales and after euro-area leaders were said to boost efforts to end the debt crisis. The S&P 500 advanced 3 percent to 1,193.86 at 11:26 a.m. in New York.

Fed Chairman Ben S. Bernanke said Nov. 2 unemployment is still "far too high" and the Fed may take further steps to boost growth, such as buying mortgage bonds or changing the way it communicates its policy goals to the public. He spoke after policy makers said the economy picked up in the third quarter and repeated its statement from September that there are "significant downside risks" to the outlook.

New Foreclosures
Delinquency rates rose, with 10 percent of outstanding debt "in some stage of delinquency" at the end of September, compared with 9.8 percent on June 30, the New York Fed survey showed. About 264,000 consumers showed new foreclosures on their credit reports, 7 percent less than in the second quarter, the report said. The amount of new bankruptcies fell 18.8 percent from the third quarter in 2010 to 423,000.

Consumer sentiment in the U.S. stagnated in the week ended Nov. 20 at levels previously reached only at the depths of recessions as a record share of households said it is a bad time to spend, the Bloomberg Consumer Comfort Index showed last week.

The New York Fed report is based on data compiled by the district bank's Consumer Credit Panel, a "nationally representative random sample" from Equifax Inc. credit-report data, the statement said.

The New York Fed revised its consumer indebtedness figures up for the second quarter to "reflect improvements" in its measurements of student loan borrowings, which it had "previously undercounted," according to the statement.

Student loan accounts that had been omitted are now being included, causing the estimate of total consumer indebtedness at the end of the second quarter to climb by $290 billion, or 2.5 percent, the statement said. The district bank said it's currently revising earlier data.

Source: Bloomberg

Buy? Housing Cheaper to Own vs. Rent in 12 U.S. Metro Areas: WSJ

Monday, November 28, 2011

Five years after the market peaked, the housing market remains depressed. October new home sales, released this morning, totaled 307,000, slightly below estimates. Meanwhile, prices rose slightly.

But, as your real estate broker will happily mention - 'Now is a great time to buy!' Unlike 2007, when that obviously was not the case for most, now it might actually be true. Ironically, the reluctance for many to buy a home is what makes it a good (relatively) time to purchase.

As Aaron and Henry discuss in the accompanying clip, owning a home is now more affordable than any time in the last 15 years, based on a new Wall Street Journal survey. In fact -- with the average price of a home $242,300 -- it is now cheaper to own than rent in 12 metro areas including Atlanta, Chicago, Detroit, Las Vegas, Miami, Orlando and Phoenix.

As the WSJ article points out, the discrepancy between buying and renting can be extreme in some areas:
"In Atlanta, which had the most favorable values for owning versus renting, the monthly payment on the average home was $539 assuming a 20% down payment during the third quarter. By contrast, the average asking rent stood at $840."

Sagging prices and sub-4% interest on a 30-year fixed mortgage are the biggest drivers behind the trend of record housing affordability. However, unlike the glory days when buying a home merely took a pulse, securing a loan today is much tougher. And, flipping property is a dead game.

Source: Wall Street Journal

Existing home sales improved in October

Monday, November 21, 2011

According to data released Monday by the National Association of Realtors (NAR), existing-home sales in October rose 1.4% to a seasonally adjusted annual rate of 4.97 million.

Compared to a year ago, the current figure is up 13.5%.

“Home sales have been stuck in a narrow range despite several improving factors that generally lead to higher home sales such as job creation, rising rents and high affordability conditions," said Lawrence Yun, NAR chief economist.

"Many people who are attempting to buy homes are thwarted in the process."

An ongoing positive trend is a steady decline in the number of homes on the market, according to the NAR. Total housing inventory at the end of October fell 2.2% to 3.33 million existing homes available for sale, which represents an 8.0-month supply at the current sales pace, down from an 8.3-month supply in September. Inventories have been trending gradually down since setting a record of 4.58 million in July 2008.

Source: Home Channel News

As More Markets Stabilize, Housing Affordability Hovers Near Record Levels for 10th Consecutive Quarter

Thursday, November 17, 2011

Buoyed by stabilizing home prices and sustained low interest rates, nationwide housing affordability during the third quarter of 2011 hovered near its highest level in the more than 20 years it has been measured, according to National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) data released today.

The HOI indicated that a near-record 72.9 percent of all new and existing homes sold in the third quarter of the year were affordable to families earning the national median income of $64,200. The affordability measure rose slightly from the 72.6 percent set last quarter and has remained above the 70 percent threshold for 11 consecutive quarters. The HOI rarely rose above 60 percent prior to this period.

"With interest rates at historically low levels and markets across the country beginning to improve, homeownership is within reach of more households than it has been for nearly two decades," said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. "However, tough economic conditions -- particularly in markets that experienced major changes in house prices and production -- as well as extremely tight credit conditions confronting home buyers and builders continue to remain significant obstacles to many potential home sales."

Lakeland-Winter Haven, Fla., was the most affordable major housing market in the country during the third quarter of the year. In Lakeland, 92.5 percent of all homes sold were affordable to households earning the area's median family income of $53,800.

Other major metro housing markets ranking near the top of the index were Toledo, Ohio; Youngstown-Warren-Boardman, Ohio-Pa.; Indianapolis-Carmel, Ind.; and Ogden-Clearfield, Utah, respectively.

Among smaller housing markets, the most affordable was Fairbanks, Alaska, where 97.8 percent of homes sold during the third quarter of 2011 were affordable to families earning a median income of $91,700. Also ranking near the top were Kokomo, Ind.; Cumberland, Md.-W.Va.; Davenport-Moline-Rock Island, Iowa-Ill.; and Lima, Ohio.

New York-White Plains-Wayne, N.Y.-N.J., led the nation as the least affordable major housing market during the third quarter of 2011. In New York, 23.3 percent of all homes sold during the quarter were affordable to those earning the area's median income of $67,400. The New York metropolitan division has held the least affordable market position for the last 14 quarters.

Other major metro areas near the bottom of the affordability index included San Francisco-San Mateo-Redwood City, Calif.; Honolulu; Santa Ana-Anaheim-Irvine, Calif.; and Los Angeles-Long Beach-Glendale, Calif., respectively.

Ocean City, N.J., where 41.7 percent of the homes were affordable to families earning the median income of $70,100, was the least affordable of the smaller metro housing markets in the country during the third quarter. Other small metro areas ranking near the bottom included Santa Cruz-Watsonville, Calif.; San Luis Obispo-Paso Robles, Calif.; Santa Barbara-Santa Maria-Goleta, Calif.; and Brownsville-Harlingen, Texas.

Source: NAHB

Home Builders Applaud Congress for Restoring Higher FHA Loan Limits

Friday, November 18, 2011

The National Association of Home Builders (NAHB) today applauded Congress for reinstating for another two years the higher conforming loan limits for the Federal Housing Administration (FHA), noting that this is an important step to help mend the struggling housing market.

"We commend congressional leaders in both parties and each chamber of Congress for taking this action to boost overall mortgage liquidity in the marketplace, create jobs, and provide home owners and home buyers with safe and affordable financing," said NAHB Chairman Bob Nielsen, a home builder from Reno, Nev.

"Restoring the higher FHA loan limits will help to stabilize home values, provide constancy while private investors re-enter the market, and enable millions of creditworthy consumers to get home loans with the best mortgage rates and lowest fees and downpayment requirements," he added.

Source: NAHB

October Housing Starts Slip to a 628,000 Rate

Thursday, November 17, 2011

Close followers of the Commerce Department's monthly residential construction data have been wondering all month if September's strong showing in housing starts could sustain itself.

The answer was delivered this morning by the latest data, sort of. Housing starts officially slipped 0.3% to a seasonally adjusted annual rate of 628,000.

There were several mixed signals jumping out of the data. First of all, last month's housing starts weren't as strong as originally reported. The September rate was revised downward from 658,000 to 630,000. The October figure was down 0.3% from the downwardly revised rate.

Here's the good news. This month's starts are up double digits -- 16.5% -- from the same month last year.

Also strong is this month's building permits figure of 653,000, up 10.9% from the September rate and up 17.7% above the October 2010 estimate.

Single-family housing starts in October were at a rate of 430,000; this is 3.9% above the revised September figure of 414,000.

On a regional basis, the south showed the broadest strength, growing in total starts and single-family starts for both the month and the year. Going the other direction, single-family starts in the Northeast declined 22.8% on a year-to-year basis.

Source: Home Channel News

Builder Confidence Rises Three Points in November

Wednesday, November 16, 2011

Builder confidence in the market for newly built, single-family homes rose by three points to 20 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for November, released today. The gain builds on a revised three-point increase in October, and brings the confidence gauge to its highest level since May of 2010.

"While this second solid monthly gain on the builder confidence scale is encouraging, the overall measure remains quite low due to the many challenges that home building continues to face with regard to the high number of foreclosures, the difficulties of obtaining construction financing and accurate appraisals, and the restrictive lending environment that is discouraging potential buyers," said Bob Nielsen, NAHB Chairman and a home builder from Reno, Nev. "These problems must be addressed so that housing can contribute to economic and job growth the way it has in the past."

"This second consecutive gain in the HMI is evidence that well-qualified buyers in select areas are being tempted back into the market by today's extremely favorable mortgage rates and prices," said NAHB Chief Economist David Crowe. "We are anticipating further, gradual gains in the builder confidence gauge heading into 2012 due to these pockets of improving conditions that are slowly spreading."

Each of the HMI's three component indexes continued to build on gains registered in the previous month in November. The component gauging current sales conditions rose three points to 20 - its highest level since May 2010 - while the component gauging future sales expectations rose two points to 25 - its highest level since March of 2011. The component gauging traffic of prospective buyers rose one point to 15, which was its highest point since May of 2010.

The HMI rose in three out of four regions in November, with a three-point gain to 17 registered in the Northeast, an eight-point gain to 23 registered in the Midwest, and a two-point gain to 21 registered in the South. After posting a big increase in October, the West returned to trend this month with a six-point decline to 15.

Source: NAHB

Why Home Prices Won't Bottom Out

Wednesday, November 16, 2011

Watching the U.S. home market struggle to rebound is like listening to children in the back of a car. No, we're not there yet.

The National Association of Realtors reported that ten real estate markets are "leading the nation toward a general recovery and stability of the housing sector," but myriad problems are going to weigh down the housing market for months to come.

The lingering malaise in the economy has triggered a new wave of defaults and foreclosures. After five straight quarterly drops, foreclosures nationwide shot up 14 percent from the second to third quarter this year, according to data released by Realtytrac, the foreclosure information service in October.

While RealtyTrac doesn't foresee that the latest foreclosure wave will equal the severity of the 2007-2010 pattern -- in which three million borrowers lost their homes -- it's going to slam on the brakes where areas are getting hit the hardest.

In theory, it should be a good time to buy a home. In the worst-hit areas, properties have lost more than half their value.

Yet as the average 30-year mortgage rate has slipped below 4 percent, the combination of employment insecurity and unusually tight standards for lending are discouraging buyers en masse. Lenders are asking for extensive income verification and tax returns. One lender I contacted for refinancing even wanted me to get an accountant to certify that I wasn't lying to the IRS.

Here are some of the biggest roadblocks:
--Even in bruised cities where price appreciation is evident, unemployment is still too high. Six out of 10 of the "top turnaround towns" listed by Realtor.com for the third quarter had jobless rates above 10 percent. People can't buy homes if they're not working or soon to lose their jobs. Those cities, which include four of the largest cities in Florida, still have a long way to go to recover from the housing bust.

--Although at a record low, the home mortgage rate may still be high relative to home prices. This may sound counterintuitive, but research from the Leuthold Group in their November newsletter shows that a "real" mortgage rate -- which factors in the falling market value of the home prices -- is 8 percent. Leuthold says that real cost of buying must include the 4 percent interest rate and the 3.9 percent average home prices decline over the past 12 months. That cost is still scaring away buyers.

--The combination of unemployment, high housing inventory and foreclosures is hurting places where there wasn't an excessive price run-up. Realtor.com found that the largest year-over year median listing price decreases through October were in cities like Chicago, Detroit and Atlanta. This three-punch combination will continue to ravage markets where there's a sluggish economy.

Possible solutions to the housing blockage range from the radical to the necessary. A group called Remortgage America is calling for the government to loan Americans mortgages at 1 percent to finance a new or existing residence.

Others would like to see Fannie Mae and Freddie Mac take the foreclosed homes they own and either auction them off or offer them in a huge fire sale.

The seized mortgage agencies account for up to one-third of foreclosed homes -- about 250,000. American taxpayers are pouring tens of billions into propping up these two wards of the state, which were taken over by the U.S. Treasury in late 2008. The Obama Administration has yet to announce what it wants to do with the companies.

Will they be restructured, liquidated or privatized?

A third option, which may have the least impact on a battered market, is to offer foreclosed homes in rent-to-own deals. Prospective homeowners get a place to live under reasonable leases and can build equity toward a purchase.

It's estimated that some 3.4 million foreclosed homes will be on the books of banks and mortgage companies by the end of this year. As regulators, banks, mortgage companies and state attorneys general move sheepishly to unblock mortgage modifications, refinancings and resales, only one certainty prevails: The open market will not be able to properly price every property until all government restrictions are lifted on their sales and re-financing.

Source: Reuters

Fannie, Freddie Execs Score $100 Million Payday

Tuesday, November 15, 2011

Mortgage finance giants Fannie Mae and Freddie Mac received the biggest federal bailout of the financial crisis. And nearly $100 million of those tax dollars went to lucrative pay packages for top executives, filings show.

The top five executives at Fannie Mae received $33.3 million in 2009 and 2010, while the top five at Freddie Mac received $28.1 million. And each company has set pay targets of as much as $17 million for its top managers for 2011.

That's a total of $95.4 million, which will essentially be coming from taxpayers, who have been keeping the mortgage finance giants alive with regular quarterly cash infusions since the Federal Home Finance Agency (FHFA) took control of the companies in September 2008.

Fannie CEO Michael Williams and Freddie CEO Charles Halderman, each received about $5.5 million in pay for last year, and they could receive more when their final deferred compensation for 2010 is set. All the executives receive a significant portion of their pay in the year or years after they earn it.

The CEOs' pay targets for 2011 are about $6 million a piece, though Halderman might not get much of that money since he's announced plans to leave Freddie sometime in 2012. He must still be at the company in order to receive the deferred compensation. His base pay for 2011 is $900,000, with most of the rest of his compensation coming in deferred payments.

The salary filings were all made by the companies in early 2011, but received relatively little attention until a recent report by Politico, the political news Web site, which highlighted about $12.8 million in bonuses the executives received for last year.

That published report sparked a political firestorm on Capitol Hill that could lead to legislation to put strict limits on pay at the two firms. But it only told part of the story. The full extent of salary, deferred pay and bonuses are only found in the filings.

Rep. Spencer Bachus, the chairman of the House Financial Services Committee, has scheduled a vote in his committee Tuesday on his own legislation that would suspend the compensation packages of top executives at the firms.

"The fact that the top executives of these failed companies are receiving multi-million dollar pay packages, plus millions more in bonuses, is an added insult to the taxpayers who are forced to foot the bill," Bachus said in a statement announcing plans to hold the vote.

The Democrat-controlled Senate Banking Committee also plans to hold a hearing on the matter on Tuesday. Additionally, the Republican-controlled House Committee on Oversight and Government Reform is set to call Edward DeMarco, the acting director of FHFA, and the CEOs of the two firms, to a hearing on the pay packages on Wednesday.

Sixty senators from both parties have already sent a letter to DeMarco asking that he change the compensation policy of the two companies. FHFA has final say on pay at the two companies.

"The idea that Fannie Mae and Freddie Mac, which rely on taxpayer funding to stay afloat, must offer excessive bonuses to its executives to attract effective management strains credulity," the letter said.

DeMarco responded to the senators saying that the executives who were running the companies in 2008 when the problems occurred have left without any golden parachutes, and that effective management is needed to make sure that taxpayer losses at the firms do not rise and the companies continue to function. He said current executive pay at the firm is about 40% less than before the bailouts.

"I need to ensure that the companies have people with the skills needed to manage the credit and interest rate risks of $5 trillion worth of mortgage assets and $1 trillion of annual new business that the American taxpayer is supporting," he wrote.

Spokespeople for Fannie and Freddie declined to comment ahead of the hearings.

The latest cost estimate from FHFA is that the two bailouts will end up with a net cost to taxpayers of about $124 billion through 2014, though that figure could rise as high as $193 billion. Even the lower cost estimate will make it the most expensive bailout of the financial crisis -- far more costly than bailing out the nation's banks or automakers.

The CEOs and the other top executives at Fannie and Freddie get all their pay in cash, and none of it in company stock , which is generally deemed worthless.

The company filings that disclosed the pay back in February also defended the pay based on the work they had done.

Fannie's filing said that under Williams' leadership, the company "made solid progress in managing credit losses on its pre-2009 book of business, acquired a 2010 book of business with a strong credit profile that is expected to be profitable, and achieved substantial progress in making the company more operationally disciplined and efficient."

Source: CNN Money

Builder Confidence Declines in Third Quarter for 55+ Housing Market

Thursday, November 10, 2011

Builder confidence in the 55+ housing market for single-family homes fell three points to 12 compared to the same period a year ago, according to the latest National Association of Home Builders' (NAHB) 55+ Housing Market Index (HMI) released today.

"The current state of the economy continues to affect buyers in the 55+ housing market," said NAHB Chairman Bob Nielsen, a home builder from Reno, Nev. "The market remains weak given the many uncertainties people face in this economy. While potential buyers exist, they are hesitant to commit to buying a new home as they are concerned about selling their existing home at a fair price, due to low appraisals, an abundance of foreclosures and tighter mortgage lending criteria."

The 55+ single-family HMI measures builder sentiment based on current sales, prospective buyer traffic and anticipated six-month sales for the 55+ single-family market. A number greater than 50 indicates that more builders view conditions as good than poor. Among the index components, present sales dropped four points, to 11. Expected sales (six months into the future) dropped nine points, to 15. Traffic of prospective buyers rose two points, to 13.

While staying even compared to a year earlier, the 55+ multifamily condo HMI still remains weak with an index level of 10. Present sales dropped one point, to 9, while expected sales dropped four points, to 10. Traffic of prospective buyers rose two points, to 11.

Alternatively, 55+ multifamily rentals remain the strongest segment of the 55+ housing market, with the index measuring present demand rising 12 points to 40, and the one measuring future demand up 10 points to 42. Current and future production indices for 55+ multifamily rental units also jumped in the third quarter from a year ago, up 11 points (to 25) and 10 points (to 26), respectively.

"Multifamily rental units continue to be the bright spot in the 55+ housing market," said NAHB Chief Economist David Crowe. "However, with demand currently running ahead of production, as it has been for several quarters now, the risk of a shortage of rental units in select markets in the future looms larger as builders continue to have trouble obtaining credit to finance new construction."

Source: NAHB

Rate on 30-Year Mortgage Below 4 PCT. for 2nd Time

Thursday, November 10, 2011

The average rate on the 30-year fixed mortgage fell below 4 percent for just the second time in history.

Freddie Mac said Thursday the rate on the 30-year fixed loan fell to 3.99 percent, down from 4 percent last week.

Five weeks ago, it dropped to a record low of 3.94 percent, according to the National Bureau of Economic Research.
The average rate on the 15-year fixed mortgage fell last week to 3.30 percent from 3.31 percent. Five weeks ago, it too hit a record low of 3.26 percent.

Mortgage rates track the yield on 10-year Treasury note, which fell this week as investors shifted money into safer Treasurys amid fears Europe's debt crisis could worsen.

Low mortgage rates have down little to boost home sales. Rates have been below 5 percent for all but two weeks this year. Yet home sales are on pace to be the lowest in 14 years.

Refinancing activity jumped more than 12 percent last week from the previous week, to the highest level in a month, according to the Mortgage Bankers Association. But refinancing is down 13.5 percent from a year ago and the four-week moving average for purchase and refinancing mortgage applications is down slightly, suggesting the low rates are failing to entice many Americans.

High unemployment and declining wages have made it harder for many people to qualify for loans. Many Americans don't want to sink money into a home that could lose value over the next three to four years. And most homeowners who can afford to refinance already have.

The low rates have caused a modest boom in refinancing, but that benefit might be wearing off. Most people who can afford to refinance have already locked in rates below 5 percent.

Just five years ago they were closer to 6.5 percent. Ten years ago, they were above 8 percent.

The average rates don't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for the 30-year fixed mortgage was unchanged at 0.7. The average fee on the 15-year fixed loan rose from 0.7 to 0.8.

The average rate on the five-year adjustable loan rose to 2.98 percent from 2.96 percent, which had been a record low. The average rate on the one-year adjustable loan increased to 2.95 percent from 2.88 percent. It fell last month to 2.81 percent, the lowest on records dating to 1984.

The average fees on the five-year and one-year adjustable loans were both unchanged at 0.6.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country Monday through Wednesday of each week.

Source: Associated Press

Texas Tops the List in Improving Housing Markets

Wednesday, November 9, 2011

An index by the National Association of Home Builders (NAHB) designed to track improving housing markets across the country has added nine more metro regions while dropping two cities. The November additions -- Cheyenne, Wyo.; Corpus Christi, Texas; Davenport, Iowa; Fort Collins, Colo.; Hinesville, Ga.; Lima, Ohio; Monroe, La.; Tyler, Texas; and Williamsport, Pa. -- raise the number from 23 to 30 metro areas.

The two cities dropped from the NAHB’s First American Improving Markets Index (IMI) in November were Iowa City and Wichita Falls. These areas experienced declines in their employment and permit data, respectively.

"Texas continues to dominate the list of improving housing markets in November, increasing its net number of entries to eight and continuing a trend in which energy-producing metros seem to be doing better than the average," said NAHB chairman Bob Nielsen, a home builder from Reno, Nev. "Meanwhile, the geographic diversity of metros also continued to expand this month, with the states of Colorado, Georgia and Ohio all represented for the first time. This is further evidence that all housing markets are uniquely dependent upon local conditions, and some are leading the way toward an eventual, broader recovery."

"The November IMI remains heavily weighted by smaller cities, with Pittsburgh and New Orleans as the only major metros represented," said NAHB chief economist David Crowe. "This is indicative of the tough conditions that continue to prevail across much of the country, particularly in larger markets that have been hit hardest by job losses and foreclosures during the recession and that will take more time to heal. However, momentum is building in pockets of the country where energy and agriculture are the dominant industries and where consistent, measurable improvements in economic conditions are now becoming apparent."

Overall, the index identifies metropolitan areas that have shown improvement for at least six months in housing permits, employment and housing prices. The following metros were listed in November:
• Alexandria, La.;
• Amarillo, Texas;
• Anchorage, Alaska;
• Bismarck, N.D.;
• Casper, Wy.;
• Cheyenne, Wy.;
• Corpus Christi, Texas;
• Davenport, Iowa;
• Fairbanks, Ark.;
• Fayetteville, N.C.;
• Fort Collins, Colo.;
• Hinesville, Ga.;
• Houma, La.;
• Jonesboro, Ark.;
• Kankakee, Ill.;
• Lima, Ohio;
• McAllen, Texas;
• Midland, Texas;
• Monroe, La.;
• New Orleans;
• Odessa, Texas;
• Pine Bluff, Ark.; and
• Pittsburgh.

Source: Home Channel News

Average Rate on 30-Year Mortgage Falls to 4 PCT.

Thursday, November 3, 2011

The average rate on the 30-year fixed mortgage fell to 4 percent this week, nearly matching the all-time low hit just one month ago.

Freddie Mac said Thursday the rate on the 30-year loan dropped from 4.10 percent last week. Four weeks ago, it dropped to 3.94 percent — the lowest rate ever, according to the National Bureau of Economic Research.

The average rate on the 15-year fixed mortgage fell to 3.31 percent from 3.38 percent. Four weeks ago, it too hit a record low of 3.26 percent.

Mortgage rates tend to track the yield on the 10-year Treasury note, which the Federal Reserve has been buying to try to force rates lower.

Federal Reserve Chairman Ben Bernanke said Wednesday that low rates have failed to spur the increase in home buying or mortgage refinancing government officials had expected.

High unemployment and declining wages have made it harder for many people to qualify for loans. Many Americans don't want to sink money into a home that could lose value over the next three to four years. And most homeowners who can afford to refinance already have.

The number of Americans who bought previously occupied homes fell in September and is on pace to match last year's dismal figures — the worst in 13 years.

Sales of new homes rose last month after four straight monthly declines. But the increase was largely because builders cut their prices. And it followed a peak buying season that was the worst on records going back nearly 50 years.

The low rates have caused a modest boom in refinancing, but that benefit might be wearing off. Most people who can afford to refinance have already locked in rates below 5 percent.

Rates have been below 5 percent for all but two weeks in the past year. Just five years ago they were closer to 6.5 percent. Ten years ago, they were above 8 percent.

The average rate on the five-year adjustable loan fell to 2.96 percent from 3.08 percent. That matches a record low hit four weeks ago.

The average rate on the one-year adjustable loan declined to 2.88 percent from 2.90 percent. It fell last month to 2.81 percent, the lowest on records dating to 1984.

The average rates don't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for the 30-year fixed mortgage fell from 0.8 to 0.7. The average fee on the 15-year fixed loan was unchanged at 0.7. The average fees on the five-year adjustable loan one-year adjustable loan were also unchanged at 0.6.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country on Monday through Wednesday of each week.

Source: Associated Press

Consumer Confidence Unexpectedly Up in October

Tuesday, November 1, 2011

A report released Friday by Thomson Reuters and the University of Michigan found that consumer confidence in the United States rose unexpectedly in October, a signal that an economic recovery process may still be intact.

The Thomson Reuters/University of Michigan final index of consumer sentiment climbed to 60.9 from 59.4 in September, beating Bloomberg News economists’ projections of a drop to 58.
The preliminary reading for the month was 57.5.

Relief from plummeting stocks and rising gas prices has left Americans feeling more uplifted than in recent months, raising hopes that the collective good mood will spur more holiday spending.

“Consumers are not throwing caution to the winds, but their mood has lifted slightly from the recession-type readings late this summer,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ in New York City, who forecast a reading of 60. “The stock market is sharply higher, and the consumer is back in a spending mind frame.”

Estimates for the confidence measure ranged from 55 to 60, according to the Bloomberg survey. The index averaged 89 in the five years leading up to the recession that began in December 2007.

Commerce Department figures showed that spending increased in September by 0.6%, after a 0.2% gain the prior month.

Source: Home Channel News

Congress Recognizes NAHB Member for Helping Homeless Women Veterans

Thursday, October 27, 2011

Home builder Chip Smith and his company Blue Ridge Log Cabins of Campobello, S.C., were recognized from the floor of the U.S. House of Representatives by Rep. Trey Gowdy (R-S.C.) on Oct. 26 for building a home for women veterans. The home was donated to the Steps-N-Stages Jubilee House, a non-profit agency that provides housing for homeless and disabled women veterans and their families in Fayetteville, N.C.

"It is truly humbling to be recognized at the highest level in the country," said Smith. "We felt very strongly about the plight of homeless women veterans and couldn't let this opportunity to make a difference pass us by."

The construction of the home was featured on the season premiere of the ABC television series "Extreme Makeover: Home Edition," on Sept. 25 with a very special guest volunteer worker--First Lady Michelle Obama.

Navy veteran Barbara Marshall founded the non-profit Steps-N-Stages, Inc. In addition to transitional and permanent housing, the agency provides mentoring, life coaching, job search assistance, peer counseling and other support services for veterans. More than 30 homeless women veterans and their families will be served by the housing and resources in Jubilee House.

The log home was assembled from 13 modular units over seven days with the help of more than 4,000 volunteers.

Smith, a member of NAHB's Building Systems Councils and Log Home Council, donated the home, and local companies and individuals donated supplies, materials and funds to help complete the house.

"Blue Ridge Log Homes is the only company in the world to combine log and modular construction building systems," said Smith. "Our creativity and innovative practices have allowed us to be successful and give back to the community through this tough time for home builders."

Blue Ridge constructs around ninety percent of each home in their factory, which both reduces cost and allows the home to be completed faster than a conventionally-constructed log home.

"The First Lady told me 'I hope other people look at what you're doing and are inspired to build homes like this around the country,'" said Smith. "It would be the best outcome imaginable for these deserving veterans for that to happen."

Source: NAHB

Remodeling Activity Remains Slow Under Current Economic Conditions

Thursday, October 27, 2011

The current state of the national economy continues to affect the remodeling industry, according to the latest National Association of Home Builders' (NAHB) Remodeling Market Index (RMI). The index dropped to 41.7 in the third quarter from 43.9 in the second quarter, after having reached a four-year high of 46.5 in the first quarter. An RMI below 50 indicates that more remodelers report that market activity is declining than report that it is increasing.

The overall RMI combines ratings of current remodeling activity with indicators of future activity, like calls for bids.

In the third quarter, the RMI component measuring current market conditions fell to 43.0 from 44.8 in the previous quarter. The RMI component measuring future indicators of remodeling business declined as well, to 40.4 from 43.0 in the last quarter.

"Remodelers report that while many consumers show interest in having remodeling work done, they are slow to commit to projects," said NAHB Remodelers Chairman Bob Peterson, CGR, CAPS, CGP, a remodeler from Ft. Collins, Colo. "Consumers are in a 'wait and see' mode with regard to current economic conditions."

All three components measuring current market conditions decreased in the third quarter: major additions to 45.2 (from 46.2 in the second quarter), minor additions to 45.7 (from 48.5) and maintenance and repair to 37.1 (from 38.4). Future market indicators decreased as well: calls for bids to 45.4 (from 49.8), amount of work committed for the next three months to 29.9 (from 32.3), backlog of remodeling jobs to 43.0 (from 45.7) and appointments for appraisals to 43.3 (from 44.2).

Regionally, current remodeling market conditions shrank in two areas: the Northeast to 43.9 (from 48.1 in the second quarter) and the West to 40.9 (from 48.2). Increases were seen in the Midwest at 46.8 (from 44.4) and the South at 47.1 (from 42.9). Future market indicators fell in all regions, except for the South, where it edged up to 42.2 from 41.6 in the second quarter.

"The current economic instability continues to affect consumer confidence, therefore we have seen a drop off in remodeling activity for the last two quarters," said NAHB Chief Economist David Crowe. "In order for the remodeling market to pick up, home owners need to have access to less restrictive lending requirements and see their economic future stabilizing."

Source: NAHB

Contracts to Buy Homes Fell 4.6 Percent in Sept

Thursday October 27, 2011

The number of Americans who signed contracts to buy homes fell for the third straight month in September after the spring-and-summer peak buying season failed to entice new buyers.

The National Association of Realtors said Wednesday that its index of sales agreements fell 4.6 percent last month to a reading of 84.5.

A reading of 100 is considered healthy. The last time the index reached that high was in April 2010, the final month that buyers could qualify for a federal tax credit that has since expired.

Contract signings are usually a reliable indicator of where the housing market is headed. There's typically a one- to two-month lag between a contract and a completed deal.

But the Realtors group said a growing number of buyers have canceled contracts after appraisals showed that the homes were worth less than the buyers had bid. A sale isn't final until a mortgage is closed. That means more "pending" sales aren't turning into final sales.

"It is especially troubling given the big August decline in long-term interest rates," said Pierre Ellis, an analyst at Decision Economics.

Homes are the most affordable they've been in decades. Long-term mortgage rates are hovering at record lows near 4 percent. Prices in some metro areas have been cut in half. Still, sales in most areas remain weak.

In part, that's because loans are harder to get. Many lenders are requiring 20 percent down payments and strong credit scores to qualify.

Sales for previously occupied homes are on pace to match last year's 4.91 million sold, the fewest since 1997. In a healthy economy, Americans would buy roughly 6 million homes each year.

In September, sales of new homes rose after four straight monthly declines. But that was largely because builders had cut their prices in the face of depressed demand. This year is shaping up as the worst for new-home sales on records dating to 1963.

The number of people who signed home contracts had risen in both May and June before falling 7 percent over the past three months.

Contract signings fell across the country. September's index fell 2.1 percent in the West, 4.7 percent in the Northeast, 5.5 percent in the South and 6.2 percent in the Midwest.

Source: Associated Press

Rate on 30-Year Fixed Mortgage Falls to 4.10 PCT.

Thursday October 27, 2011

The average rate on the 30-year fixed mortgage was nearly unchanged for a second straight week after rising from a record low.

Freddie Mac said Thursday that the rate on the 30-year loan fell to 4.10 percent from 4.11 percent last week. Three weeks ago, it dropped to 3.94 percent. The National Bureau of Economic Research says that's the lowest rate ever.

The average rate on the 15-year fixed mortgage was unchanged at 3.38 percent. Three weeks ago, it hit a record low of 3.26 percent.

Low rates have done little to jolt the struggling housing market. Sales remain depressed, and home prices are still dropping in many markets.

High unemployment and declining wages have made it harder for many people to qualify for loans. Most of those who can afford to refinance already have.

The number of Americans who bought previously occupied homes fell in September and is on pace to match last year's dismal figures -- the worst in 13 years.

Sales of new homes rose last month after four straight monthly declines. But the increase was largely because builders cut their prices and it followed a peak buying season that was the worst on records going back nearly 50 years.

Many borrowers are unable to take advantage of the low rates because they can't meet banks' restrictive lending standards, or are unable to scrape together a down payment.

The low rates have caused a modest boom in refinancing, but that benefit might be wearing off. Most people who can afford to refinance have already locked in rates below 5 percent.

The Federal Reserve has been helped push rates lower by buying longer-dated Treasurys, such as 10-year Treasury notes. Mortgage rates tend to track the yield on the 10-year note. Buying by the Fed pulls the yield lower.

Rates have been below 5 percent for all but two weeks in the past year. Just five years ago they were closer to 6.5 percent.

The average rates don't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount. The average fee for the 30-year fixed mortgage was unchanged at 0.8 point. The average fee for the 15-year loan fell to 0.7 point from 0.8 point.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country on Monday through Wednesday of each week.

The average rate on the five-year adjustable loan rose to 3.08 percent from 3.01 percent. It hit a record low of 2.96 percent three weeks ago.

The average rate on the one-year adjustable loan fell to 2.90 percent from 2.94 percent. It fell last month to 2.81 percent, the lowest on records dating to 1984.

The average fee on the five-year adjustable loan fell to 0.5 point from 0.6 point. The average fee on the one-year adjustable loan was unchanged at 0.6 percent.

Source: Associated Press

Stern Advice: Reverse Mortgages Appeal to Younger Homeowners

Thursday, October 27, 2011

The typical reverse mortgage borrower isn't who you think she is. Instead of the elderly woman you may be picturing, think of a married couple who is a bit younger.

New reverse mortgage applicants tend to be clustered around ages 62 and 63, according to Peter Bell, president of the National Reverse Mortgage Lenders Association. And they are as likely to be couples as singletons.

That's a change from 15 years ago, when the recently widowed 75-year-old woman was their most common applicant.

In a typical reverse mortgage arrangement, a homeowner will borrow money against the equity in his home, but not have to make any payments on it until the home is sold.

The new younger borrowers often pay off these loans more quickly than the elderly borrowers of yore. They use them as a transitional way to fund retirement, says Bell -- living off of reverse mortgage income during the early retirements and then selling their homes, paying off loans and downsizing later.

That may make sense for a boomer generation that is said to hold half of its net worth in home equity. But it can also be a costly strategy and one laden with upfront fees and complexities.

The newly created Consumer Financial Protection Bureau is studying the risks of reverse mortgages and the AARP has filed lawsuits claiming bad behavior on the part of lenders and federal agencies in the way they have administered reverse mortgages.

"My observation is that you have to be very, very, very careful with a reverse mortgage," says Susan Fulton, a Bethesda, Maryland, fee-only financial adviser. "Before you take one out, get at least two opinions from experts who can look it over."

Jean Constantine-Davis, the attorney who has pressed litigation on these mortgages for the AARP, doesn't think they are always a bad idea. "I'm not down on the product," she says. "I just think it's a product for a very narrow group of people."

If you think you might be in that narrow group, here are some considerations.

-- Look at the numbers. Bell's group offers a full-featured reverse mortgage calculator at www.reversemortgage.org. Put in your zip code, age and home value, and you will be able to see how much you can borrow AND how much it will cost you.

For example, a 62-year-old with a $500,000 Maryland house could borrow as much as $306,323 at a variable rate starting at 3.99 percent. But it would cost as much as $27,701 in up-front closing costs and reverse mortgage insurance. Note that the vast majority of reverse mortgages are part of the Home Equity Conversion Mortgage (HECM) program guaranteed by the federal government, and while some lenders may charge somewhat more or less than others, some of the fees are established by HUD.

-- Think very long term. Obviously, if you're going to spend that much money upfront to nail down one of these loans, you need to make sure you're going to use it for a long time. If you end up selling the home a year later, you will have paid an effective interest rate that is more than 10 percent. The longer you're in the loan, the less costly those upfront fees will be.

-- Weigh the choices. That same borrower could pay less up front if she were willing to borrow less and take a so-called HECM Saver loan. You can also opt for a fixed-rate reverse mortgage, which could protect you if you expect to hold it for many years and rates rise. But it could end up being expensive, because in the typical reverse mortgage, you don't have to tap all of the money at once, but if it's a fixed rate loan, you do have to borrow the full amount when you take the loan.

-- Don't go solo if you're married. Most of the problems Constantine-Davis has seen involve older couples where the lender convinced the borrower to remove the younger spouse from the home deed and therefore, the loan. That enables the borrower to get more cash out of the house, but also makes the loan become due when that borrowing spouse dies. It can leave the second spouse in the lurch. It's safer to make sure both homeowners are on the deed.

-- Look at other alternatives. If you have home equity and are not squeezed to the max, consider a regular home equity line of credit first, suggests Fulton. You'll have to make payments, but you will have extra cash available for home repairs and emergencies, typically at lower rates and costs, than you will with a reverse loan. She tells strapped retirees that they are better off selling their home, pulling out their equity and downsizing than hanging onto a home they cannot afford. When you have a reverse mortgage, you still have to make sure you have enough cash to keep up with the real estate taxes or home insurance.

-- Don't take a reverse loan just to invest money. Some folks have been talked into borrowing against their homes just to hand money to an unscrupulous salesperson pushing expensive annuities. It's rarely a good idea to pull money out of your house at comparatively high costs, just to buy another financial product. If the same person that's peddling the loan is also telling you what to do with the proceeds, beware.

Source: Reuters

New-Home Sales Rise 5.7 Percent in September

Wednesday, October 26, 2011

Sales of newly built, single-family homes rose 5.7 percent to a seasonally adjusted annual rate of 313,000 units in September, according to newly released data from the U.S. Commerce Department. This marks the fastest pace of new-home sales in the past five months.

"Today's report highlights the gradual improvement in housing market conditions that is becoming evident in certain pockets of the country, as consumers who can surmount very restrictive lending standards to qualify for a favorable mortgage rate seize on this opportunity to buy," said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. "The latest numbers also reveal that first-time buyers are driving the new-homes market right now, as evidenced by the volume of lower-priced, entry-level homes under contract. It's worth noting that these consumers are very dependent upon federal policies and programs that support homeownership, such as the mortgage interest deduction and low-downpayment mortgage options that have been threatened by recent government proposals."

"The improved rate of new-home sales in September is on par with NAHB's forecast for the overall number of sales this year and in keeping with the spotty improvements that our latest builder surveys have highlighted in select markets," said NAHB Chief Economist David Crowe. "While 313,000 is still an exceptionally low rate of new-home sales by historic standards, it is an encouraging sign of an anticipated broader recovery over the course of next year, and builders have helped the situation by keeping their inventories of homes for sale very lean in areas where there is an oversupply of existing units."

Regionally, new-home sales were mixed in September, with gains of 11.2 percent and 9.7 percent registered in the South and West, respectively, and declines of 4.2 percent and 12.2 percent registered in the Northeast and Midwest, respectively.

The inventory of new homes for sale held at an all-time record low of 163,000 units in September. This represents a modest 6.2 -month supply at the current sales pace.

Source: NAHB

Mortgage Applications Bounced Last Week: MBA

Wednesday, October 26, 2011

Applications for home mortgages rose last week, recouping some of the steep decline a week before as demand for both purchases and refinancing perked up, an industry group said on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, rose 4.9 percent in the week ended Oct 21.

The index had tumbled nearly 15 percent the week before.

The MBA's seasonally adjusted index of refinancing applications gained 4.4 percent, while the gauge of loan requests for home purchases was up 6.4 percent.

The refinance share of total mortgage activity eased to 77.3 percent of applications from 77.6 percent. Fixed 30-year mortgage rates averaged 4.33 percent, unchanged from the previous week.

The survey covers over 75 percent of U.S. retail residential mortgage applications, according to MBA.

Source: Reuters

Tamko makes donation to “Extreme Makeover: Home Edition”

Tuesday, October 25, 2011

Tamko Building Products is donating seven complete asphalt roofing systems and three composite decking packages to “Extreme Makeover: Home Edition.”

The show will build seven houses in seven days, its largest project to date. The build is part of the recovery effort in Joplin, Mo., after the tornado hit on May 22.

Tamko was founded in Joplin in 1944 and has been part of the community for 67 years.

“We are pleased to make this donation in support of the residents of Joplin and the rebuilding efforts that are taking place,” president David Humphreys said.

Tamko recently donated a complete decking system to another “Extreme Makeover: Home Edition” build in Springfield, Mass., in August.

Source: Home Channel News

Home Prices Rise for 5th Straight Month

Tuesday, October 25, 2011

Home prices continued a winning streak in August, the fifth straight month of price gains, but remain lower on a year-over-year basis.

A gauge of home prices featuring 20 major cities, the S&P/Case Shiller index, reported Tuesday that prices rose 0.2% in August but were still down 3.8% year over year.

"Even though the [year-over-year] rates are improving, national home prices are still below where they were a year ago," said David Blitzer, a spokesman for S&P.

Overall, the market is treading water and there doesn't seem to be any reason to suspect that's going to change soon.

"As long as the economy remains weak, foreclosures are still a problem and lending standards stay stringent, we're not going to see much movement in home prices," said Mike Larson, a real estate analyst for Weiss Research.

"You just haven't gotten yet the rocket fuel needed to send housing soaring again," he said.

Among individual metro areas, Washington saw the biggest gain -- 1.6% in August. Detroit and Chicago were close behind at 1.4%. In the past 12 months, Washington prices have gone up 0.3%. In Detroit prices were up 2.4% since August 2010, more than any other area.

The Atlanta metro area recorded the steepest decline, down 2.4% for the month. Year-over-year prices were off 6.3%. Minneapolis home prices recorded the worst 12-month drop of 8.5%.

The home price report comes on the heels of changes in the Home Affordable Refinance Program (HARP) announced Monday by the Obama administration. The changes will enable many homeowners to refinance high-interest mortgages more easily, making their monthly payments more affordable. The plan should enable some to avoid default.

Ed Mermelstein, a New York-based real estate attorney, broker and developer, doubts that the HARP changes will have much impact on home prices or sales.

"The economy and jobs have to come back. That's what's going to help the housing market," he said.

Larson pointed out that even if they work as planned, HARP's main focus is helping existing homeowners stay in their homes; it won't spur new sales.

Newport said he thinks that housing market weakness will continue improving.

"The key reason is that more distressed homes are coming onto the market and will be selling," he said. "That tends to drag home prices down."

Fiserv, which provides real estate financial analytics to industry, is projecting a further home price decline of 3.6% through the end of June 2012.

If that forecast comes true, it would mean home prices will plumb a new, post-bubble bottom over the next nine months, down 34% from the mid-2006 peak.

Source: CNN Money

Consumer Confidence Tumbles in October

Tuesday, October 25, 2011

Consumer confidence unexpectedly dropped to its lowest level in two-and-a-half years in October as consumers fretted about job and income prospects.

In other data on Tuesday, U.S. home prices were unchanged in August, pointing to a market that continued to stabilize but has yet to gain traction.

The Conference Board, an industry group, said its index of consumer attitudes fell to 39.8 from a upwardly revised 46.4 the month before. It was the lowest level since March 2009.

Economists had expected the index to rise to 46.0, according to a Reuters poll. September was originally reported as 45.4.

The present situation index slipped to 26.3 from 33.3, while the expectations index declined to 48.7 from 55.1. The expectations gauge was also at its lowest since March 2009.

"Consumer expectations, which had improved in September, gave back all of the gain and then some, as concerns about business conditions, the labor market and income prospects increased," Lynn Franco, director of the Conference Board Consumer Research Center, said in a statement.

Consumers' view of the labor market was mixed. The number of respondents that said they found "jobs plentiful" fell to 3.4 percent from 5.6 percent. However, the "jobs hard to get" category eased to 47.1 percent from 49.4 percent.
The assessment of price increases was unchanged with expectations for inflation in the coming 12 months at 5.8 percent.

Recent better than expected manufacturing and jobs data has tempered fears the economy could lapse back into recession, with most expecting a slow pace of growth that should avoid contraction.

Analysts are hoping to get confirmation of that from U.S. gross domestic product data for the third quarter later in the week. The advance reading is expected to show the economy grew at an annual rate of 2.5 percent after a weak first half of the year, according to a Reuters poll of economists.

But the surprising drop in consumer confidence in August may suggest that the improvement in third quarter economic growth may not be sustained.

Source: Reuters

Troubled Homeowners Get a Lifeline

Monday, October 24, 2011

President Obama will announce changes in the government's Home Affordable Refinance Program (HARP) on Monday, making it easier for homeowners to capitalize on current low-interest rates by refinancing their old, high-interest mortgages.

More than 890,000 Americans have already utilized the HARP program to reduce monthly mortgage payments but many more have not. One reason: The current rules do not permit severely underwater borrowers to participate.

The new rules will allow homeowners who owe more than 125% of the market value of their homes -- $125,000 in mortgage balance on a home worth less than $100,000, for example -- to get new loans.

"We know there are many homeowners who are eligible to refinance under HARP and those are the borrowers we want to reach," said Edward DeMarco, acting director for the FHFA.

Jaret Seiberg, an analyst for MF Global Inc.'s Washington Research Group, which analyzes public policy for institutional investors, said he expects the lifting of that restriction will help only a limited number of borrowers.

"This change is unlikely significantly to expand the universe of eligible HARP borrowers as the borrowers must still be current and qualify for a new loan," he said in a research report.

Perhaps more significantly, Seiberg believes, the changes may allow banks to refinance loans without fear that Fannie Mae (FMNA) and Freddie Mac will force them to repurchase those loans if a large percentage of them fail.

Fannie and Freddie will also reduce risk-based fees to enable underwater borrowers to better afford the new loans and extend HARP through to the end of 2013.

Source: CNN Money

Foreigners are Buying U.S. Homes

Friday, October 21, 2011

Hey, wealthy foreigners! Want to live in the U.S.? Buy a home here.

International purchases of American homes are ramping up, and a new Senate bill designed to boost the ailing real-estate market would encourage globe-trotting investors to buy even more.

The bill, co-sponsored by Charles Schumer (D-N.Y.) and Mike Lee (R.-Utah) would grant a U.S. visa to international investors who agree to spend at least $500,000 on residential real estate here.

If passed, the legislation could add to a surge in homebuying by international purchasers over the past year or two that's already given some local U.S. markets a welcome boost.

Foreigners spent $82 billion buying up U.S. homes in the 12 months ended in March, up 24% from a year earlier, according to the National Association of Realtors (NAR). That represents 8% of total U.S. sales.

In places like South Florida, international buyers already account for a whopping 25% of the market. California, Texas and Arizona also attract many foreign buyers, as do Hawaii and New York.

South Florida condo sales have been surprisingly strong, said Brad Hunter, chief economist for Metrostudy, a housing analytics company. "And the majority of those sales are to South Americans and Canadians," he said.

All that international buyer activity has been a tonic for the anemic Florida market. Housing starts were up nearly 20% in the three months ended Sept. 30, according to Metrostudy.

In Manhattan, there's been a steady baseline of foreign condo buyers, said Jonathan Miller, CEO of Miller Samuel, a New York appraisal firm. They generally account for about 15% of investors, but in recent years, the buyer mix in New York City has shifted, he said.

When the euro was strong in the mid-2000s, buyers from Western Europe -- and particularly Ireland -- dominated.

The Irish "economy was so strong back home -- the 'Celtic Tiger' years -- that many were flush and wanted to invest and take advantage of the spread between currencies," said Miller. "There were marketing groups that would go to Ireland and sell packages of condos here."

Now, said Miller, the New York market now attracts more Asian and Latin American buyers than in the past.

Wei Min Tan, a real-estate agent with Charles Rutenburg Realty who specializes in selling Manhattan real estate to Asians, said his volume has more than doubled this year.

"I tell [buyers] it's going to be a stable investment that should go up 10% a year," he said. That's "not as much as they might get in Hong Kong or Shanghai," but there's less volatility, he said.

Even better for homeowners, foreign sales can be very easy: The buyers are often affluent and buy more expensive homes. The median sale price of $175,000 they pay in Florida, for example, is well above the median sales price of $136,500 for all transactions.

There's also no hassle over financing or waiting around for a mortgage lender to approve the deal: Overwhelmingly, international buyers pay cash.

Indeed, the Senate bill would require buyers to pay cash for the homes to qualify for the new "homeowner" visa.

They'd also need to pay U.S. taxes and spend at 180 days a year in the country, and can't work here or take out home-equity loans against the properties. In return, they'd get to live here for at least three years.
A vote of confidence

The program could improve the housing market nationwide, said Schumer.

"We think a very significant number of people will be brought in," he said. "They'll sop up the extra supply of homes we have right now that has been dragging down the economy."

Foreigners seem to have more confidence in the U.S. real estate market than Americans do. Almost half of buyers surveyed by NAR cited the profitability or safety of their investments as the main factor that persuaded them to buy.

"With the economic distress in Europe," said Miller, "people are still looking for safe havens for investing and the U.S. is perceived globally as safe."

Source: CNN Money

Donald Trump: Why Now Is The Best Time Ever to Buy a House

Friday, October 21, 2011

Real estate mogul Donald Trump has some advice for you: buy a house.

Despite the continued weakness in the U.S. housing market, now is the best time ever to buy a house, says Trump who sat down with The Daily Ticker's Aaron Task to discuss the state of both residential and commercial real estate.

But there is a caveat.

"This time is a great time to buy a house, but only if it is owned by a bank," says Trump. "If a bank already owns a house, they are dying to get rid of it and they will give you all the loan you want because they have to get rid of those houses."

He's referring the huge number of foreclosed homes banks now have on their balance sheets.

Foreclosure filings for the third quarter of 2011 were up 1% or 610,337 from the previous quarter and down 34% from the third quarter of 2010, reports RealtyTrac. And September filings were down 6% from August and down 38% from September 2010.

But this does not mean the foreclosure problem is improving and here's why:

"U.S. foreclosure activity has been mired down since October of last year, when the robo-signing controversy sparked a flurry of investigations into lender foreclosure procedures and paperwork," said James Saccacio, chief executive officer of RealtyTrac. "While foreclosure activity in September and the third quarter continued to register well below levels from a year ago, there is evidence that this temporary downward trend is about to change direction, with foreclosure activity slowly beginning to ramp back up.

With the potential for far more foreclosures properties to hit the market in the months to come, Trump says, the opportunity to buy a house—a bank-owned home—is only going to improve.

Source: Yahoo Finance

Presidential Hopefuls Must Address Housing Issues

Thursday, October 20, 2011

As noted by the Wall Street Journal, MSNBC and other media outlets, the Republican presidential candidates let a great opportunity slip away during Tuesday night's presidential debate to explain how they would address the nation's housing problems in order to get the housing market and economy back on track, according to the National Association of Home Builders (NAHB).

"There can be no economic recovery without a housing recovery, yet the silence on housing was deafening during the debate," said NAHB Chairman Bob Nielsen, a home builder from Reno, Nev. "It is particularly ironic that with the debate setting in Las Vegas, the epicenter of the foreclosure crisis, the candidates chose to duck this topic and other critical housing issues."

Furthermore, Nielsen noted that the absence of specific policy proposals to spur the housing market and promote homeownership is not just limited to the GOP presidential contenders.

"President Obama needs to take an affirmative position on homeownership as well," he said. "The failure of the Administration to put forth pro-housing policies is impeding the economic recovery and hurting job growth and consumer confidence."

In normal economic times, housing accounts for more than 17 percent of the nation's economic output. Building 100 single-family homes generates 305 full-time jobs, $23.1 million in wage and business income and $8.9 million in taxes and revenue for state, local and federal governments.

Though more than 1.4 million residential construction workers have been idled since April 2006, several markets are showing signs of improvement, but policy headwinds are preventing workers from returning to their jobs, keeping home buyers on the sidelines and harming the economic recovery.

Credit conditions remain extremely tight for home buyers and home builders alike, preventing creditworthy borrowers from obtaining affordable home loans and small home building firms from getting construction loans to build even pre-sold homes and create jobs in their communities.

Policymakers are also considering mandating 20 percent downpayments for home buyers and abolishing Fannie Mae and Freddie Mac, which would make it even more difficult to obtain an affordable 30-year home loan, the major housing finance tool for most Americans.

Meanwhile, some leaders in Washington are calling for eliminating or drastically reducing the mortgage interest deduction, which would act as a tax on millions of middle-class home owners, place more downward pressure on home values, and further enflame the foreclosure mess.

"Instead of arguing who was to blame for the downturn, all the 2012 presidential hopefuls need to be addressing these housing issues head-on," said Nielsen. "Housing and homeownership are critical to a strong and prosperous nation. If any of these anti-housing policies are codified, it could fundamentally alter the ability of the nation to sustain a middle class that has contributed to a century of economic progress."

Source: NAHB

Existing-Home Sales Decline in September

Thursday, October 20, 2011

Total existing-home sales in September decreased 3% to a seasonally adjusted annual rate of 4.91 million from an upwardly revised 5.06 million in August, according to the National Association of Realtors (NAR). The September figure is but 11.3% above the 4.41 million-unit pace in September 2010.

This drop in existing-home sales comes just a day after the release of September housing starts, which showed 15% growth.

“Existing-home sales have bounced around this year, staying relatively close to the current level in most months,” said Lawrence Yun, NAR chief economist. “The irony is affordability conditions have improved to historic highs and more creditworthy borrowers are trying to purchase homes, but the share of contract failures is double the level of September 2010. Even so, the volume of successful buyers is higher than a year ago and is remaining fairly stable -- this speaks to an unfulfilled demand.”

The national median existing-home price for all housing types was $165,400 in September, down 3.5% from September 2010. Distressed homes accounted for 30% of sales in September (18% were foreclosures, and 12% were short sales), down from 31% in August and 35% in September 2010.

Total housing inventory decreased 2% to 3.48 million existing homes available for sale, which represents an 8.5-month supply, compared with an 8.4-month supply in August.

Single-family home sales fell 3.6% to a seasonally adjusted annual rate of 4.33 million in September from 4.49 million in August, but are 12.2% above the 3.86 million-unit level in September 2010. The median existing single-family home price was $165,600 in September, down 3.9% from a year ago.

Regionally, existing-home sales in the Northeast rose 2.6% to an annual level of 790,000 in September and are 6.8% above a year ago. Existing-home sales in the Midwest slipped 0.9% in September to a pace of 1.09 million but are 17.2% higher than September 2010. In the South, existing-home sales declined 2.6% to an annual level of 1.89 million in September but are 10.5% above a year ago. Existing-home sales in the West fell 8.8% to an annual pace of 1.14 million in September but are 10.7% higher than September 2010.

Source: Home Channel News

September Housing Starts Jump 15%

Wednesday, October 19, 2011

September housing starts showed double-digit increases compared with both last year and last month, according to data released this morning by the U.S. Department of Commerce.

Housing starts came in at a seasonally adjusted annual rate of 658,000, up 15% from the August rate of 572,000, and up 10.2% compared with September 2010.

The figure of 658,000 was the highest total housing-starts figure since April 2010, when starts stood at 687,000.

"The housing starts number this morning was good. whether it's real -- we'll find out next month," said Joshua Rosenbaum, managing director, Global Industrial Group, UBS. "Some of it might be a release of pent-up demand."

While the double-digit gains could spark optimism in a building industry toiling near record lows, the single-family figures were not quite as uplifting. Single-family starts came in at a rate of 425,000, a 1.7% increase compared with August.

However, single-family starts were down 4.9% from the September 2010 figure of 447,000.

Meanwhile, building permits in September were at a rate of 594,000, 5% below the August rate of 625,000.

On a regional basis, the biggest improvement came in the Midwest, where single-unit starts increased 46% compared with the previous month. Going the other direction, single-family housing starts fell 29.3% in the Northeast on a year-over-year basis.

Source: Home Channel News

US Homebuilders Less Pessimistic in October

Tuesday October 18, 2011

U.S. homebuilders are less pessimistic about the struggling housing market, but not enough to signal a recovery any time soon.

The National Association of Home Builders said Tuesday that its index of builder sentiment this month rose from 14 to 18.

Any reading below 50 indicates negative sentiment about the housing market. It hasn't reached 50 since April 2006, the peak of the housing boom. The index has been below 20 for all but one month during the past two years.

Last year, the number of people who bought new homes fell to its lowest level dating back nearly a half-century. Sales this year haven't fared much better.

Builders are struggling to compete with foreclosures, which have made the price of previously occupied homes more competitive. Many buyers are having difficulty obtaining loans or meeting higher down payment requirements.

Low appraisals are scuttling some deals after contracts have been signed. Some buyers want to upgrade to a new house but are holding off because they can't sell their home.

David Crowe, the builders group's chief economist, said some builders are shifting their assessment from "poor" to "fair," but few are changing their views from "fair" to "good."

The trade group has identified several pockets of strength. Home construction, prices and employment have been improving in those areas.

The two biggest cities cited -- New Orleans and Pittsburgh -- were suffering through economic downturns during the housing boom. New Orleans is rebuilding after Hurricane Katrina in 2005; Pittsburgh has evolved from a city dependent on the steel industry to a diverse economy with jobs in health care, education and technology.

Smaller metro areas where energy and agriculture are the primary economic drivers have also shown improvement, the trade group said. Of 23 "improving" metro areas highlighted by builders, seven are located in Texas alone.

While new homes make up a small portion of sales, they have an outsize impact on the economy. The builders' trade group says each new home built creates an average of three jobs for a year and generates about $90,000 in taxes.

Separate gauges of current single-family home sales and foot traffic of prospective buyers increased four and three points each, to 18 and 14, respectively. A survey of sales expectations over the next six months rose seven points, to 24.

An index of builders' outlook in the West rose nine points, to 21. The Midwest and South rose 4 points, to 15 and 19, respectively. The Northeast was unchanged at 15.

Source: Associated Press

2012 International Builders' Show Provides Unique Benefits for Attendees and Exhibitors

Monday, October 17, 2011

With pre-registration almost 25 percent higher than it was at this time last year and exhibit space sales going strong, the 2012 International Builders' Show (IBS) is shaping up to be an outstanding event for both attendees and exhibitors.

Sponsored by the National Association of Home Builders (NAHB), the International Builders' Show is the most important event of the year for the U.S. home building industry and the largest annual light construction trade show in the world. The IBS will be held from Feb. 8 to 11, 2012 at the Orange County Convention Center in Orlando, Fla.

"The International Builders' Show is truly unique," said Bob Nielsen, chairman of the National Association of Home Builders. "No other event provides such exceptional education and networking opportunities and such a superb showcase of top quality products for the home building industry. We're expecting more than 50,000 attendees and more than 800 exhibitors at the 2012 show.

"The IBS also demonstrates the strength, resilience and tenacity of the home building industry. Housing has been hit much harder by the downturn than any other sector of the economy, and we are very pleased that so many manufacturers and suppliers have recognized the value of exhibiting at the IBS and continue to participate each year," Nielsen said.

Karen Formico, marketing manager for longtime IBS exhibitor Broan-NuTone explained the value that participating in the show provides for the company, which is North America's largest producer of residential ventilation products such as range hoods, ventilation fans and indoor air quality products. "In these tough times, Broan-NuTone recognizes that our customers have limited resources and can't attend multiple events as they may have in the past. Because of this, we have selectively cut back our face-to-face marketing efforts, eliminating those events that don't provide the greatest return," Formico said.

"The Builders' Show remains the single best way for builders and specifiers to find the best solutions to their construction challenges and, as such, continues to be an important part of our marketing efforts. We feel it is still one of the best ways to reach the great majority of our customers in an environment that lets us interact with them on a personal level and, more importantly, lets them interact with our products and learn how we can help solve their challenges. In a world that's moving toward webinars and online education, there is still nothing better than hands-on and face-to-face contact," she said.

In addition to an outstanding lineup of almost 200 education programs and more than 400,000 square feet of product exhibits, the upcoming IBS will provide numerous networking opportunities for attendees.

"Our members greatly value networking, and we strive to meet that need with innovative, value-added programs," said Nielsen. "The 'Centrals' are a good example. We have designated specific areas of the show as Centrals for various specialties such as custom building, multifamily and remodeling. At the Centrals, attendees can meet others working in their field, get answers to questions, and see presentations that address the issues they deal with on a day-to-day basis. We also organize product tours so that people at each Central can meet with exhibitors showing products suited to their segment of the industry."

The IBS also provides attendees with perspective on how the housing industry and their own businesses function in the context of the broader national and international economies.

Federal Reserve Board Chairman Ben Bernanke will speak during a special session of the NAHB Board of Directors meeting on Feb. 10. This is an outstanding opportunity to hear from a man who is at the center of the nation's efforts to mount an economic recovery. Registered IBS attendees will be welcomed as part of the audience on a first-come, first served basis.

Source: NAHB

Consumer Confusion: Sales Up But Confidence Down — Here’s Why It Makes Sense

Monday, October 17, 2011

A strange economic trend appears to be emerging with American consumers. Retail sales have been trending higher while consumer confidence is at a 30-year low.

Retail sales grew 1.1% in September, the fastest pace since February, we learned on Friday. Even excluding strong auto purchases, the figures were better than expected. Data for earlier in the summer was also revised for the better. All this, even in the midst of stock market tumult and fears of another recession.

Meanwhile, those same economic concerns are still weighing on confidence. Consumer confidence plunged more in October than expected, according to the Thomson Reuters/University of Michigan index. It's now at the lowest measure since May 1980.

How is this contradiction possible?
Howard Davidowitz, president of Davidowitz & Associates says it's simple. "We have got a bifurcation that keeps getting bigger and bigger," he explains to Aaron and Henry in the accompanying clip.

What accounts for the increase in sales is the top earners in the country are doing fine. "Ten percent of the consumers account for 40% of the spending," he says. This group is primarily made up of college graduates who are not suffering from massive unemployment. In fact, unemployment for that segment of the population is under 5%.

But, there's another larger group that's struggling to get by, which explains the consumer worry. "Eighty percent of consumers are in a depression," says Davidowitz.

It's this growing gap between the haves and have-nots that is responsible for the Occupy Wall Street movement, says Davidowitz

Source : Reuters

Mortgage Applications Rose Last Week: MBA

Wednesday, October 12, 2011

Applications for U.S. home mortgages rose last week as demand grew for both purchases and refinancing even as interest rates rose, an industry group said on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, increased 1.3 percent in the week ended Oct 7.

The MBA's seasonally adjusted index of refinancing applications was up 1.3 percent, while the gauge of loan requests for home purchases gained 1.1 percent. The refinance share of mortgage activity was unchanged from the previous week at 79.1 percent of total applications.

Fixed 30-year mortgage rates averaged 4.25 percent, jumping 7 basis points from 4.18 percent the week before.

The average loan size for home purchases in September was $210,863, down from $212,736 in August. The average loan size for refinancing was $237,632 last month compared to $241,323 in August.

Source: Reuters

Home Ownership: Biggest Drop Since Great Depression

Friday, October 7, 2011

The percentage of Americans who owned their homes has seen its biggest decline since the Great Depression, according to the U.S. Census Bureau.

The rate of home ownership fell to 65.1% in April 2010, 1.1 percentage points lower than it was in 2000. The decline was the biggest drop since the 1930s, when home ownership plunged 4.2%.

The most recent decade-over-decade drop, however, only tells half the story.

Home ownership during the 2000s "was really high in the middle of the decade, up to almost 70% at one point around 2004," said Ellen Wilson, a survey statistician with the bureau.

The crash from that peak was more than 4 percentage points in just about five years -- a far more dramatic decline than the 1.1% drop over the 10-year period.

Certain regions have been hit harder than others. The West had the lowest home ownership rate at 60.5%, while the Midwest had the highest rate at 69.2%.The South came in at 66.7% and the Northeast at 62.2%.

Among the states, New York had the lowest home ownership rate of 53.3%, but the District of Columbia's home ownership rate was below that at 42%.

West Virginia (73.4%) led the way with the highest home ownership rate, while Minnesota (73%), Michigan, Delaware and Iowa (all 72.1%) were also well above the norm.

Number of vacant homes grows by 44%

Thanks to the housing bust there has been a substantial increase in empty homes. The number of vacant housing units jumped an astonishing 43.8% to 15 million (or 11.4% of all housing units) in 2010, up from 10.4 million in 2000.

During that 10-year period, the number of homes in the U.S. increased by 16 million to 131.7 million housing units, according to Census.

Many Sun-Belt states suffered large vacancy increases. In Nevada, ground zero for foreclosures over the past few years, vacancies grew nearly 120% to 14.3% of all homes. Georgia vacancies jumped 82.7%, Florida's 62.6% and Arizona's 61%.

Although vacancies in Maine grew by only 23%, the state had the highest percentage of vacant homes overall at 22.8%. Vermont was close behind with 20.5% of its homes empty. Florida was third with 17.5%.

Many of the nation's residents have also become renters, especially in large metropolitan areas.

Of the 10 largest cities, New York had the highest ratio with a whopping 69% of all homes in the five boroughs -- Manhattan, Brooklyn, Queens, the Bronx and Staten Island -- occupied by renters. Los Angeles had a 61.5% rental rate and Dallas was 55.9%.

San Jose had the lowest percentage of renters for any of the 10 largest cities with just 41.5%. San Antonio (43.5.%) and Phoenix (42.4%) had comparatively few renters as well.

Source: CNNMoney

Pro-Housing Policies Will Stimulate Job Growth

Friday, October 7, 2011

While the nation may have added 103,000 new jobs in September, the employment report showed relative weakness, particularly as it relates to the residential construction sector, which remains far below its job-creation potential in the absence of policies to restore the health of the housing marketplace, according to the National Association of Home Builders (NAHB).

"We are seeing now what an economic recovery looks like without housing, and the picture is hardly encouraging," said NAHB Chairman Bob Nielsen, a home builder from Reno, Nev. "We need to address anti-housing impediments to home builders creating jobs in countless communities across the land."

The inventory of new homes for sale is at a record low and there are many areas of the country that are approaching a housing shortage. Tight credit conditions are preventing builders from meeting this emerging demand, putting workers back on the job and helping the economy move forward.

Further exacerbating the situation is today's pervasive anti-housing climate in Washington, said Nielsen.

"Leaders in Washington must stop scaring consumers by talking about eliminating the mortgage interest deduction, ending a federal backstop for housing and calling for a minimum 20 percent downpayment on home loans," said Nielsen. "This is counterproductive and harms consumer confidence, the housing market and the nation's economy."

Housing normally accounts for more than 17 percent of Gross Domestic Product and building 100 single-family homes creates 305 full-time jobs and $8.9 million in taxes and revenue for state, local and federal governments.

"Getting housing back on its feet would be a shot in the arm for consumer confidence, boost job growth and lead to a long-lasting economic recovery," said Nielsen.

Source: NAHB

Nation's Unemployment Rate Doesn't Budget

Friday, October 7, 2011

The U.S. Department of Labor reported that nonfarm payroll employment edged up by 103,000 jobs in September, but the unemployment rate stayed at 9.1%.

Construction was one of the areas cited for job gains, according to the employment situation summary, released Friday morning.

Other areas were professional and business services and health care.

Construction employment increased by 26,000 over the month, after showing little movement since February. The over-the-month gain was due to employment increases in the nonresidential construction industries, which includes heavy and civil construction.

The gain of 103,000 jobs was much higher than a consensus estimate of 55,000. Also, the August data were revised from zero jobs created to 57,000 jobs gained.

Source: Home Channel News

Mortgage Interest Deduction a Middle-Class Pillar

Thursday, October 6, 2011

Eliminating or curtailing the mortgage interest deduction would have a disproportionate impact on younger, middle-class families, who would see their ability to become owners significantly diminished, with sober implications for their longer term financial prospects, the National Association of Home Builders (NAHB) told Congress today.

"How housing is treated in any future tax reform will shape the economy going forward," Robert Dietz, an economist and assistant vice president for NAHB, testified during a Senate Finance Committee hearing on tax reform options to provide incentives for homeownership.

Most Americans consider homeownership to be their single best long-term investment and a primary source of wealth and financial security. According to the 2007 Federal Reserve Survey of Consumer Finances, the median net worth of a home owner is $234,600, compared to $5,100 for renters.

"We believe that any policy change that makes it harder to buy a home, or delays the purchase of the home until an older age, will have a significant long-term impact on household wealth accumulation and the make-up of the middle class as a whole," said Dietz.

In the short term, tampering with the mortgage interest deduction would undermine an already fragile housing market and wreak havoc on the tenuous economic recovery by hurting housing demand, which would place downward pressure on home prices. In turn, this would leave more home owners underwater and trigger even more foreclosures.

This cornerstone of American housing policy provides benefits for home buyers at all income levels and retains overwhelming public support. In a New York Times/CBS News poll conducted in June of 2011, 89 percent of the respondents said that homeownership is an important part of the American Dream and more than nine in 10 opposed doing away with the mortgage interest deduction.

Public support runs strong, despite misleading claims that the deduction benefits only wealthy taxpayers and only a small number of home owners utilize the deduction because they must itemize their deductions in order to claim it.

Setting the record straight, Dietz told lawmakers that 70 percent of the tax benefits go to middle-class home owners who earn less than $200,000 and that a deduction that reduces the net cost of monthly house payments is particularly important to younger home buyers, who typically have large home loans and less equity and are paying mostly interest in the early years of the mortgage.

Dietz said that arguments that most home owners do not itemize and cannot benefit from the deduction are false.

"Out of 75 million home owners, 35 million claimed the mortgage interest deduction in 2009," he said. "This fails to take into account the millions of taxpayers who are renters and one day aspire to own a home of their own and the roughly 25 million who own their homes free and clear and used the deduction in the past. The bottom line is that 70 percent of home owners with a mortgage have claimed the deduction."

Dietz also stressed the importance of several other housing tax incentives, including the Low Income Housing Tax Credit, which is the most successful affordable rental housing production program in the nation's history and produces approximately 90,000 full-time jobs per year.

The second home deduction is also important for many who do not think of themselves as owning two homes. "For example, the second home deduction facilitates moving when owning two homes during the tax year and also permits existing home owners to claim interest on a construction loan for a future home," said Dietz.

Eliminating the mortgage deduction for second homes could threaten the economic viability of second home and vacation markets.

"We are not just talking about well-known coastal markets, but also small towns in states such as Maine, Vermont, New Hampshire, Michigan, Colorado and Florida," said Dietz. "And nearly every state has areas with significant numbers of second homes; 49 states have a county where at least 10 percent of the housing stock consists of second homes."

Home owners are also allowed to deduct interest on up to $100,000 of home equity loan debt. Half of all home equity loans are used for remodeling and home improvement, which provides jobs and are important activities for a nation with an aging housing stock.

As policymakers look to create jobs and boost economic growth, housing has an important role to play, said Dietz.

"Building 100 single-family homes creates more than 300 full-time jobs," he said. "Housing can act as a catalyst for job growth and an economic recovery because home building employs such a wide range of workers."

Source: NAHB

August Home Prices Decline

Thursday, October 6, 2011

CoreLogic, a provider of information, analytics and business services, has reported that home prices in the United States decreased 0.4% on a month-over-month basis, the first monthly decline in four months. According to CoreLogic, national home prices, including distressed sales, also declined on a year-over-year basis by 4.4% in August 2011 compared with August 2010. This follows a decline of 4.8% in July 2011 compared with July 2010.

Excluding distressed sales, year-over-year prices declined by 0.7% in August 2011 compared with August 2010 and by 1.7% in July 2011 compared with July 2010. Distressed sales include short sales and real estate-owned (REO) transactions.

Including distressed sales, the five states with the highest appreciation were: West Virginia (8.6%), Wyoming (3.6%), North Dakota (3.5%), New York (3.2%) and Alaska (2.2%).

The five states with the greatest depreciation, including distressed sales, were: Nevada (-12.4%), Arizona (-10.7%), Illinois (-9.6%), Minnesota (-7.8%) and Georgia (-7.2%).

Source: Home Channel News

30-Year Mortgage Below 4 PCT. For First Time Ever

Thursday October 6, 2011

The average rate on the 30-year fixed mortgage this week fell below 4 percent for the first time ever, to 3.94 percent.

For those who can qualify, it's an extraordinary opportunity to buy or refinance. And mortgage rates could fall even further now that the Federal Reserve plans to reshuffle its portfolio of securities to try and lower long-term rates.

On Thursday, Freddie Mac said the average rate on a 30-year fixed mortgage dropped from 4.01 percent last week, the previous low. The average rate on a 15-year fixed loan, a popular refinancing option, dipped to 3.26 percent, also a record.

Still, rates have been below 5 percent for all but two weeks in the past year and have done little to boost home sales. This year is shaping up to be among the worst for sales of previously occupied homes in 14 years.

Many people are reluctant to take the risk in this market. High unemployment, scant pay raises and heavy debt loads are deterring many would-be buyers.

Others can't qualify for the historically low rates. Banks are insisting on higher credit scores. And many want first-time buyers to put down 20 percent. Few people have that much cash or home equity to satisfy the requirement.
Mortgage rates have tumbled because they tend to track the yield on the 10-year Treasury note. The yield has fallen in recent weeks, largely because investors are worried about the U.S. economy and the debt crisis in Europe. So they have shifted their money out of stocks and into the safety of Treasurys.

A drop in mortgage rates could provide some help to the economy if more people could refinance. When people refinance at lower rates, they pay less interest on their loans and have more money to spend.

Consider a homeowner who owes $250,000 and is paying 5.09 percent on a 30-year fixed mortgage. That was the average rate being offered in January 2010. Refinancing the loan at 3.94 percent could save him or her more than $2,000 a year.

But many homeowners with good jobs and stable finances have already refinanced over the past year. Most economists say rates would need to fall at least a full percentage point before it makes sense to refinance again.

The reason is homeowners typically pay a few thousand dollars in closing costs when they refinance. And the low rates being offered don't include extra fees, known as points, which many borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for the 30-year and 15-year rose to 0.8. The average fees for both the five-year and one-year adjustable-rate loans were 0.6 and 0.5, respectively.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country Monday through Wednesday of each week.

The average rate on a five-year adjustable-rate mortgage fell to 2.96 percent. The average for the one-year adjustable-rate mortgage ticked up to 2.95 percent.

Source: Yahoo Finance

Number of Improving Housing Markets Nearly Doubles in October

Thursday October 6, 2011

The second edition of the National Association of Home Builders/ First American Improving Markets Index (IMI), released today, shows 23 individual housing markets now qualifying as "improving" under the new gauge's parameters. This is nearly double the 12 housing markets that made the list last month.

The index reveals metropolitan areas that have shown improvement for at least six months in housing permits, employment and housing prices. The following metros were listed in October:

·               Alexandria, LA
·               Amarillo, TX
·               Anchorage, AK
·               Bismarck, ND
·               Casper, WY
·               Fairbanks, AK
·               Fayetteville, NC
·               Houma, LA
·               Iowa City, IA
·               Jonesboro, AR
·               Kankakee, IL
·               McAllen, TX
·               Midland, TX
·               New Orleans, LA
·               Odessa, TX
·               Pine Bluff, AR
·               Pittsburgh, PA
·               Sherman, TX
·               Sumter, SC
·               Waco, TX
·               Waterloo, IA
·               Wichita Falls, TX
·               Winston-Salem, NC

"Both the number and geographic diversity of improving housing markets expanded this month, with Iowa, Illinois and South Carolina all newly represented by one entry or more on the list," said National Association of Home Builders (NAHB) Chairman Bob Nielsen, a home builder from Reno, Nev. "This is further evidence that, despite the tough conditions that persist in many cities, pockets of improvement are emerging in local housing markets across the country."

"While Pittsburgh and New Orleans remain the two largest improving markets, the October IMI is heavily weighted by smaller cities in which energy and agriculture are the primary economic drivers and where the effects of the recession have been less pronounced," said NAHB Chief Economist David Crowe. "In particular, Texas stands out for its seven entries on the improving markets list."

Bangor, Maine, was the only area to drop off of the improving markets list in October, due to a decline in local building permits.

The IMI is designed to track housing markets throughout the country that are showing signs of improving economic health. The index measures three sets of independent monthly data to get a mark on the top improving Metropolitan Statistical Areas. The three indicators that are analyzed are employment growth from the Bureau of Labor Statistics, house price appreciation from Freddie Mac, and single-family housing permit growth from the U.S. Census Bureau. NAHB uses the latest available data from these sources to generate a list of improving markets. A metro area must see improvement in all three areas for at least six months following their respective troughs before being included on the improving markets list.

Source: NAHB

New Discounts for Mortgage Borrowers

Wednesday, October 5, 2011

Lenders are cutting closing costs and offering other discounts to go along with low rates. What's the catch?

As mortgage rates continue to fall, lenders are rolling out splashy discounts and promotions to inspire reluctant home buyers. But critics say the newest offers still stop short of the best deal for borrowers: Lower rates.

From large banks to credit unions, a growing number of lenders are waiving fees, lowering rates and finding new ways to cut loan prices for would-be home buyers and refinancers. Capital One is waiving some closing fees for refinancers, which can save $3,300 on average. Citi and Bank of America are discounting fees by as much as 0.75 percentage point. And online lender Quicken Loans is telling customers who get a mortgage through December that if mortgage rates fall in the future, they'll be able to get the lower rates with most refinancing costs covered.

While some of the deals are available to refinancers, they are mostly aimed at home buyers. In this market, new purchase mortgages can be more profitable for banks. But they currently account for just about 20% of all mortgage applications, according to the Mortgage Bankers Association. "We are still amazed that record low interest rates and significantly lower home prices have not resulted in strong loan demand," says Tim Zimmerman, president and CEO at Standard Bank in Pittsburgh, which is lowering closing costs by up to $500 for home purchases and refinances.

That's a small discount, relatively. Closing costs typically run up to 2% of the loan amount — $500 would fully cover closing costs for a $25,000 loan. Zimmerman says that on refinances closing costs tend to be lower, and that this discount along with low mortgage rates creates an opportunity for borrowers.

But other offers are more generous. In a rare deal for refinancers, Capital One is eliminating on average $3,300 closing costs — including the appraisal and title-related charges — for homeowners who refinance into a 30-year mortgage in some locations, including New York, Texas and the Washington D.C. metro area. Some credit unions are also slashing closing fee costs. In August, for example, the largest credit union, the Navy Federal Credit Union (designated for Department of Defense employees and their families) began offering $2,500 off of closing costs for borrowers.

Other lenders are discounting costs that borrowers may pay when they sign up for a mortgage. Borrowers have the option to pay what are called "discount points" — a prepayment of interest — in exchange for a lower interest rate. One point equals 1% of the loan amount. Citi is offering home buyers 0.75% of the loan amount that can be used to offset discount points. On a $375,000 mortgage, the credit would be $2,812.50 -- plus the lower interest rate over the life of the loan. Earlier this year, Bank of America began offering 0.25 percentage point off discount points in 12 states; next month, the bank will extend the offer in nine more states, including South Carolina, Texas and Washington D.C.

But if you're seeing incentives, says Keith Gumbinger, vice president at mortgage-data firm HSH Associates, there might be a catch. To qualify for the Bank of America discount, for example, consumers must have at least $50,000 socked away with the bank or its investment firm.

Other incentives may be designed to distract from a rate that's not as low as it could be. The average rate consumers get on a 30-year fixed-rate mortgage is 4.25% — about 0.75 percentage point higher than the lowest advertised, according to LendingTree.com. That's almost the widest spread since the firm began tracking the data in February 2010. On a $275,000 30-year fixed rate mortgage, the difference adds up to about $120 more per month, or more than $42,000 over the life of the loan.

For their part, banks say they're looking to attract new customers, or drum up more business with old ones, and that rock-bottom rates, though difficult to get, are accessible for borrowers with the highest credit scores, large down payments and low debt levels. But they also acknowledge that these promotions are good without being too good: A Bank of America spokesman says the institution is looking to price competitively but not low enough to spark an overflow of applications that would prevent it from being able to process the mortgages in a timely manner, the spokesman says.

Still, a low interest rate is still the key to finding the cheapest mortgage. Experts direct borrowers to consider lenders who are most eager for business, including online outfits, which can offer a lower rate because they have lower overhead, and smaller institutions like community banks and credit unions that might have more wiggle room on rates. With rates expected to stay low for a while, qualified borrowers can afford to haggle to get a low rate, which will help them save more than most incentives on the table now.

Source: Yahoo Finance

Housing is Key to Job Creation, Economic Recovery

Wednesday, October 5, 2011

Discussions on the need to restore the nation's languishing housing market in order to rouse job creation from anemic levels and boost economic growth has been prominent this week in congressional testimony from Federal Reserve Chairman Ben Bernanke and in newspapers across the country, leaving many wondering when leaders in Washington will take action to address this problem.

"How many more articles need to appear on the front pages of major newspapers and how many officials need to sound the alarm before federal policymakers reverse anti-housing policies that are dampening demand and preventing a housing and economic recovery from taking hold?" asked Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev.

Testifying before the Joint Economic Committee yesterday, Bernanke said: "The housing sector has been a significant driver of recovery from most recessions in the United States since World War II. This time, however, a number of factors -- including the overhang of distressed and foreclosed properties, tight credit conditions for builders and potential home buyers, and the large number of 'underwater' mortgages (on which home owners owe more than their homes are worth) -- have left the rate of new home construction at only about one-third of its average level in recent decades."

With inventories of new homes nearly depleted in many markets, builders should be gearing up to meet demand, create new jobs and help the economy move forward. Unfortunately, production remains stymied because builders in these locations cannot get credit from lending institutions to begin work on new homes.

"National unemployment flatlined in August, more than 1.4 million residential construction jobs have been lost since April 2006 and yet there is demand for housing in markets that are on the mend," said Nielsen. "Home builders have plenty of shovel-ready jobs set to go but they can't keep their doors open and create jobs in their communities if federal regulators continue to shut off the credit spigot."

During the past few months, seven different national surveys conducted by prominent polling organizations including the New York Times/CBS News, the Pew Research Center, the AllState/National Journal Heartland Monitor and Hanley-Wood have looked at homeownership from every possible angle.

"One thing is always crystal clear in all these polls," said Nielsen. "The American people still strongly believe that homeownership provides security, stability and a solid long-term investment. Yet, policymakers are doing their best to put policies in place that reduce the American people's ability to purchase a home. Why? How long do we want to stay in a recession?"

While prudent underwriting and other safeguards are needed to prevent another housing collapse in the future, he said, current proposals to correct shortcomings in the home finance system are far more stringent than necessary and threaten to price many creditworthy borrowers out of the housing market.

Six federal agencies are proposing a national Qualified Residential Mortgage standard that would require a minimum 20 percent downpayment and other stricter qualifications, which would keep homeownership out of reach for most first-time home buyers and middle-class households. NAHB estimates that it would take 12 years for a typical family to save enough money for a 20 percent downpayment on a median-priced single-family home and other research has found it would take even longer.

Meanwhile, some members of Congress are actively pushing to abolish Fannie Mae and Freddie Mac and end the federal backstop for housing. A strong federal role is essential to help absorb market risk, ensure a stable and reliable flow of credit for home buyers and to maintain a liquid secondary market. Diminishing or ending government support for housing would make the 30-year, fixed-rate mortgage, the major housing finance tool for most Americans, increasingly scarce and much more costly.

Further complicating the situation, this week's reduction in the conforming loan limits means that many prospective buyers who are seeking a home loan will now have to pay higher interest rates, fees and downpayments and face more stringent credit standards.
Noting that housing normally accounts for more than 17 percent of the nation's total economic output, Nielsen said policymakers need to take steps to spur housing, create jobs and bolster the economy.

"Home building can be the key engine of job growth that this country needs," he said. "Constructing 100 single-family homes generates more than 300 jobs and $8.9 million in taxes and revenue for state, local and federal governments that helps to fund local school systems and build strong communities."

Source: NAHB

Construction Spending Grows in Several Sectors

Tuesday, October 4, 2011

Builders and developers spent $799.1 billion on construction projects in August 2011, a 1.4% rise from July’s estimated rate, according to numbers released by the U.S. Commerce Department. Spending on private construction was approximately $511.0 billion, 0.4% above the previous month. Residential construction was estimated at $237.8 billion in August, 0.7% above July’s figure. Nonresidential construction, such as offices, restaurants and hotels, was $273.1 billion in August, 0.2% above the previous month’s spending rate.

In public construction, where the increases were more dramatic, August saw a jump of 3.1% to $288.2 billion compared with July. Educational construction was estimated at $72.7 billion, 4.3% above the previous month. Highway construction was at $80.2 billion, 3.5% higher that July’s estimated spending.

Source: Home Channel News

Pending Home Sales Slow

Friday, September 30, 2011

Pending home sales, an index that tracks contracts signed but deals not yet closed, slipped 1.2% in August 2011, according to figures released Sept. 29 by the National Association of Realtor (NAR).

Results were mixed across the country, with the Northeast seeing the biggest declines. NAR chief economist Lawrence Yun blamed this Northeastern decrease on Hurricane Irene, which “seriously disrupted” sales in the closing weekend of August. “But broadly speaking,” he said, “contract signing activity has been holding in a narrow range for many months.”

The pending home sale index, at 88.6 in August 2011, is 7.7% higher than last year, however, when it stood at 82.3 in August 2010.

Source: Home Channel News

90% of Americans Say Economy Stinks

Friday, September 30, 2011

Three years after a financial crisis pushed the country deep into recession, an overwhelming number of Americans -- 90% -- say that economic conditions remain poor.

The number, reported Friday in a new CNN/ORC International Poll, is the highest of Barack Obama's presidency and a significant increase from the 81% who said conditions were poor in June.

The persistent pessimism indicates that Americans are feeling a level of hardship in line with the official statistics. Unemployment stands at 9.1%, economic growth is barely above stall speed, and the housing market remains tied in knots.

For a White House now fully engaged in re-election efforts, there is one shred of good news: More than two and half years after inauguration day, Americans are still more likely to blame former President George W. Bush for current economic conditions.

Asked which administration is to blame, 52% of Americans blame the previous Republican regime, while only 32% point a finger at Obama and Democrats.

While there is widespread consensus that the economy is in rough shape, Americans have a split opinion of two of its biggest actors: Federal Reserve Chairman Ben Bernanke and billionaire investor Warren Buffett.

Bernanke -- who leads monetary policy for the world's largest economy -- is relatively unknown. Only 42% of Americans have an opinion of the Fed chief. Meanwhile, those with an opinion are roughly split between positive and negative views.

Republicans are less enthused with the Fed chairman than Democrats. Only 25% have a favorable opinion of Bernanke -- a Republican who was appointed by George W. Bush and reappointed by Obama.

Both Bernanke and the Fed have become targets for criticism by most of the 2012 Republican presidential candidates, particularly Texas Gov. Rick Perry.

Buffett, meanwhile, is more well known and more popular. Forty-three percent of Americans have a favorable opinion of the Berkshire Hathaway chairman, while 33% are unsure and 24% hold an unfavorable opinion.

Buffett has been more outspoken in his support of Obama in recent months -- even holding a fundraiser in Manhattan. As with Bernanke, Buffett enjoys a higher favorable rating with Democrats -- 47% of whom approve, while only 36% of Republicans give the same answer.

The CNN poll was conducted by ORC International from September 23-25, with 1,010 adult Americans questioned by telephone. The survey's overall sampling error is plus or minus three percentage points.

Source: CNN Money

Forecast Says Double-Dip Recession is Imminent

Friday, September 30, 2011

The U.S. economy is staring down another recession, according to a forecast from the Economic Cycle Research Institute.

"It's either just begun, or it's right in front of us," said Lakshman Achuthan, the managing director of ECRI. "But at this point that's a detail. The critical news is there's no turning back. We are going to have a new recession."

The ECRI produces widely-followed leading indicators which predict when the economy is moving between recession and expansion. Achuthan said all those indicators are now pointing to a new economic downturn in the immediate future.

His recession call puts him ahead of most other forecasters. A CNNMoney survey of economists this week pointed to a one-in-three chance of a new recession in the next six months. The most bearish predictions put the odds at 50-50.

Achuthan said it is still possible that the recession will be mild this time, lasting less than a year with relatively limited job losses. But he said if there are shocks to the system, such as another financial meltdown due to the European sovereign debt crisis, it could become a very serious and deep recession.

His call comes the day after the government's final report on second quarter gross domestic product, the broadest measure of the nation's economic health, showed weak growth of only 1.3% in the three months ending in June.

Achuthan said he's confident that the recession either began in the third quarter, which ends today, or will begin in the fourth quarter.

The average American is already more bearish than most economists. A CNN/ORC International poll shows 90% of those polled believe current economic conditions are poor.

The last recession, which caused the U.S. economy to shrink by more than 5%, lasted from December 2007 through June 2009, and was the nation's longest and deepest downturn since the Great Depression.

The recovery that followed has been relatively weak, and if Achuthan's forecast is correct, short. Only once in the last 50 years has a period of expansion lasted less than three years.

That poses a threat to the economy, since it makes it less likely the labor market will be able to recover the jobs lost during a recession before falling into a new period of job losses.

"The reason some people feel like the previous recession never ended is no mystery; the jobs that were lost have not been recovered," he said. "But we've added more than 1 million jobs in the last year, which only happens if we're in a recovery. If you think this is a bad economy, you haven't seen anything yet."

Source: CNN Money

Rate on 30-Year Mortgage Falls to Record 4.01 PCT

Thursday September 29, 2011

Fixed mortgage rates have fallen to historic new lows for a fourth straight week and are likely to fall further.

The average on a 30-year fixed mortgage fell to 4.01 percent this week, Freddie Mac said Thursday. That's the lowest rate since the mortgage buyer began keeping records in 1971. The last time long-term rates were lower was in 1951, when most long-term home loans lasted just 20 or 25 years.

The average on a 15-year fixed mortgage, a popular refinancing option, ticked down to 3.28 percent. Economists say that's the lowest rate ever for the loan.

Mortgage rates tend to track the yield on the 10-year Treasury note. The 10-year yield has risen this week to around 2 percent. A week ago, it touched 1.74 percent -- the lowest level since the Federal Reserve Bank of St. Louis started keeping daily records in 1962. As recently as July, the 10-year yield exceeded 3 percent.

Rates on mortgages could fall further after the Federal Reserve announced last week that it would take further action to try to lower long-term rates.

Still, low rates have so far done little to boost home sales or refinancing. Many would-be buyers or homeowners don't have enough cash or home equity to get a new loan.

High unemployment, scant wage gains and debt loads represent a heavy burden for many people. Others can't qualify. Banks are insisting on higher credit scores and 20 percent down payments for first-time buyers.

This year is shaping up to be among the worst for sales of previously occupied homes in 14 years. Few are buying, even though the average rate on the 30-year fixed mortgage has fallen to around 4 percent.

A drop in mortgage rates could provide some help to the economy if more people could refinance. When people refinance at lower rates, they pay less interest on their loans and have more money to spend.

Consider a homeowner who owes $250,000 and is paying 5.09 percent on a 30-year fixed mortgage. That was the average rate being offered in January 2010. Refinancing the loan at 4.01 percent could save him or her roughly $2,000 a year.

But many homeowners with good jobs and stable finances have already refinanced over the past year as rates have fallen. The average rate on the 30-year loan fell to new lows in November, August and again this month.

Homeowners also typically pay a few thousand dollars in closing costs when they refinance. And the low rates being offered don't include extra fees, which many borrowers must pay to get the rates. Those fees are known as points; one point equals 1 percent of the loan amount.

The average fee for the 30-year held steady at 0.7; for the 15-year, it rose to 0.7. The average fee for both the five-year and one-year adjustable-rate loans was unchanged at 0.6 point.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country Monday through Wednesday of each week.

The average rate on a five-year adjustable-rate mortgage was unchanged at 3.02 percent. The average for the one-year adjustable-rate mortgage ticked up to 2.83 percent.

Source: Associated Press

Contracts to Buy Homes Fell 1.2 Percent in August

Thursday September 29, 2011

The number of Americans who signed contracts to buy homes fell in August, after a weaker-than-expected peak buying season.

The National Association of Realtors said Thursday that its index of sales agreements fell 1.2 percent last month to a reading of 88.6.

A reading of 100 is considered healthy. The last time the index reached that level was in April 2010, the final month that buyers could qualify for a federal tax credit that has since expired.

Contract signings are usually a reliable indicator of where the housing market is headed. There's typically a one- to two-month lag between a contract and a completed deal.

But the Realtors group said a growing number of buyers have canceled contracts after appraisals showed the homes were worth less than the buyers had bid. A sale isn't final until a mortgage is closed.

Home loans are also harder to come by. Many lenders are requiring 20 percent down payments and strong credit scores to qualify.

The pace of sales for previously occupied homes is slightly above last year's 4.91 million sold, the fewest since 1997. In a healthy economy, Americans would buy roughly 6 million homes each year.

In August, sales of new homes fell for a fourth straight month. This year is shaping up to be the worst for new-home sales on records dating to 1963.

Even so, homes are the most affordable they've been in decades. Mortgage rates are at six-decade lows. Prices in some metro areas have been cut in half. Still, sales in most areas remain weak.

The number of people signing home contracts rose in both May and June. But those increases didn't make up for a huge drop-off in April, when signings fell more than 11 percent. Over the past two months, signings have declined 2.5 percent.

Contract signings fell across most of the country. July's index fell 5.8 percent in the Northeast, 3.7 percent in the Midwest and 2.4 percent in the West. It rose 2.6 percent in the South.

Source: Associated Press

Analysis: Time to Borrow? Debt is Not a Dirty Word

Wednesday, September 28, 2011

Here's a crazy idea: Maybe, just maybe, you should be borrowing more money.

You don't have to tell Matt Kouri of Austin, Texas. Just last month, the chief executive officer of local nonprofit Greenlights traded up to a bigger home for his growing family. Not only did they secure an additional 700 square feet of living space, the Kouris moved into a superior school district that enabled them to switch their son from private to public school. And what made it all happen? A new 4.375 percent mortgage.

Kouri admits to being a frugal guy, but at such rock-bottom rates, he's perfectly comfortable with the manageable debt load.

"To get such a low rate, it was a fantastic deal," says the 38-year-old. "Our previous mortgage was 6 percent, so when combined with depressed real-estate prices, it made for a great buying opportunity." Since Kouri took out his loan, rates have fallen even further, with 30-year mortgages now averaging 4.09 percent, according to Bankrate.com
Taking on new debt doesn't mean overextending yourself, like buying a second home in the hills of Aspen or a shiny new Maserati that you can't possibly afford. Consumers learned that lesson the hard way before: The housing bust exposed the American consumer, and the financial meltdown exposed the big banks. The bills came due, and we're still paying the price today.

But all debt isn't de facto a terrible thing. If it's within your means to get your dream home for a 30-year fixed mortgage at record-low interest rates like 4 percent, you should go ahead and do it. If you're a company like Microsoft, and you can issue a three-year bond for a ridiculous 0.875 percent coupon, then you should be borrowing as much cash as you cart away in a wheelbarrow.

After the Great Recession, consumers have been conditioned to think of debt as a cancer to be eliminated at all costs. But when money is the cheapest it's ever been, it is also a rare historical moment to be taken advantage of. Used wisely and judiciously, a measure of good debt can cement your family's financial security.

"It's a concept that the wealthy learned a long time ago: Using other people's money," says Greg McBride, senior analyst at Bankrate . "If you're taking out a mortgage at today's rates, after inflation and tax deductions, you're basically borrowing for free -- and that's a very attractive proposition."

That's not to say you should be loading yourself up with debt beyond a reasonable level. The American public has already gotten that belt-tightening message, and learned it well during the financial crisis. Total consumer debt is now down 8.6 percent from late 2008 and fell another $50 billion in this year's second quarter, according to data from the New York Federal Reserve. And in terms of the debt-to-disposable income ratio, the United States is now at the lowest levels seen since 2004.

The same goes for corporations. Since the financial crisis, many companies have cleaned up their balance sheets and stockpiled cash reserves. But yields are so impossibly low, that even traditionally zero-debt companies like Google are only too happy to issue bonds. In fact, the search-engine giant has around $39 billion in cash on hand, but if it can issue a billion dollars in three-year notes with a 1.25 percent coupon, then it's almost silly not to do so.

The argument can even be extended to governmental borrowing. Yes, the federal debt load is a $14.5 trillion beast, a level that can't be sustained over the long term. But if the government can issue 10-year Treasuries for a minuscule 1.86 percent, and earmark that cash for critical projects that could stave off a worsening economy, then is it the worst thing in the world to do so?

Indeed, Robert Reich -- who was Labor secretary under President Bill Clinton -- has been banging the drum for exactly that. As he writes in a recent blog post, "Anyone with half a brain will see this is the ideal time to borrow money from the rest of the world to put Americans to work rebuilding the nation's infrastructure."

Federal issues aside, what really matters to you is your personal balance sheet. And as always, it comes down to the numbers. The point is to get past a knee-jerk negative reaction to debt, and be willing to borrow when it makes perfect sense.

"We're big spreadsheet people," says Kouri, the new homeowner. "You don't go into a big decision like this without being very analytical. And at these rates, we're definitely coming out on top."

Source: Reuters

California Homeowners Win a Round Against Big Builders

Wednesday, September 28, 2011

A group of 19 California homeowners who bought their homes between 2004 and 2006 – each with a 20% or more down payment – won the right to sue D.R. Horton, Richmond American, Shea Homes, Lennar Homes, and other production home builders for devaluing their properties with risky lending practices.

According to an article in Courthouse News Service, a federal appeals court in San Francisco overturned a lower court’s decision, paving the way for a class action lawsuit over whether developers of new home communities marketed homes to high-risk buyers and then sold houses to unqualified individuals and investors prone to foreclosure.

The end result, according to the plaintiffs, are neighborhoods blighted by foreclosures, empty houses, and increased crime. Home values have also plummeted.

The three-judge appellate panel unanimously agreed that the plaintiffs would likely not have purchased their homes had they known the developers’ lending practices. Although they found no causal link between the defendants’ actions and the decreased value of the homes, the ruling allowed the plaintiffs to amend their claims to provide more evidence of a connection between the two events.

Source: Home Channel News

In August, New-Home Sales dDeclined 2.3%

Tuesday, September 26, 2011

Sales of new single-family houses in August 2011 were at a seasonally adjusted annual rate of 295,000, according to estimates released jointly by the U.S. Census Bureau and the Department of Housing and Urban Development.

The figure is 2.3% below the revised July rate of 302,000, but is 6.1% above the August 2010 estimate of 278,000.

The median sales price of new houses sold in August 2011 was $209,100; the average sales price was $246,000.

The seasonally adjusted estimate of new houses for sale at the end of August was 162,000. This represents a supply of 6.6 months at the current sales rate

Source: Home Channel News

Rate on 30-Year Mortgage Stays at Record 4.09 PCT.

Thursday September 22, 2011

Fixed mortgage rates hovered at record lows for a third straight week. They are likely to fall even further now that the Federal Reserve said it would shuffle its holdings to drive down long-term interest rates.

The average rate on the 30-year fixed mortgage was unchanged at 4.09 percent this week, Freddie Mac said Thursday. That's the lowest rate seen since 1951.

The average rate on the 15-year mortgage ticked down to 3.29 percent. Economists say that's the lowest rate ever for the loan.

Mortgage rates tend to typically track the yield on the 10-year Treasury note. One day after the Fed's announcement, the yield on the 10-year note touched 1.74 percent Thursday. That's the lowest level since Federal Reserve Bank of St. Louis started keeping daily records in 1962.

In July, the yield on the 10-year note was above 3 percent.

Low mortgage rates have done little to boost home sales. This year is shaping up to be the worst for sales of previously occupied homes since 1997. Few are buying homes, even though the average rate on the 30-year fixed mortgage has been below 5 percent for all but two weeks this year.

Many Americans are in no position to buy or refinance. High unemployment, scant wage gains and large debt loads have kept them away.

Others can't qualify. Banks are insisting on higher credit scores and 20 percent down payments for first-time buyers. Some homeowners have too little equity invested in their homes to meet loan requirements.

Most people must also pay extra fees to get the low mortgage rates. Those fees are known as points, with one point equaling 1 percent of the total loan amount.

The average fees for the 30-year held steady at 0.7 point. Fees paid on 15-year fixed loans and both 5-year and one-year adjustable-rate loans were all at 0.6 point.

Once fees are factored in, the average rate on the 30-year loan rises to 4.25 percent, Freddie Mac said.

A drop in mortgage rates could provide some help to the economy if more people could refinance. When people refinance at lower rates, they pay less interest on their loans and have more money to spend.

But many homeowners with good jobs and stable finances have already refinanced in the past year. The average rate on the 30-year fixed loan fell to 4.17 percent last November, and to 4.15 percent last month. Both were previous lows.

Homeowners typically pay a few thousand dollars in closing costs when they refinance. To refinance again, most experts say rates would need to fall an additional 1 percentage point to make it worthwhile.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country Monday through Wednesday of each week.

The average rate on a five-year adjustable-rate mortgage rose to 3.02 percent. That's higher than last week's 2.99 percent.

The average rate for the one-year adjustable-rate mortgage increased slightly to 2.82 percent from 2.81 percent, the lowest rate on records going back to 1984.

Source: Associated Press

Existing-Home Sales Increased in August

Wednesday, September 21, 2011

One day can make a big difference in housing industry metrics.

About 25 hours after the release of a disappointing housing starts report, the National Association of Realtors (NAR) said existing-home sales for August increased 7.7% to a seasonally adjusted annual rate of 5.03 million.

The August figure is 18.6% higher than the 4.24 million pace recorded in August 2010.

"Some of the improvement in August may result from sales that were delayed in preceding months, but favorable affordability conditions and rising rents are underlying motivations,” said Lawrence Yun, NAR chief economist.

“Investors were more active in absorbing foreclosed properties. In additional to bargain hunting, some investors are in the market to hedge against higher inflation.”

Yun added that aberrations in housing data are possible over the coming months, as parts of the country recover from storm damage that may have disrupted closings.

NAR president Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said market affordability is a positive. But he pointed to some of the challenges to closing deals. “The biggest factors keeping home sales from a healthy recovery are mortgages being denied to creditworthy buyers, and appraised valuations below the negotiated price," Phipps said.

The national median existing-home price for all housing types was $168,300 in August, which is 5.1% below August 2010. Distressed homes -- foreclosures and short sales typically sold at deep discounts -- accounted for 31% of sales in August, compared with 29% in July and 34% in August 2010.

Source: Home Channel News

Home Depot Announces Grants to Veterans Groups

Wednesday, September 21, 2011

As part of its "Celebration of Service" initiative to honor U.S. military veterans, the Home Depot Foundation announced $1.425 million in grants to nonprofits dedicated to addressing the housing needs of veterans.

The grant recipients are U.S.VETS, Center for Veterans Issues, The Jericho Project, Low Income Housing Institute and Renovating Hope. Across the country, these recipients provide more than 500 homes and apartments for veterans each year.

During the "Celebration of Service" initiative, the Home Depot Foundation will announce about $1 million in grants each Monday between Sept. 11 and Veterans Day (Nov. 11) to veterans' initiatives. The grants will total $9.1 million.

"We are impressed by the quality of work being done by each organization, and we hope that our funding and volunteer assistance will allow them to serve even more veterans and their families," said Kelly Caffarelli, president of the Home Depot Foundation.

Source: Home Channel News

Balanced Approach Needed to Dispose of REO Properties, NAHB Tells Congress

Tuesday, September 20, 2011

The National Association of Home Builders (NAHB) today urged the Administration and Congress to take a balanced approach in disposing of the large inventory of real estate owned (REO) properties held by Fannie Mae, Freddie Mac and the Federal Housing Administration to avoid further disruptions to pricing and markets and to limit further losses to the two government sponsored enterprises and the FHA.

Testifying before the Senate Subcommittee on Housing, Transportation and Community Development on new ideas to address the glut of foreclosed properties, NAHB Chairman Bob Nielsen, a home builder from Reno, Nev., said that Fannie, Freddie and the FHA should avoid bulk sales to large investors that have no stake in the neighborhoods in which these properties are located.

"Local and small businesses that have a stake in the future of the affected communities should be the driving force behind the disposition of the REO inventory. This will result in the creation of jobs and the stabilization of neighborhoods," said Nielsen.

NAHB also urged Congress to extend the current conforming loan limits for Fannie Mae, Freddie Mac and the FHA, which are due to be lowered on Oct. 1.

"This is not a time to reduce loan limits as the lower limits will exclude many homes and home buyers from FHA and Fannie and Freddie loan programs, particularly in areas like California where there is substantial foreclosure inventory," said Nielsen.

Given that many potential buyers who lack sterling credit are unable to take advantage of today's record-low mortgage rates, Nielsen said that mortgage financing terms for home buyers need to be more reasonable than the overly restrictive standards that are currently in place.

In addition, NAHB urged the regulators to allow modifications to a number of existing federal housing programs, particularly altering rules that restrict or prohibit for-profit investors, in order to effectively reduce foreclosures.

"With the scale of the problem so large, it is necessary to deploy all resources in both the for-profit and nonprofit sectors," he said.

To further help reduce excess inventory, NAHB also offered suggestions for a new investment fund and lease-purchase program.

"We support the goals to maximize value for taxpayers and increase private investment in the housing market," said Nielsen. "Stabilizing home values will improve the balance sheets of financial institutions and will reassure home owners that their biggest asset will retain its value."

Source: NAHB

Credit Crunch and Foreclosure Rate Limit Builders

Tuesday, September 20, 2011

The National Association of Home Builders (NAHB) weighed in on the disappointing housing starts figures released Tuesday.

Nationwide housing starts declined 5% to a seasonally adjusted annual rate of 571,000 units in August.

"At this point, most builders are only looking to replenish their depleted inventories of new homes for sale, but otherwise holding off on new projects," said National Association of Home Builders (NAHB) chairman Bob Nielsen, a home builder from Reno, Nev. "While we would like to get more crews back on the job, we need to see solid improvement in consumer demand, greater access to credit for both builders and buyers, and a reduction in the number of foreclosed properties on the market before we can ramp up new production."

"Today's numbers are completely consistent with NAHB's forecast for the quarter, and are in keeping with the anemic economic and job growth we are seeing across most of the country," said NAHB senior economist Robert Denk. "That said, we continue to anticipate modest gains in new-home production through the end of this year with greater momentum building into 2013, and some pockets of improvement are already evident in about a dozen metros nationwide."

The decline in starts was primarily on the more volatile multi-family side, with single-family housing production edging down just 1.4%. Meanwhile, permits for new construction posted modest gains in both sectors.

Source: NAHB

August Housing Starts Slip, Again

Tuesday, September 20, 2011

The latest tally from the U.S. Department of Commerce showed housing starts in August at a seasonally adjusted annual rate of 571,000.

The disappointing August rate -- analysts were expecting a pace of about 590,000 -- was 5% below July's downwardly revised figure, and 5.8% below the August 2010 rate of 606,000.

On an unadjusted basis, there were 53,000 housing starts in August, and 38,300 single-family starts. Both are down from last month and last year. In fact, the single-family figure is the lowest for August since the government began keeping track in 1959.

On the bright side, building permits in August were up 3.2% to a SAAR of 620,000. Compared with a year ago, building permits were up 7.8%.

Looking at the country's four regions, the most negative region was the Midwest -- down 29.1% in total starts compared with a month ago, and down 14.6% in single-family starts compared with a month ago.

The least disappointing from a building perspective was the West region. It suffered only a 2.2% decline in single-family starts compared with July, and was flat compared with August 2010.

Source: Home Channel News

Builder Confidence Dips

Monday, September 19, 2011

Builder confidence in the market for newly built, single-family homes dipped by a single point in September to 14 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). The index has now held between 13 and 16 for six consecutive months.

"Very little has changed in terms of housing market conditions so far this year," said NAHB chairman Bob Nielsen, a home builder from Reno, Nev. "Builders continue to confront the same challenges in accessing construction credit, obtaining accurate appraisal values for new homes and competing against foreclosed properties that they have seen for some time. Beyond this, both builder and consumer confidence took a hit in recent weeks, with the market disruptions caused by the S&P downgrade and congressional gridlock on the budget deficit."

NAHB chief economist David Crowe said: "The fact that the HMI continues to hover within such a narrow, low range reflects builders' awareness that many consumers are simply unwilling or unable to move forward with a home purchase in today's uncertain economic climate. While some bright spots are beginning to emerge in about a dozen select metro areas, the broader picture remains fairly bleak due to the weak economy and job market."

The NAHB has been conducting its monthly builder confidence survey for more than 20 years, asking builders of single-family homes to rate their sales expectations for the next six months as "good," "fair" or "poor." The survey also asks builders to gauge traffic of prospective buyers as "high to very high," "average" or "low to very low." The index is then calculated and seasonally adjusted. Any number over 50 indicates that more builders view sales conditions as good than poor.

Source: Home Channel News

Builders Call On Congress to Extend Load Limits

Monday, September 19, 2011

With the Oct. 1 deadline rapidly approaching when the conforming loan limits for Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA) will be lowered, the National Association of Home Builders (NAHB) today called on Congress to move swiftly to extend the current loan limits to prevent further damage to the already fragile housing market and lackluster economy.

"Congress must act now to prevent the loan limits from reverting to lower levels," said NAHB Chairman Bob Nielsen, a home builder from Reno, Nev. "A drop in mortgage loan limits would reduce housing demand, and place downward pressure on home prices in major markets. This would exacerbate the current housing downturn, trigger more foreclosures, impede job growth and endanger the fragile economic recovery."

As a result, NAHB is engaged in a major grassroots push and association members are being urged to contact their members of Congress and seek their support for immediate efforts to extend the current loan limits.

If Congress fails to act, the loan limits will revert to the lower levels for high-cost areas established under the Housing and Economic Recovery Act of 2008.

The national ceiling for mortgages securitized by Fannie Mae and Freddie Mac or insured by the FHA, would drop from $729,750 to $625,000 and the formula for establishing area loan limits would become more restrictive, producing decreases for areas in addition to those currently bound by the national ceiling.

Loan limits are based on a percentage of median area home prices. A recent NAHB study found that if the limits are allowed to revert to 2008 levels, millions of homes would no longer be eligible for Fannie Mae, Freddie Mac and FHA funding and would have to be financed with mortgages requiring higher interest rates, fees and down payments and more stringent credit standards.

While the changes would affect only a minority of counties in the nation, those areas represent large concentrations of homes and population. The counties affected by the changes in the FHA limits contain nearly 60 percent of all owner-occupied homes; the counties affected by the Fannie-Freddie changes contain nearly 30 percent of all owner-occupied homes.

Bipartisan legislation to extend the current federal home loan guarantees is pending in both chambers of Congress, but with the Oct. 1 deadline looming, time is running short.

"Credit conditions for home builders and home buyers are already extremely tight," said Nielsen. "Reducing the loan limits would further restrict overall mortgage liquidity and make it even more difficult for potential buyers to purchase a home. Congress must not allow this to happen."

Source: NAHB

Builder Confidence Virtually Unchanged in September

Monday, September 19, 2011

Builder confidence in the market for newly built, single-family homes dipped by a single point to 14 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for September, released today. The index has now held between 13 and 16 for six consecutive months.

"Very little has changed in terms of housing market conditions so far this year," said NAHB Chairman Bob Nielsen, a home builder from Reno, Nevada. "Builders continue to confront the same challenges in accessing construction credit, obtaining accurate appraisal values for new homes, and competing against foreclosed properties that they have seen for some time. Beyond this, both builder and consumer confidence took a hit in recent weeks with the market disruptions caused by the S&P downgrade and congressional gridlock on the budget deficit."

"The fact that the HMI continues to hover within such a narrow, low range reflects builders' awareness that many consumers are simply unwilling or unable to move forward with a home purchase in today's uncertain economic climate," added NAHB Chief Economist David Crowe. "While some bright spots are beginning to emerge in about a dozen select metro areas, the broader picture remains fairly bleak due to the weak economy and job market."

Each of the HMI's three component indexes recorded declines in September. The component gauging current sales conditions slipped one point to 14, while the components gauging sales expectations in the next six months and traffic of prospective buyers each declined two points, to 17 and 11, respectively.

The Midwest was the only region to post a gain in its HMI score for September, edging up one point to 11. Meanwhile, the Northeast and South each posted two-point declines to 15 and the West posted a three-point decline to 12.

Source: NAHB

Readers Respond: The Obama Jobs Plan

Thursday, September 15, 2011

The absence of housing initiatives was just one criticism we heard from readers regarding President Obama's $47 billion jobs plan:

"Washington, D.C., has the cart before the horse. There has to be DEMAND for products before businesses can hire people. Housing is the best category to jump-start more businesses throughout the USA. Housing drives our economy in so many ways. However, if housing affordability is not in line with consumer income, savings and trust in the future, there will be no job creation on a scale that will bring us back to prosperity, let alone out of recessionary thinking.

“It is increasingly apparent that the President and Congress (as well as the banking system) have little clue regarding the day-to-day running of a business. It also seems lacking in the knowledge of U.S. citizens’ needs. We are ‘voters’ to the politicians running our government, instead of ‘their employers.’ "

— Jim Schweiger

“I don’t feel [the jobs plan] will do any real good because it focuses on a microcosm of the overall economy. This small group that will benefit coincidently has a major union presence (Operating Engineers Union). The housing construction industry does not have this presence. Also, the housing industry consists of many small ‘mom and pop’ companies. It’s not like the Roosevelt ‘New Deal’ era when such infrastructure projects were largely manual labor and thus created tens of thousands of jobs. With our current technologies, they will only employ a couple of thousand -- not nearly enough to make a dent in the problem.”

— Kent Pearson

"Housing will lead us out of this mess, if we support it."

— George Pattee
CEO
Parksite

Source: Home Channel News

Rate on 30-Year Mortgage Falls to Record 4.09 PCT.

Thursday September 15, 2011

Fixed mortgage rates fell to the lowest level in six decades for the second straight week. But few Americans can take advantage of the historically low rates.

Freddie Mac said Thursday that the average rate on the 30-year fixed mortgage fell to 4.09 percent this week. That's the lowest rate seen since 1951.

The average rate on the 15-year mortgage, a popular refinancing option, fell to 3.30 percent, also a new low. Economists say it is likely the lowest rate on the 15-year ever.

Mortgage rates tend to track the yield on the 10-year Treasury note. Worries over Europe's debt crisis are pushing investors to shift money into safe Treasurys, forcing the yield lower.

Over the past year, the average rate on the 30-year fixed mortgage has been below 5 percent for all but two weeks.

That compares with five years ago, when the average 30-year fixed rate was near 6.5 percent. A decade ago, it was higher than 8 percent.

Still, cheap mortgage rates haven't helped home sales. Sales of new homes are on pace for the worst year on records dating back a half-century. The pace of re-sales is shaping up to be the worst in 14 years.

Many Americans are in no position to buy. High unemployment, scant wage gains and large debt loads have kept them away.

Others can't qualify for the lowest rates. Banks are insisting on higher credit scores and 20 percent down payments for first-time buyers. Many repeat buyers have too little equity invested in their homes to meet loan requirements.

Most people pay extra fees to get the low mortgage rates. Those fees are known as points, with one point equaling 1 percent of the total loan amount.

The average fees for the 30-year held steady at 0.7 point. Fees paid on 15-year fixed loans and both 5-year and one-year adjustable rate loans were all at 0.6 point.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country Monday through Wednesday of each week.

The average rate on a five-year adjustable-rate mortgage rose to 2.99 percent. That's higher than last week's 2.96 percent, the lowest records dating to January 2005 and the sixth straight week of record lows for this type of loan.

The average rate for the one-year adjustable-rate mortgage fell to 2.81 percent from 2.84 percent. That's the lowest on records going back to 1984.

Source: Associated Press

Housing Market: Foreclosures Rise in August

Thursday September 15, 2011

Foreclosure filings rose in August, as more homebuyers fell behind on their mortgage payments.

Filings were up 7% compared to July, but were still 33% lower than they were a year ago -- marking the eleventh straight month of year-over-year declines, according to RealtyTrac, a leading online marketer of foreclosed properties.

According to the report, 228,098 homes in the U.S. received some kind of foreclosure filing in August. Default notices, which typically initiate the foreclosure process, surged more 33% from July. Foreclosure auctions and bank repossessions, which come later in the process, both fell slightly.

The increase in default notices may signal that lenders are starting to finally push through foreclosure paperwork that was previously delayed by the "robo-signing" controversy last fall, said RealtyTrac CEO James Saccacio.

"It also foreshadows more bank repossessions in the coming months as these new foreclosures make their way through the process," he said in a release.

The good news is that bank repossessions have been falling. Lenders repossessed 64,813 homes in August, a six-month low and a 37% decline after bank repossessions hit a peak in September last year.

Meanwhile, foreclosure auctions were scheduled for 84,405 homes, the lowest number in more than three years.

Not surprisingly, Nevada, California and Arizona housing markets continued to be the hardest hit by foreclosures.

Nevada has had the nation's highest foreclosure rate for more than four-and-a-half years now, and even though bank repossessions and auctions both fell in August, the state saw default notices increase 31%.

One in every 118 Nevada homes received a foreclosure filing in August.

California came in second place, with one in every 226 homes in foreclosure, and Arizona, with one in every 248 homes, was third.

Source: CNN Money

Compared With Last Year, Retail Sales Are Rising

Wednesday, September 14, 2011

The U.S. Census Bureau announced Wednesday that advance estimates of U.S. retail and food services sales for August were virtually unchanged from the previous month, and up 7.2% from the month last year.

Adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, August sales were an estimated $389.5 billion. Total sales for the June through August 2011 period were up 7.9% from the same period a year ago.

In the building material & garden equipment and supplies business -- NAICS 444 dealers -- adjusted sales in August were $25.019 billion, an increase of 0.2% over last month, and an increase of 6.7% over the same month last year.

Also interesting: nonstore retailers sales were up 10.4% from last year.

Source: Home Channel News

Chances of Another Recession Increasing: Reuters Poll

Wednesday, September 14, 2011

Chances the United States will lapse into another recession rose over the past month to nearly one in three as the economy faces a number of road blocks that could derail already weak growth, a Reuters poll showed on Wednesday.

The consensus among economists for the probability of another U.S. recession in the next 12 months rose to 31 percent from 25 percent in the August Reuters poll.

The last time economists predicted a similar chance of recession was four years ago, in September 2007. One year later, investment bank Lehman Brothers collapsed and Western economies plunged into the Great Recession.

"The economy is dangerously close to stall-speed. There is no buffer, and even a moderate shock could derail the cycle," said Aneta Markowska, economist with Societe Generale.

The poll of more than 70 economists found respondents had slashed their growth forecasts from just a month ago, although the rate of growth was still expected to tick up in the second half of the year after a dismal first half.

The economy grew at an annualized rate of just 1.0 percent in the second quarter and experts see it improving modestly for the rest of the year, with somewhat stronger growth in 2012.

Economists forecast gross domestic product growing at an annualized 1.9 percent in the third quarter, lower than the 2.3 percent that was seen in the last poll. They slashed expectations for Q4 to 2.0 percent from 2.6 percent.

That suggests a recovery that is crawling along, but still vulnerable to jolts.

The escalating debt crisis in the euro zone is one of the biggest risks to the economy. Politicians have come under intense fire to do more to stop Greece from defaulting on its sovereign debt and lead the currency bloc out of the crisis.

U.S. President Barack Obama joined the fray on Tuesday, telling Spanish journalists that euro zone leaders needed to show markets they were taking responsibility for the debt crisis.

A Greek default could have domino effects for larger countries such as Spain and Italy.

JOBS CHALLENGE
Domestically, the world's biggest economy faces high unemployment, frail consumer confidence and jittery financial markets.

2012 is expected to start off with 2.0 percent growth, before rising to 2.5 percent by the second half of the year. There is also some optimism that a new jobs bill from President Obama could help the economy regain momentum.

"The Obama jobs plan has the potential to increase 2012 growth to the 3.4 percent to 3.7 percent range, if passed as is," said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott.

However, there is uncertainty over the ultimate outcome, with Obama and the Republicans now fighting their third major budget battle of the year.

Confidence in lawmakers' handling of the economy was eroded by an acrimonious debate in the summer over raising the debt ceiling, which led to a downgrade of the United States' credit rating by Standard & Poor's.

Economists also nudged up their expectations for consumer prices. The consumer price index was seen averaging 3.5 percent in the third quarter, up from 3.3 percent earlier, and 3.2 percent in the final quarter, up from 3.1 percent
.
The consensus for core inflation -- which strips out volatile items like food and gasoline, and is more closely watched by the Federal Reserve -- was also revised up a hair.

Expectations for third-quarter core CPI was lifted to 1.8 percent from 1.7 percent, and the fourth quarter was raised to 2.1 percent from 1.9 percent.

The U.S. Federal Reserve was seen keeping interest rates near zero through 2012 after the central bank said last month it expected to hold rates steady for at least the next two years.

Source: Reuters

Multifamily Housing Production Index Shows Ongoing Market Improvement

Thursday, September 8, 2011

The multifamily housing market continued to show improvement in the second quarter of 2011, as the Multifamily Production Index (MPI) compiled by the National Association of Home Builders (NAHB) increased for the fourth consecutive quarter.

The MPI rose from 41.7 in the first quarter of the year to 44.4 in the second quarter. It is the highest quarterly reading since 2006, and continues the trend of generally improving conditions in the market for new multifamily housing that has emerged since the MPI dropped to a record low of 16.0 in the third quarter of 2008.

The index provides a composite measure of three key elements of the multifamily housing market: construction of low-rent units, construction of market-rate-rent units, and construction of "for sale" units. The index and all of its components are scaled so that any number over 50 indicates that more respondents report conditions are improving than report conditions are getting worse. In the second quarter of 2011, a majority of developers saw improvements in the production of low-rent and market-rate units.

"Multifamily rental construction is trending upward, and it is definitely the brightest sector in the broader housing market," said NAHB Chief Economist David Crowe. "However, the entire housing market continues to be very fragile and subject to many external pressures, including an ongoing shortage of financing for new projects."

Looking forward, developers' expectations about multifamily construction for the next six months improved in the second quarter in all three market components: low-rent, market-rate-rent and for-sale multifamily. However, Crowe cautioned that the current climate of overall economic uncertainty is making builders and consumers cautious and having a dampening effect on expectations.

The Multifamily Vacancy Index (MVI), which measures the multifamily housing industry's perception of vacancies, increased slightly from 35.0 in the first quarter of 2011 to 36.1 in the second quarter. With the MVI, lower numbers indicate fewer vacancies. Crowe noted that recent small increases in the MVI follow an extended period of improvement, and over the past three quarters the MVI has been lower than at any time since the second quarter of 2007. Crowe also noted that multifamily developers and property owners expect vacancy rates to decline over the next six months.

"Even though multifamily is trending upward, production is still very low in a historic context and in the context of what we project is necessary to meet long-term demand," Crowe said.

He added that the Multifamily Production Index and the Multifamily Vacancy Index have emerged as leading indicators for the multifamily market, providing information about potential movement in Census Bureau tabulations in advance of their release.

Source: NAHB

30-Year Mortgage Falls to 4.12 PCT., Record Low

Thursday September 8, 2011

Fixed mortgage rates fell this week to the lowest levels in six decades. But few Americans can take advantage of the rates to refinance or buy a home.

The average rate for the 30-year fixed mortgage fell to 4.12 percent, down from 4.22 percent, Freddie Mac said Thursday. It's the lowest level on records dating back to 1971. Freddie Mac said the last time rates were cheaper was 1951, when most long-term home loans lasted just 20 or 25 years.

The average rate on a 15-year fixed mortgage, a popular refinancing option, fell to 3.33 percent from 3.39 percent. That's the lowest on records dating to 1991 and likely the lowest ever, according to economists.

Mortgage rates tend to track the yield on the 10-year Treasury note, which fell to an all-time low this week. An uncertain outlook for the U.S. economy has led many investors to shift money out of stocks and into the safety of Treasurys, lowering the yield.

Record-low mortgage rates have done little to energize the depressed housing market.

Over the past year, the average rate on the 30-year fixed mortgage has been below 5 percent for all but two weeks.

That compares with five years ago, when the average 30-year fixed rate was near 6.5 percent.

Yet sales of new homes are on pace to finish the year as the lowest on records dating back a half-century. The pace of re-sales is shaping up to be the worst in 14 years.

Many Americans are in no position to buy. High unemployment, scant wage gains and large debt loads have kept them away.

Others can't qualify for the lowest rates. Banks are insisting on higher credit scores and 20 percent down payments for first-time buyers. Many repeat buyers have too little equity invested in their homes to meet loan requirements.

"Low rates are great, but the real issue is that the pool of people who can get a loan or refinance is small," said Greg McBride, Bankrate.com's senior financial analyst."

Roughly 40 percent of U.S. households have the necessary credit scores above 700 to get a prime mortgage rate, according to an Associated Press analysis of Fair Isaac Corp., or FICO, data.

A bigger issue is just half of Americans say they'll ever be able to save enough money for any type of down payment, let alone one as high as 20 percent, according to a survey by the National Foundation for Credit Counseling.

Nearly a third of homeowners have nearly zero equity or are underwater in their mortgage, according to the real estate research firm CoreLogic. That leaves then unable to refinance because of lender-imposed limits and the cost of extra fees.

Increased refinancing activity isn't providing much economic benefit. Without much equity, few are drawing money out for home-improvement projects or other big expenditures.

Many people must also pay extra fees to get the low mortgage rates. Those fees are known as points. One point is equal to 1 percent of the total loan amount.

The average fees for the 30-year held steady at 0.7 point. The 15-year fixed loans and 5-year and one-year adjustable rate loans were all at 0.6 point.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country Monday through Wednesday of each week.

The average rate on a five-year adjustable-rate mortgage was unchanged at 2.96 percent. That's the lowest rate on records dating to January 2005. It was the sixth straight week of record lows for this type of loan.

The average rate for the one-year adjustable-rate mortgage fell to 2.84 percent. That's the lowest on records going back to 1984.

Source: Associated Press

Are Large Home Builders Running Out Of Money?

Wednesday, August 31, 2011

Home-building businesses may be at risk for consolidation if home sales don’t pick up soon, according to an analysis by the Wall Street Journal.

Several production home builders may be running low in cash, the article said, as their stock prices continue to sink as the housing slowdown drags on. Toll Brothers, Lennar Corp., Beazer and Hovnanian were all mentioned as being on various analysts’ “watch lists,” although all have taken measures to cut overhead, change products or refinance their debt.

Source: Home Building News

Mortgage Applications Tumbled Last Week: MBA

Wednesday, August 31, 2011

Applications for U.S. home mortgages tumbled last week as demand for refinancing sagged for the second week in a row, an industry group said on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, dropped 9.6 percent in the week ended Aug 26.

The MBA's seasonally adjusted index of refinancing applications slumped 12.2 percent, while the gauge of loan requests for home purchases edged up 0.9 percent after setting a 15-year low set the week before.

"Refinance application volume declined for a second week from recent highs, despite rates staying near a 10-month low, while purchase volume remained near 15-year lows," Mike Fratantoni, MBA's vice president of research and economics, said in a statement.

The refinance share of mortgage activity decreased to 77.8 percent of total applications from 79.8 percent.

Fixed 30-year mortgage rates averaged 4.32 percent, down from 4.39 percent the week before.

Source: Reuters

White House Could Unveil Mortgage Plan Next Week

Wednesday, August 31, 2011

The Obama administration is considering unveiling new plans next week to revive the ailing housing market and reduce foreclosures, including an effort to help troubled borrowers refinance their mortgages.

The administration has been working for weeks on how to implement a mortgage relief program. President Barack Obama could include a nod to the plan in a speech on job creation next week, sources familiar with the administration's plans said.

The refinancing initiative would allow certain borrowers to refinance loans that are backed by government-owned Fannie Mae and Freddie Mac or the Federal Housing Administration, the sources said.

A broad-based effort to automatically refinance millions of mortgages is not in the works, yet the administration is looking to take targeted changes to an existing program that would allow more borrowers to take advantage of low mortgage rates, including allowing borrowers to refinance even if they owe a significant amount above their property's current value.

The idea is to help struggling borrowers refinance at current low interest rates, which would cut their monthly payments and free up cash for other spending. The hope is that this could drum up overall business activity.

The average rate on a 30-year fixed loan was 4.22 percent last week, close to the lowest level in more than 50 years, according to Freddie Mac.

Fannie Mae, Freddie Mac and the FHA, which together account for 90 percent of the U.S. residential mortgage market, would be given permission to begin refinancing plans for borrowers that are current on their mortgage payments and not considered seriously delinquent, according to the sources.

While the administration is under pressure to firm up the details, it is not yet clear whether borrowers seeking to take out a loan that is more than 80 percent of the value of the home would qualify for refinancing. The White House has kept the specifics of the refinancing plan closely guarded as it attempts to work out the details.

White House officials had long been wary of trying aggressive new programs to revive the housing market. The prevailing view at the White House over much of the last two years was that any remedies would cause at least as many problems as they solved.

A mainstay of the administration's housing initiative, rolled out in April 2009, has fallen short of expectations.

Known as the Home Affordable Refinance Program, it was originally intended to help 4 million to 5 million homeowners avoid foreclosure. As of May it had helped only about 810,000 homeowners refinance into loans with lower rates, according to the Federal Housing Finance Agency.

But Democrats close to the White House said the weakness in the economy and the drop in mortgage rates have led officials to take a second look at ideas that could bolster the housing market and ease the strain on household budgets.

Analysts who favor action say housing is at the heart of the economy's woes and that its moribund state is creating a risk of a Japanese-style "lost decade" of economic stagnation.

"We can either spend the better part of a decade allowing households to gradually work off their debt burden," said William Galston, a scholar at the Brookings Institution think tank. "Option number two is that we try to jump-start the process."

"I think it's time to go back to the drawing board," he added.

Source: Reuters

How to Rescue the Housing Market: Foreclosures!

Wednesday, August 31, 2011

If the Obama administration really wants to save the housing market, it should speed up the foreclosure process -- not prolong the inevitable, experts say.

Four years into the housing crisis, the real estate market is still teetering on the edge. The Obama administration has tried one program after another to stem the tide of foreclosures with limited success. And it is continuing to look for ways "to ease the burden on struggling homeowners," though no new initiative is imminent, the White House said this week.

But some housing experts argue that the administration should go in a different direction than it has in the past.

Instead, they say it's time to focus on pushing many of those delinquent borrowers through the foreclosure process and putting foreclosed properties back into use.

While some of the 2.2 million loans in foreclosure can still be saved, many are too far gone, they say. Some 37% have not made a payment in more than two years, while another 34% have not made a payment in 12 to 23 months, according to Lender Processing Services.

"Loans enter into foreclosure, but never come out," said Thomas Lawler, founder of Lawler Economic & Housing Consulting. "If this keeps going on, you have a continual overhang that never goes away."

Delaying foreclosure increases the percentage of homeowners who'll likely never catch up, Lawler said. In 2009, only 6% of delinquent borrowers were more than two years behind. And it means vacant properties still in limbo could fall even further into disrepair, hurting the value of the surrounding housing market.

Lawler is not the first to warn about the consequences of slowing the foreclosure process. Since the housing crisis began, several experts cautioned that foreclosure prevention efforts may only prolong the pain.

Accelerating foreclosures is tricky, however, especially since it is largely the purview of the states. But the administration could work with state officials to speed the process, especially on vacant homes, he said.

The push would come at a time when many mortgage servicers have slowed foreclosure efforts as they resolve shoddy paperwork practices. Foreclosure filings in July dropped to their lowest level since November 2007, due to processing delays and foreclosure prevention measures, according to RealtyTrac.

Another key to helping the housing market is facilitating the resale of homes that have already been foreclosed upon, experts said. This glut of vacant properties will continue to weigh on home values until they are sold.

"They can't be a glacier hanging over the market with everyone waiting for it to fall," said Jim Gaines, research economist at The Real Estate Center at Texas A&M University. "Those properties have to clear the market."

A first step could be to sell off the foreclosed properties owned by Fannie Mae, Freddie Mac and the Federal Housing Administration. Collectively, they own 248,000 homes, about 31% of the foreclosure inventory.

The administration and the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, are already looking for ways to unload these foreclosed homes. Earlier this month, they put out a request for ideas, including possible bulk sales of inventory. Also, they are interested in turning many of these properties into affordable rentals, which are sorely lacking in many communities. Experts interviewed agree this would be a good move for the market.

To entice investors to purchase these homes, as well as other foreclosed properties owned by banks, the administration could advocate for changes to the tax code, Gaines said. For instance, more favorable capital gains or depreciation rules could attract buyers.

Source: CNN Money

Home Sales Slip in July, According to NAR

Tuesday, August 30, 2011

The National Association of Realtors (NAR) has reported a 1.3% decline in pending home homes in July, as measured by signed contracts for the sale of existing homes. All regions show monthly declines except for the West, which continues to show the highest level of sales contract activity.

The Pending Home Sales Index (PHSI) for July 2011 did rise above last July’s number by 14.4%, however.

The index is based on a large national sample, typically representing about 20% of transactions for existing-home sales, according to the NAR. The PHSI in the Northeast declined 2.0% to 67.5 in July but is 9.7% above July 2010.

In the Midwest, the index slipped 0.8% to 79.1 in July but is 18.8% above a year ago. Pending home sales in the South fell 4.8% to an index of 94.4 but are 9.5% higher than July 2010. In the West, the index rose 3.6% to 110.8 in July and is 20.6% above a year ago.

Lawrence Yun, NAR chief economist, said sales activity is underperforming. "The market can easily move into a healthy expansion if mortgage underwriting standards return to normalcy," he said. "We also need to be mindful that not all sales contracts are leading to closed existing-home sales. Other market frictions need to be addressed, such as assuring that proper comparables are used in appraisal valuations and streamlining the short sales process."

Source: Home Channel News

Home Prices Bounce Back, but Market Still Struggles

Wednesday, August 30, 2011

Home prices made a comeback during the second quarter, but the struggling housing market isn't out of the woods yet.

Prices rose a substantial 3.6%, compared with the three months ended March 31. But home prices are still down 5.9% compared with the second quarter of 2010.

The rise in home prices came after three consecutive quarters of drops, as reported by the S&P/Case-Shiller national index -- an influential gauge of residential real-estate markets.

The year-over-year decline was a bit more than the than the drop of 4.7% that had been forecast by a consensus of experts at Briefing.com.

A separate monthly index of home prices in 20 major metro areas also reported a month-over-month gain of 1.1% for June, and a drop of 4.5% year-over year.

The quarter-over-quarter price increase may be the last one for a while, according to Stan Humphries, chief economist for real estate website Zillow. He expects prices will weaken again due to economic woes.

"The August turmoil of credit rating downgrades, negative GDP revisions, stock oscillations and European debt woes are likely to leave a mark on both August home sales and home value appreciation," Humphries said.

The economic woes already seem to have affected new homes sales, which declined in July. Real estate gurus have been pushing back forecasts for a housing market recovery.

Even mortgage interest rates hitting new lows in August failed to move many potential homebuyers. The number of people applying for loans to purchase homes dropped nearly every week during the month, according to the Mortgage Bankers Association.

None of the 20 cities coverted in the report recorded price decreases in June: 19 posted gains and one, Portland, Ore., was flat.

The biggest gains were made by Chicago and Minneapolis, which were both up 3.2%. Boston prices were up 2.4% and Washington's rose 2.3%.

The 20-city index is at approximately the same level it stood at in June 2003, following a roller-coaster ride of big gains and losses. The index peaked in mid-2006 and is down nearly 32% from that high.

Anthony Sanders, a real estate professor at George Mason University, called the latest gains a "blip."

"I would take it with a grain of salt," he said, "and I'd be very surprised if, come fall, the increases continue."

Hi attributed some of the improvement to a change in the mix of homes being sold. There are more short sales these days -- up 19%, according to RealtyTrac -- compared with sales of properties repossessed by banks.

That would be enough to account for much of the quarterly increase in the Case-Shiller index.

Source: CNN Money

Nonresidential Construction Slowing, Survey Says

Thursday, August 25, 2011

Uncertainty in the market and difficulties of getting projects approved are putting the brakes on non-residential construction, according to a survey just released by FMI, a leading provider of management consulting and investment banking to the engineering and construction industry.

The firm’s Nonresidential Construction Index (NRCI) slipped from 58.6 to a still positive 52.4 for the third quarter of 2011. Although the survey closed the week before the stock market slide, the uncertainty in the markets is reflected in the panelists’ responses, the company noted.

Most components of the NRCI are down this quarter as backlogs slipped again from nine months back to just eight months. After setting the question aside for two quarters, the survey asked again about cancellations and delays due to owner financing difficulties. The response was similar to that received at the end of 2010, except panelists noted delays weren’t caused as much by lack of financing now as uncertainty in the market and difficulties of getting projects approved and off the ground. Another factor mentioned was contractors taking more care to assure project financing was in place before the project got started.

The NRCI survey also questioned participants about the current connection between residential construction and nonresidential construction, as well as expected changes in infrastructure construction due to expected government budget cuts. Most panelists said there is still a bond between nonresidential construction activity and residential, but the ties might be weaker than in the past. Nonetheless, few expect there to be a strong recovery for nonresidential construction until residential gets more traction, especially for commercial construction.

Infrastructure construction is expected to pull back in all levels of government. Many panelists noted that this was probably necessary, but also amounted to lack of governments to recognize the job potential benefits of good infrastructure projects on both the economy and overall employment. If there was one concern reflected in the results this quarter, it was the government’s uncertainty and lack of direction, which stifles owners’ decisions to invest in capital improvements and infrastructure.

Source: Home Channel News

Home Prices Decline 5.9% in Second Quarter

Wednesday, August 24, 2011

U.S. home prices fell 5.9 percent in the second quarter from a year earlier, the biggest drop since 2009, as foreclosures added to the inventory of properties for sale, according to the Federal Housing Finance Agency.

Prices declined 0.6 percent from the prior three months, the Washington-based agency said today in a report. In June, prices retreated 4.3 percent from a year earlier, while increasing 0.9 percent from the previous month.

Foreclosures are boosting the supply of properties on the market and undercutting the confidence of homebuyers, sapping demand even as mortgage rates tumble to near-record lows. The U.S. inventory of homes for sale averaged 3.7 million during the second quarter, the highest since the third quarter of 2010, data from the National Association of Realtors show. The mortgages on 6.5 million U.S. homes had late payments or were in foreclosure in June, according to Lender Processing Services Inc. in Jacksonville, Florida.

“Foreclosures water down home prices because banks want to get rid of properties as fast as they can,” said Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts. “The key number driving foreclosures is the unemployment rate, and we saw that worsen in the second quarter.”

Today’s FHFA report measures changes in real estate values using repeat data on individual properties with mortgages backed by Fannie Mae or Freddie Mac. It doesn’t include a dollar value for homes. The U.S. median home price was $171,900 in the second quarter, according to NAR.

Source: Yahoo Finance

New-Home Sales Virtually Unchanged in July

Tuesday, August 23, 2011

Sales of newly built, single-family homes held virtually unchanged in July with a 0.7 percent dip from the previous month to a seasonally adjusted annual rate of 298,000 units, according to newly released data from the U.S. Commerce Department.

"The fact that new-home sales fell by less than one percent in July is an indication of how little conditions have changed in the housing market," said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. "While new-home inventories are exceptionally thin, home builders are still competing with large numbers of foreclosed and distressed homes on the market and a climate of uncertainty in which consumers are reluctant to go forward with a major purchase for fear of what economic news tomorrow might bring."

"The sales pace of newly built, single-family homes in July was in line with what it has been over the last year, and this is in keeping with our forecast," said NAHB Chief Economist David Crowe. "While we expect to see some marginal gains in sales activity through the rest of 2011, we do not foresee any major advances until economic growth helps boost home buyers' confidence."

Regionally, new-home sales recorded declines of 7.4 percent in the South and 5.9 percent in the West, but rose 2.4 percent in the Midwest and actually doubled (100 percent increase) in the Northeast from a record low number in the previous month.

The inventory of new homes for sale in July fell to a 48-year record low of just 165,000 units, which represents a 6.6-month supply at the current sales pace. Putting this situation into perspective, said Crowe, "The current nationwide inventory of completed new homes ready for occupancy - at 61,000 units - is in keeping with what a single major metropolitan area such as Atlanta might sell in a typical year."

Source: NAHB

Who Will Benefit From the Slowing Economy

Monday, August 22, 2011

It's bad news for many Americans-- but not for everybody.

The economy has hit the skids recently, with a sharp slowdown in growth triggering anxious flashbacks to 2008 and reviving fears of a double-dip recession. Economists have been slashing their forecasts for the remainder of 2011 and for 2012, on account of weak spending, a shortage of jobs, debt problems in Europe, and political dysfunction that seems more likely to hurt the economy than help it. Most forecasts now call for meager growth of about 2 percent for the next 18 months, which is far lower than the robust expansion that usually follows a recession. There's nothing on the horizon that's likely to help 14 million unemployed Americans find work. The economy is more vulnerable to shocks than it was a year ago, and most economists peg the odds of another recession at an uncomfortably high 40 percent or so. The nauseating volatility in the stock market these days reflects the anxiety of investors as they lower their expectations and prepare, once again, for tough times.

It's grim-sounding news, to be sure. But economic slowdowns usually have some collateral benefits as well, especially for those lucky enough to have secure jobs. Here's who will benefit from a teeter-tottering economy:
Borrowers. Interest rates usually rise in the aftermath of a recession, as spending picks up and the demand for loans increases. But that's not likely to happen anytime soon. The Federal Reserve recently announced it will keep short-term interest rates at record lows until 2013 at least, which means businesses and others reliant on short-term borrowing will continue to enjoy remarkably cheap money. Other Fed policies, combined with the dynamics of a weak economy, ought to keep longer-term rates low, too. Forecasting firm IHS Global Insight predicts that long-term rates will dip slightly in 2012 and end up back where they are now by 2013. If the economy turns out weaker than expected, rates could fall even further.

That's good news for car and home buyers and, to a lesser extent, for people who carry credit-card balances.

Mortgage rates, for instance, now average less than 4.5 percent, the lowest levels in more than 50 years. The catch for many potential home buyers is that tougher lending standards prevent them from getting the best rates, or even getting a loan at all. That's one big reason housing remains in such a slump. But banks have gradually been easing their lending standards as they adjust to the aftermath of the 2008 financial panic. More people should qualify for loans over the next few years, which will help revive the housing market at some point. And an extended period of low rates will allow more people to take advantage of the record affordability of homes.

Drivers. Oil prices can gyrate wildly, but in general they go up when the global economy is strong and down when it's weak. And sure enough, the weakening economy has brought oil prices down from a peak of $113 per barrel in May to about $85 today. Drivers should not--repeat, NOT--get used to the idea that gas prices will fall below $3 per gallon any time soon. That may never happen again, since global demand for oil will only rise over time. But gas prices have fallen from nearly $4 in May to about $3.55 right now, and they'll probably fall further to catch up with the recent drop in oil prices. If drivers are lucky, gas prices will stay below $3.50 for another year or two. Once the economy starts to improve in earnest, expect gas prices to drift back up.

Shoppers. Inflation is unlikely to be a problem as long as the economy is weak. It's true that inflation has picked up recently and is now running at slightly more than three percent. As usual, the cost of healthcare, education, and some food items is rising faster than other things. But recent inflation readings are due partly to gas prices--which had been rising but are now falling--and temporary hikes in the price of cars caused by the Japanese earthquake earlier this year. IHS predicts that inflation will fall back below two percent for most of 2012 and 2013. That's largely because labor costs, one of the biggest inputs for many goods and services, are unlikely to rise by much as long as unemployment is so high. Shoppers will benefit from stable and even falling prices on many everyday items. The trick for many families will be wrangling pay increases that keep them ahead of inflation.

People with cash on hand. If you've saved money over the last few years, it may soon be time to put it to use. Some analysts think stocks, for instance--which have fallen 17 percent from their April peak and are down about 10 percent for the year--are undervalued, with smart investors gradually adding to their stock portfolios over the next several months. If there's more "quantitative easing" by the Fed or surprise fiscal stimulus out of Washington, it could even produce a modest stock-market rally. Cash will also help home buyers who are able to muster a sizeable down payment, since they're more likely to qualify for a mortgage and take advantage of terrific housing affordability.

Source: US News

Housing Affordability Hovers Near Record Level as Some Markets Begin to Stabilize

Thursday, August 18, 2011

Nationwide housing affordability during the second quarter of 2011 hovered for the 10th consecutive quarter near its highest level in the more than 20 years it has been measured, according to National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) data released today.

The HOI indicated that 72.6 percent of all new and existing homes sold in the second quarter of the year were affordable to families earning the national median income of $64,200. The affordability measure dipped slightly from the record high of 74.6 percent set last quarter but remained above the 70 percent threshold initially achieved in the first quarter of 2009.

"At a time when homeownership is within reach of more households than it has been for more than two decades and interest rates are at historically low levels, the sluggish economy and the extremely tight credit conditions confronting home buyers and builders remain significant obstacles to many potential home sales," said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. "That said, however, some housing markets across the country have stabilized and are beginning to show signs of a budding recovery."

Source: NAHB

Existing-Home Sales Decline in July

Thursday, August 18, 2011

The National Association of Realtors (NAR) reported that existing-home sales declined in July compared with June, but have improved compared with a year ago.

Total existing-home sales, which are based on transaction closings of single-family, townhomes, condominiums and co-ops, fell from a seasonally adjusted annual rate of 4.84 million in June to 4.67 million in July, a decrease of 3.5%. However, existing-home sales for July 2011 were 21.0% above the 3.86 million-unit pace in July 2010.

Single-family home sales were at a seasonally adjusted annual rate of 4.12 million in July, down 4% from 4.29 million in June, but 21.5% above the 3.39 million level set a year ago. The median existing single-family home price was $174,800 in July, down 4.5% in July 2010.

Existing condominium and co-op sales were at a seasonally adjusted annual rate of 550,000 in July 2011,
unchanged from June and 17.3% above the 469,000-unit mark in July 2010. The median existing condo price was $168,400, down 4% from a year ago.

The NAR reported monthly declines in the West and South, which offset gains in the Midwest and Northeast for an overall monthly decline in existing-home sales.

Existing-home sales in the Northeast rose in July 2011 to an annual level of 750,000 from 469,000 in July 2010, an increase of 17.3%. The median existing condo price in the Northeast was $168,400, down 4% from July 2010. In the Midwest, existing-home sales increased 1.0% from June to July, and are at a pace of 1.05 million, a 31.3% increase from July 2010. The Midwest median price was $146,300, down 2.9% from a year ago. In the West, existing-home sales fell to an annual pace of 1.04 million in July 2011, a 12.6% decrease since June but a 16.9% improvement compared with July 2010. The median price in the West was down 7.1% from July 2010, at $208,300. The South showed a 1.6% decline in existing-home sales since June, falling to an annual level of 1.84 million, which nevertheless is 19.5% above July 2010. The median price in the South was 2.2% below a year ago, at $152,600.

The national median existing-home price for all housing types was down 4.4% from July 2010, at $174,000 in July 2011. Distressed homes -- foreclosures and short sales typically sold at deep discounts -- accounted for 29% of sales in July, compared with 30% in June and 32% in July 2010.

Total housing inventory at the end of July fell 1.7% to 3.65 million existing homes available for sale, which represents a 9.4-month supply at the current sales pace, up from a 9.2-month supply in June.

All-cash sales accounted for 29% of transactions in July, compared with 30% in June 2010, with no change compared with June 2011. The majority of cash purchases can be attributed to investors, the NAR reported.

First-time buyers purchased 32% of homes in July, compared with 31% in June, and 38% in July 2010. Investors accounted for 18% of purchase activity in July, 19% in June, and 19% in July 2010. The balance of sales was to repeat buyers, which, unchanged from June, were a 50% market share in July.

Freddie Mac reported that the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 4.55% in July, compared with 4.51% in June and 4.56% a year ago. Last week, Freddie Mac said the 30-year fixed rate dropped to 4.32%, according to the NAR.

In July, an unchanged 16% of NAR members reported contract failures, cancellations caused largely by declined mortgage applications or failures in loan underwriting from appraised values coming in below the negotiated price. An additional 9% reported a delayed contract in the last three months because of low appraisals, and another 13% reported contracts that were renegotiated to lower prices because an appraisal was below the initially agreed price.

“For both mortgage credit and home appraisals, there’s been a parallel pendulum swing from very loose standards, which led to the housing boom, to unnecessarily restrictive practices as an overreaction to the housing correction,” said Ron Phipps, president of the NAR.

“Beyond the tight credit problems, all appraisals must be done by valuators with local expertise and using reasonable comparisons. It doesn’t make sense to consistently see so many valuations coming in below negotiated prices, often below replacement construction costs,” Phipps said.

According to Phipps, in an environment following a large price correction, the price negotiated between a buyer and seller should be a fair market price. However, he said, the number of home buyers unable to complete transactions is unacceptably high. “Banks frequently request numerous sales comparisons, well beyond the customary three comps used in the past, with little consideration that some of those properties may be discounted foreclosures used to valuate a traditional home in good condition,” he said. “To a great extent, banks are exerting influence on appraised valuations with negative impacts for both home sales and prices.”

“Affordability conditions this year have been the most favorable on record dating back to 1970, but many buyers are being held back because banks are offering financing to only the most highly qualified borrowers, ignoring a large share of otherwise creditworthy buyers,” said Lawrence Yun, chief economist for the NAR. “Those potential buyers represent the difference between an uneven recovery and a much more robust housing market that could stimulate additional economic activity and create jobs.”

Source: Home Channel News

Housing Starts Down Slightly in July

Tuesday, August 16, 2011

Nationwide housing starts edged down 1.5 percent to a seasonally adjusted annual rate of 604,000 units in July, according to figures released by the U.S. Commerce Department today. The slight decline comes on the heels of significant gains in housing production in June, and was attributable to a moderate drop-off on the single-family side while production of multifamily units continued upward.

"Although single-family housing production slid a few notches in July, the number was right in line with the second quarter average, so we view this report as an indication of relative stability," said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. "This is in keeping with the fact that not much has changed over the past several months with regard to the outlook for new-home sales and production. Both builders and buyers continue to exercise a great deal of caution due to uncertainty about the current economic climate, the large number of foreclosed homes on the market, and concerns about access to credit."

"Overall housing production held relatively steady in July, with construction of new multifamily projects showing greater strength due to higher demand for rental units," noted NAHB Chief Economist David Crowe. "Going forward, we expect housing production to show modest improvement through the end of this year, particularly in select markets that do not have large inventories of distressed homes and where economic stability is more apparent."

Single-family housing starts declined 4.9 percent to a seasonally adjusted annual rate of 425,000 units in July, on par with their second-quarter average. Multifamily starts rose 7.8 percent to a seasonally adjusted annual rate of 179,000 units, their highest level since January.

Starts activity was mixed across the four regions in July, with the Northeast's 34.7 percent gain countered by a 37.7 percent decline in the Midwest, a 5.6 percent gain reported in the South, and a 3.0 percent decline posted in the West.

Issuance of building permits, which can be an indicator of future building activity, fell 3.2 percent to a seasonally adjusted annual rate of 597,000 units in July. While single-family permits were virtually unchanged with a 0.5 percent gain to 404,000 units, multifamily permits registered a 10.2 percent decline to 193,000 units.

Regionally, permits gained 18.3 percent in the Northeast and 3.6 percent in the South, but fell 7.1 percent in the Midwest and 7.8 percent in the West in July.

Source: NAHB

Building Green Finally Profitable, Oregon Builders Say

Tuesday, August 16, 2011

A group of builders in Eugene, Ore., who consider themselves early pioneers of the green building movement say their businesses have finally turned profitable, even during the downturn. Interviewed for an article in the Oregon Register Guard, these contractors, designers and architects now find themselves in a multimillion-dollar niche market.

While not every firm is successful, a mixture of local government incentives and public awareness has made green building projects more popular. RainbowValley Design and Construction, a 40-year-old firm, said it was once wary about marketing itself as green. But that stigma has turned into a calling card, and the company, which has offices in Portland and Eugene, has an established reputation for sustainable design and construction.

“People know that we do green building,” said company designer Alec Dakers. “Now we get a lot of people that walk in the door asking for specific products. We don’t really have to pitch it at all.”

Several of the construction firms interviewed said they’ve had to adapt to the slowdown by taking on more remodeling work instead of just new construction. And projects tend to be smaller. But the work keeps coming in the door, and revenues for green building far exceed what they did in previous years.

Source: Home Channel News

Builder Confidence Unchanged in August

Monday, August 15, 2011

Builder confidence in the market for newly built, single-family homes held unchanged at a low level of 15 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for August, released today.

"Builders continue to confront the same major challenges they have seen over the past year, including competition from the large inventory of distressed homes on the market, inaccurate appraisal values, and issues with their buyers not being able to sell an existing home or qualify for favorable mortgage rates because of overly tight underwriting requirements," said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. He noted that 41 percent of respondents to a special questions section of the HMI indicated they had lost sales contracts due to buyers' inability to sell their current homes.

"The uncertain economic climate and concerns about job security are discouraging many potential buyers from exploring a home purchase at this time," said NAHB Chief Economist David Crowe. "While buying conditions are very favorable in terms of prices, interest rates and selection, consumers are worried about what the future will bring, and builders are echoing those sentiments in their responses to the HMI survey."

Two out of three of the HMI's component indexes posted marginal gains in August. The component gauging current sales conditions gained one point to 16 - its highest level since March of this year - and the component gauging traffic of prospect buyers rose one point to 13 following two consecutive months at 12. However, the component gauging sales expectations for the next six months declined two points to 19, partially offsetting a six-point gain from the last month's revised number.

Regionally, the HMI results were mixed in August. While the Northeast posted a four-point gain to 19, the West registered a one-point gain to 15, the South held even at 17 and the Midwest posted a two-point decline, to 10.

Source: NAHB

Household Debt Falls Slightly

Monday, August 15, 2011

Consumer borrowing fell slightly in the second quarter, as Americans shed more of their debt.

A new report released Monday by the New York Federal Reserve -- which looks at mortgages, home equity lines, credit cards, auto loans and student debt held by consumers nationwide -- found that total consumer debt fell to $11.4 trillion in the second quarter of this year.

That marked a $50 billion drop in total consumer debt from the prior quarter, a decrease so slight that the New York Fed called consumer borrowing "essentially flat."

"This is more evidence that the pace of consumer deleveraging that began in late 2008 has slowed," Andrew Haughwout, vice president of the Research and Statistics Group at the New York Fed said in a statement.

Consumer debt remains 8.6% below its $12.5 trillion peak at the end of September 2008, just after the collapse of Lehman Brothers and the seizing of financial markets.

Reeling from the shock of the recession, American households have been paying down their debt slowly for nine of the last 10 quarters. That trend is typically viewed as a healthy rebalancing step for the economy, but at the same time it also limits the recovery.

At some point, consumer borrowing and spending will need to pick up in order for the U.S. recovery to truly take hold. That's why the ability to borrow money more easily is widely seen as an important step for economic growth.

"The economy is certainly not going to recover that much until we see borrowing start to improve again," said Mark Vitner, Wells Fargo senior economist. "On the flip side, we're not going to go back to where we were before, where the recovery was being driven by overspending by consumers."

Total household delinquency rates also continued to improve for the sixth quarter in a row, as overdue balances fell 15% from a year ago.

Housing: Mortgages by far account for the largest portion of consumer debt, totaling $8.5 trillion in the second quarter. Consumers have been cutting back on mortgage debt for nine of the last 10 quarters.

Foreclosure rates have also started to improve. In the last quarter alone, new foreclosures fell about 23% to 284,000. New foreclosures had previously been as high as 566,180 just two years ago.

Meanwhile, mortgage originations recently fell after increasing for three months in a row. New mortgages are now 3% below their year-ago level.

Bankruptcies: About 284,000 Americans filed for bankruptcy in the second quarter, marking a 9.2% increase over the previous quarter.

That said, bankruptcies still remain far below their post-recession peak of about 621,000 in the second quarter of 2010.

Credit cards: Consumers have been consistently cutting back on credit card debt since the end of 2008. Credit card balances recently totaled $690 billion, or roughly 6% of all consumer debt.

Credit card limits have now increased for two quarters in a row, including $60 billion or 2% in the latest quarter.

This trend is considered a good sign that consumer credit markets are healing, the New York Fed said.

Student loans: Student debt remains the one type of debt that continues to grow, despite the recession. In fact, it has either increased or remained flat every quarter since mid-2002.

Student debt now totals $550 billion, or 4.8% of total consumer debt, according to the New York Fed.

Auto loans: Auto loans were flat for the fourth quarter in a row, totaling $710 billion.

The New York Fed compiles the household debt report by surveying an anonymous panel of homes across the country about their borrowing decisions.

Source: CNN Money

Feds Looking at New Foreclosure Solution

Friday, August 12, 2011

In an attempt to shore up the housing market and also provide more affordable rentals, the federal government is considering the idea of turning some of the 250,000 foreclosed homes it owns into rental units. On Aug. 10, the U.S. Department of Housing and Urban Development (HUD) announced it was seeking public input on “new options” for selling single-family homes owned by Freddie Mac and Fannie Mae.

“As we continue moving forward on housing finance reform, it’s critical that we support the process of repair and recovery in the housing market," said Treasury Secretary Tim Geithner. "Exploring new options for selling these foreclosed properties will help expand access to affordable rental housing, promote private investment in local housing markets, and support neighborhood and home price stability."

Officials from the Federal Housing Finance Agency, which oversees Freddie Mac and Fannie Mae, said they would accept ideas in a “request for information process” through Sept. 15. A more formal request for proposals from interested investors is expected to follow.

Source: Home Channel News

Foreclosures Fall for 10th Straight Month

Thursday, August 11, 2011

Foreclosure filings dropped once again in July, hitting their lowest level since November 2007, as processing delays and foreclosure prevention measures enabled a larger number of delinquent borrowers to remain in their homes.

Filings were down 4% compared to June and were 35% lower than July 2010, marking the tenth straight month of year-over-year declines, according to RealtyTrac, a leading online marketer of foreclosed properties.

RealtyTrac reported that 212,764 U.S. homes received some kind of foreclosure filing -- notice of default, notice of auction sale or completed foreclosure -- during the month. Bank repossessions totaled 67,829, down 33.6% from the peak month of September, 2010 -- when banks took back 102,134 homes, and off 27% from 12 months earlier.

The steep foreclosure drop, according to RealtyTrac CEO James Saccacio, was triggered by a foreclosure processing slowdown that was sparked by the "robo-signing" controversy last fall. As a result of the scandal, in which the banks were accused of mishandling paperwork and failing to follow proper protocols, banks are being much more careful and many filings have been delayed.

"[T]he downward trend in foreclosure activity has now taken on a life of its own," said Saccacio. "It appears that processing delays, combined with the smorgasbord of national and state-level foreclosure prevention efforts, may be allowing more distressed homeowners to stave off foreclosure."

There were some small glimmers of hope in RealtyTrac's report. One promising sign was the steep plunge in initial notices of default, which fell 39% year-over-year to fewer than 60,000.

The decline may indicate that fewer borrowers are falling behind on payments. Or, it could mean lenders are not filing those notices as promptly as they have in the past, according to Rick Sharga, a spokesman for RealtyTrac.

The company analyzed initial default notices in California and discovered that the average sum of missed payments has risen to $78,000 from $17,000 over the past four years. Sharga attributed the jump to delays in filing the initial papers.

Getting rid of repossessed homes
RealtyTrac's release came a day after the Federal Housing Finance Agency (FHFA), the Treasury Department and the U.S. Department of Housing and Urban Development announced they were seeking suggestions on how to dispose of the 92,000 repossessed homes now owned by Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA).

FHFA, the agency that supervises Fannie/Freddie, and HUD, which oversees FHA loans, want to be able to reduce that inventory quickly and in a manner that helps stabilize communities that have been hard hit by foreclosures.

They're seeking proposals from private enterprises, municipalities and non-profits that will result in bulk sales and result in their refurbishment and eventual resale or rental.

Hardest hit markets
Among the markets where these efforts may be most concentrated are those hardest hit by the foreclosure crisis. According to RealtyTrac's report, Las Vegas continued to record the highest rate of foreclosures in the nation, with a filing for every 99 homes, but the gap between "Sin City" and other metro areas has shrunk.

Foreclosure filings in Stockton, Calif. jumped 57% month-over-month, one for every 124 homes, the second highest rate.

Nevada continued to post the highest foreclosure rate of any state, one filing for every 115 homes. California, one in every 239 homes came in second place, and Arizona, one in every 273 homes, was third.

Source: CNNMoney

Mortgage Fates Fall Again, 30-Year Near Record Low

Thursday August 11, 2011

Fixed mortgage rates fell to at or near record lows. That's good news for the few who can afford to buy a home or are able to refinance. But the rates have done little to lift the ailing housing market.

Freddie Mac said Thursday that the average rate for the 30-year fixed mortgage fell to 4.32 percent this week from 4.39 percent. The 30-year loan hit a record low of 4.17 percent in mid-November.

The average rate on a 15-year fixed mortgage, a popular refinancing option, fell to a record low of 3.50 percent, from last week's record rate of 3.54 percent.

Mortgage rates tend to track the yield on the 10-year Treasury note. A weakening U.S. economy has led many investors to shift money from stocks to bonds, which are seen as safer bets. That has pushed Treasury yields to historic lows.

In theory, low mortgage rates should provide a boost to the troubled housing market. But rates have been below 5 percent for nearly two years and haven't helped home sales much. Rates on the 30-year fixed loan were near 6.5 percent five years ago and higher than 8 percent in 2000.

Sales of previously occupied homes fell in June for a third straight month to a seasonally adjusted 4.77 million. The pace is lagging behind the 4.91 million homes sold last year -- the fewest since 1997.

New-home sales also declined in June and are trailing last year's sales, which were the worst on records dating back nearly half a century.

Many people can't take advantage of the low mortgage rates. Banks are insisting on higher credit scores and larger down payments from applicants. Others have too little equity invested in their homes to qualify for loans.
Historically low rates have helped fuel another boom in refinancing.

Applications jumped nearly 22 percent last week from the week before, according to the Mortgage Bankers Association. Refinancing made up more than 75 percent of all mortgage activity, the group said. That's up from 70 percent the previous week and the highest level of refinancing this year.

Still, a higher number of refinancing applications is unlikely to have much economic impact. Many people have little or no equity in their homes. So they are not pulling money out when they refinance for home-improvement projects or other big expenditures. And many people already refinanced last year, when the 30-year loan fell to a record low
.
To calculate average mortgage rates, Freddie Mac collects rates from lenders across the country on Monday through Wednesday of each week.

The average rate on a five-year adjustable-rate mortgage fell to 3.13 percent, its lowest level on records that go back to January 2005. Last week's reading of 3.18 percent also was a record low.

The average rate for one-year adjustable-rate loans plunged to 2.89 percent from 3.02 percent last week. That's a record low dating back to 1984.

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

The average fees for the 30-year and 15-year fixed loans was 0.7 point and the five-year and one-year adjustable-rate loans was 0.5 point.

Source: Associated Press

S&P Downgrades Fannie and Freddie, US-Backed Debt

Monday, August 8, 2011

Standard & Poor's Ratings Services on Monday downgraded the credit ratings of Fannie Mae and Freddie Mac and other agencies linked to long-term U.S. debt.

The agency also lowered the ratings for: farm lenders; long-term U.S. government-backed debt issued by 32 banks and credit unions; and three major clearinghouses, which are used to execute trades of stocks, bonds and options.

All the downgrades were from AAA to AA+. S&P says the agencies and banks all have debt that is exposed to economic volatility and a further downgrade of long-term U.S. debt. Their creditworthiness hinges on the U.S. government's ability to pay its own creditors.

Stocks plunged further after the downgrades. The Dow Jones industrial average fell nearly 300 points, or 3.2 percent. The S&P 500 stock index tumbled nearly 5 percent. Investors seeking safety drove gold prices up and Treasury yields down.

Monday's downgrades of the mortgage giants Fannie and Freddie reflected their "direct reliance" on the U.S. government, S&P said.

Fannie and Freddie own or guarantee about half of all U.S. mortgages, or nearly 31 million home loans worth more than $5 trillion. As part of a nationalized system, they account for nearly all new mortgage loans. Their downgrade might force anyone looking to buy a home to pay higher mortgage rates.

Officials at Standard & Poor's say they will also indicate shortly how local and state governments will be affected by their decision on Friday to lower the long-term U.S. debt from AAA to AA+.

S&P on Friday said that it was downgrading U.S. debt for the first time in history because it lacks confidence that political leaders will make the choices needed to avert a long-term fiscal crisis.

The downgrade of long-term debt issued by the U.S. government affects the banking and lending industries because many interest rates are pegged to the yields on Treasury securities. In addition, many companies use the securities as collateral that they would surrender if their bets lost value.

The lower credit rating for long-term U.S. debt means that it might be considered less valuable for those purposes.

It might become more costly for companies to borrow or trade.

Ten of the country's 12 Federal Home Loan Banks also were downgraded from AAA to AA+. The banks of Chicago and Seattle had already been downgraded earlier to AA+.

Source: Associated Press

Short Sales Become Bank Foreclosure Shortcut

Friday, August 5, 2011

Banks dealing with lengthy, complicated and frequently messy foreclosures are starting to see "short sales" as a quicker and cheaper way of getting bad loans off their books.

The nation's biggest mortgage servicers- Bank of America, JPMorgan Chase and Wells Fargo - are beginning to step up their efforts to ease the short sale process for borrowers who are unsuccessful in getting loan modifications and face the threat of foreclosure.

Servicers are attempting to reach out to borrowers and are paying out more incentives to those suffering financial hardship to help proceed with a short sale. They are also cutting down the time taken to approve short sales, although realtors still complain that the process takes too long.

JPMorgan has processed 120,000 short sales through its proprietary program since June 2009 and now averages 5,000 short sales a month. The bank says its average response time to approve a short sales transaction is 30 days.

"We think the short sale is a good solution for many struggling homeowners and we let them know that it's an option," said Christine Holevas, spokesperson for JPMorgan in an email. "Our outreach efforts have increased in the past year or so. Foreclosure can be an expensive and lengthy process for all parties. It's a good deal for the homeowner and a good deal for us (a cheaper way to get a bad loan off the books.)"

A short sale is seen as a more palatable alternative to foreclosure for borrowers. In its simplest form, borrowers with underwater mortgages sell their homes to a buyer at a price that is approved by the lender. The lender normally forgives the difference between the loan and the sale proceeds- in essence the bank is being shorted for the loan amount.

Previously, lenders were said to prefer foreclosures to short sales because they -- or the investors in the loans -- figured that more money could be made from the former.

But the average time for the foreclosure process- from the time of notice to the completed foreclosure- is now 318 days in the U.S., according to RealtyTrac.

The foreclosure process in the state of New York, which follows a judicial process, took 966 days on average for properties foreclosed in the second quarter. New Jersey and Florida followed with an average processing time of 944 days and 676 days respectively.

The longer it takes for a foreclosure to be approved, the longer bad loans stay on banks' books.

Foreclosures are also more expensive, because of the legal expenses involved as well as the expenses for maintenance and upkeep while the property is in foreclosure.

Wells Fargo, for instance, incurred expenses on repossessed homes to the tune of $305 million in the second quarter and $408 million in the first quarter, according to data from SNL. Data for the other big banks wasn't available.

But at a time when analysts are paying more attention how well expenses are managed, banks might be more willing to look at other alternatives.

According to real estate analytics firm CoreLogic, the number of short sales in the market have tripled in the last two years and transactions are anticipated to grow by 25% in 2011. The markets with the largest short sale volume are California, Arizona, Colorado and Florida.

"Lenders often consider short sales as the lesser of two evils when compared to foreclosures," Core Logic noted in a May 2011 report on short sales. "While significant losses may be incurred in both foreclosure and short sale scenarios, the overall negative financial impact of short sales is typically less than that of foreclosure. In many cases short sales represent the best way for lenders to minimize their overall losses. In general, all parties fare better when a foreclosure is prevented."

JPMorgan is now paying certain types of borrowers- such as those with infamous option-arm mortgages as much as $35,000 to help them out with a short sale, the Herald Tribune reports.

JPMorgan spokesperson Holevas told TheStreet that the incentives vary and that they are available only for certain kinds of borrowers. She would not share specifics about the incentives.

CitiMortgages, the mortgage servicing arm of Citigroup is paying an average $12,000 in incentives, up from between $3,000 and $5,000 in 2010 for short sales on its own loan portfolio, HousingWire reported in June, citing a senior real estate management executive.

Again these incentives are paid out by servicers on the short sales of their own loan portfolios. In cases where loans have been sold, investors often dictate how much is paid out. But it suggests that servicers are beginning to push short sales more aggressively.

J.K. Huey, a senior vice president at Wells Fargo Home Mortgage- REO and Short Sales says transactions through the bank's proprietary program have been fairly stable. But the bank has seen a pickup in short sales through the government's HAFA (Home Affordable Foreclosure Alternatives) program, which loosened restrictions in February.

Most of the short sales executed by Wells are in the harder-hit housing markets such as California and Florida, which is also where they service more loans. The borrowers in these transactions are fairly late in their delinquency stage, although Wells does engage with borrowers who reach out to them earlier in the process.

Investors too are willing to consider short sales as a first option.

"Short sale is considered a positive alternative to foreclosures," said Huey. "Investors for the most part will do a short sale over a foreclosure provided the net present value shows it that way. Investors have been very attentive to this, as has the Treasury."

Still, the short sale process is not easy and industry observers say sellers and buyers of short sale properties must set realistic expectations.

For one, borrowers should realize that their credit scores aren't any less affected under a short sale than it is in the case of a foreclosure. In both case, the borrower is considered in default.

However, in a short sale, the borrower's debt is often forgiven, at least on the first lien. Also, a borrower who does a short sale might be able to apply for another mortgage sooner than he or she could in the case of a foreclosure, where the wait can be as much as 7 years.

For buyers interested in bidding for short sale properties, the process can be frustrating. P/>Jeff Lischer, managing director for regulatory policy at the National Association of Realtors says banks are trying to do improve the process, but realtors still complain that the process is chaotic.

Most still say there is a lot of back and forth in the documentation process as well as disagreements over valuation of the property. Short sale contracts often fall through because there are multiple parties involved. And the process varies significantly from one servicer to another.

"It is hard to know what the rules are," says Lischer. "You can have a house with two loans serviced by two different servicers. You need to get four parties to sign off on your short sale, instead of one."

Wells' Huey says that servicers are now using workflow processes that have shortened the processing time considerably.

In the simplest of cases, where loans are owned by the bank and there are no junior liens or mortgage insurance companies involved, a short sale transaction can be approved in as little as five days, provided all the documentation is in order, she says.

It gets more complicated when there are more parties involved. Investors, junior lien holders and mortgage insurers often want more documentation to prove financial hardship of the seller, proof of funding for the borrower and they usually want to negotiate the price. That adds to the processing time, which takes Wells on an average 15 days.

She also adds that the short sale process can go a lot more smoothly when the real estate agent is someone who understands how to do a short sale. "This is not a regular sale where there is just one contract between a buyer and a seller," she said.

Source: Yahoo Finance

Housing Subsidies Make Huge Tax Target

Friday, August 5, 2011

The fragile housing market may attract the attention of the Congressional committee charged with finding ways to cut the growing U.S. deficit.

The Joint Select Committee on Deficit Reduction won't be able to put much of a dent in the deficit by going after housing subsidies, but the subsidies are nonetheless thought to be relatively easy pickings.

The bipartisan, bicameral committee of 12 was created by the deficit reduction plan passed by Congress and signed by President Obama this week. It must cut $1.5 trillion in 10 years or a tough series of cuts to areas dear to each party--such as Defense and Medicare will kick in automatically.

The biggest savings from housing would come from cutting tax deductions on mortgage interest. Estimates vary widely, but the numbers--whether $80 billion per year or $200 billion are enormous.

"Killing the mortgage interest deduction would be huge," wrote Robert Litan, vice president for Research and Policy at the Ewing Marion Kauffman Foundation, and a former associate director of the Office of Management and Budget, in an email exchange with TheStreet,though he is convinced it won't happen as it is too popular with middle class Americans.

"Instead, the idea in Simpson-Bowles of putting an overall cap on personal deductions - including home mortgage - is an ideal that may have legs," he says.

Another less talked about issue the committee may take up is fees charged by Fannie Mae and Freddie Mac.
As part of a white paper published earlier this year, the Treasury Department has already proposed gradually raising fees the mortgage giants charge for guaranteeing mortgage backed securities, known as "g-fees." The idea would be to offset the government sponsored enterprises' debts to the Treasury, while allowing the government to gradually withdraw from the mortgage market, which it currently backstops almost singlehandedly.

"It's inevitable that some g-fee increase will be part of deficit reduction," says Rob Zimmer, a former Freddie Mac lobbyist who now represents Community Mortgage Lenders of America. "It's a relatively easy thing to do versus cutting other social programs for Dems or, in the case of Republicans, cutting defense spending or raising taxes."

Over the long term, such a move would likely benefit big mortgage lenders like Bank of America, Wells Fargo and JPMorgan Chase says Ed Mills, policy analyst with FBR Capital Markets.

That's because they would no longer have to compete with Fannie and Freddie, whose fees are below what the market would dictate. A Wells Fargo spokeswoman declined to comment on whether the bank supports a g-fee increase. Spokespeople for Bank of America and JPMorgan did not respond to questions.

However, raising the g-fee too quickly could further weaken the housing market, Mills says. "In the short term it could be viewed as a tax by some because they have no other options, and the only thing that changes is it is more expensive to make a mortgage."

Litan, however, believes Congress will be reluctant to tinker with Fannie and Freddie without a larger consensus about the future of the housing giants. He also believes small revenue-raising tricks like these are a distraction from the real work that needs to be done.

"Everyone knows where the money is," Litan says. "The money is in the entitlement programs and somehow in closing loopholes and if they end up having to sort of nickel and dime it with a variety of these other things then the whole thing is in trouble."

Source: Yahoo Finance

U.S. Says More Must Be Done to Help Housing Market

Friday, Aug 5, 2011

U.S. housing authorities said on Friday more needed to be done to help the market recover, as the Obama administration's foreclosure prevention program helped 31,620 homeowners win lower mortgage payments in June.

The program provides financial incentives to servicers, which help borrowers rework their mortgages. So far it has helped 763,071 borrowers win permanent loan modifications, far fewer than the administration's initial goal of helping up to four million homeowners.

Despite a slight improvement in home prices, the Department of Housing and Urban Development said there was much more work to do to help the housing market recover.

Source: Reuters

Fannie Needs More Funds as U.S. Struggles With Housing

Friday, August 5, 2011

The government's mortgage buyer Fannie Mae on Friday sought a further $5.1 billion from taxpayers, as the Obama administration struggled to keep Americans in their homes.

With high unemployment and foreclosures expected to put more downward pressure on home prices, the government's efforts to help the housing market has had little impact.

Federal housing authorities said it had "much more work to do to help the market recover and to reach the many households...across the nation who still face trouble."

Under the administration's premier housing program that provides financial incentives for banks to help borrowers rework their loans, nearly 32,000 homeowners won lower mortgage payments in June.

So far that program has provided 763,071 borrowers with permanent loan modifications, far fewer than the administration's initial goal of helping up to four million homeowners.

The administration has been mulling ways to help the housing market and recently unveiled plans to give unemployed borrowers and their bankers more time to delay home foreclosures.

But economists see little relief ahead.

"The housing market problem is simple - too much supply against demand," said Steve Blitz, senior economist with ITG Investment Research in New York. "The weak economy has made lots of people anxious to sell but they are holding off waiting for a better bid."

Source: Reuters

Construction Spending at a Standstill in June

Thursday, August 4, 2011

Numbers released this week from the U.S. Department of Commerce announced that construction during June 2011 was estimated at a seasonally adjusted annual rate of $773.2 billion, a 0.2% increase above the May estimate of $770.5 billion. The June figure is 4.7% below the June 2010 estimate of $810.4 billion.

During the first six months of 2011, construction spending amounted to $357.5 billion, 5.4% below $377.9 billion for the same period in 2010.

Spending on residential construction was estimated at $235.8 billion in June, a 0.3% dip below the revised May estimate of $236.5 billion. Non-residential construction was reported to be $257.7 billion in June, 1.8% above the revised May estimate of $253.1 billion.

Public construction was also flat. Overall spending for June was down 0.7% to $278.9 billion. Educational construction dropped 4.1% and highway construction decreased 1.6% compared with May 2011.

Source: Home Channel News

Economy Grinds To Halt As Consumers Pull Back

Friday, July 29, 2011

Consumers all but shut their wallets in the second quarter, causing the U.S. economy to grow at a tepid pace. And growth in the first quarter was much slower than initially thought, according to new government figures released Friday.

Gross domestic product, the broadest measure of the nation's economic health, rose at an annual rate of 1.3% in the second quarter, the Commerce Department said.

While that's an increase from the revised 0.4% growth rate in the first three months of the year, it is hardly good news. The government originally reported that the economy grew at a 1.9% annualized rate in the first quarter. The growth in the second quarter was also below the 1.8% increase expected by economists surveyed by CNNMoney.

Dubbed a "soft patch" by economists and even Federal Reserve Chairman Ben Bernanke, the economy's sluggishness was due to a variety of factors that weighed on consumers and businesses.

Higher gas prices for one, hit Americans hard when they peaked at a national average of $3.98 a gallon in May.

Overall, consumer spending, which accounts for roughly 70% of gross domestic product, picked up only 0.1% in the second quarter -- marking a significant decline from growth of 2.1% in the first three months of the year.
It was the slowest growth in consumer spending since the fourth quarter of 2009.

Looking back further, it also now appears that American consumers had less disposable income than originally thought from 2007 through 2010, whereas corporate profits were revised significantly higher for 2009 and 2010. The government revised GDP data back to 2003.

Overall, the theme of the U.S. recovery continues to be one driven by companies holding cash on the sidelines and building up their infrastructure, rather than a recovery driven by consumers.

Americans on Main Street continue to be held back by slow job growth and the housing slump, even as major companies report strong profits and have mostly solid balance sheets.

According to the latest GDP report, investment in commercial real estate surged 8.1% in the second quarter, and business spending on equipment and software rose 5.7%.

Meanwhile, exports rose 6%. The U.S. continues to import far more goods and services than it exports to foreign countries, but because imports grew at a slower rate of 1.3%, that also contributed positively to GDP. The aftermath of Japan's earthquake and tsunami may have been one of the major reasons import growth slowed, as the U.S. bought fewer auto parts from the country.

Source: CNNMoney

Remodeling Activity Slows Under Economic Uncertainty

Thursday, July 28, 2011

The remodeling market slipped under pressure from a sluggish economy according to the National Association of Home Builders' (NAHB) Remodeling Market Index (RMI), which dipped during the second quarter to 43.9 from the first quarter result of 46.5. An RMI below 50 indicates that more remodelers report market activity is lower compared to the prior quarter than report it is higher.

The overall RMI combines ratings of current remodeling activity with indicators of future activity, like calls for bids. Current market conditions for the second quarter of 2011 fell to 44.8 from 46.1 in the first quarter. Future market indications dropped to 43.0 from 46.8 in the previous quarter.

"Remodelers have experienced the same hiccup that has rippled through the U.S. economy," said NAHB Remodelers Chairman Bob Peterson, CGR, CAPS, CGP, a remodeler from Ft. Collins, Colo. "After picking up the pace early in the year, the calls from customers dropped off and remodeling slowed down."

Regionally, current market conditions shrank in two areas: the Midwest to 44.4 (from 47.1 in the first quarter) and the South to 42.9 (from 46.1). The West at 48.2 (from 46.1) and Northeast at 48.1 (from 46.1) both climbed modestly.

Two indicators of current market conditions dropped: major additions to 46.2 (from 50.3 in the first quarter) and maintenance and repair to 38.4 (from 39.5). A third indicator, minor additions, remained essentially flat at 48.5 (from 48.0). Future market indicators also descended: calls for bids to 49.8 (from 53.1), backlog of remodeling jobs to 45.7 (from 49.7), and appointments for proposals to 44.2 (from 52.4). The amount of work committed for the next three months stayed level at 32.3 (from 32.1).

"While the RMI indicates that the home remodeling market softened somewhat in the second quarter, this is still the second highest RMI we've been able to report since the third quarter of 2007," said NAHB Chief Economist David Crowe. "There are several barriers blocking the way to a stronger recovery. Home owners who may want to remodel still face stringent lending requirements, and uncertainty about the economy is making them hesitant to undertake major improvements."

Source: NAHB

Mortgage Tax Break Eyed to Help Cut Debt

Thursday July 28, 2011

Lawmakers are eyeing a popular tax deduction for mortgage interest as they look for ways to fill record budget deficits, although any changes are likely to await a broad reworking of the tax code.

Two forces are conspiring in a way that could put the long-cherished deduction on the chopping block: a need to raise more revenues and a feeling among policymakers that government incentives for housing have been too generous.

"It's a confluence of several factors. First, it's such a large tax break," said Donald Marron, director of the Urban-Brookings Tax Policy Center. "And the tax treatment of housing is much more favorable than we provide for most other investments people undertake."

A bipartisan group of U.S. senators, known as the "Gang of Six," pushed a debt plan last week that embraced changing the deduction to help achieve $1 trillion in revenues and reduce deficits by nearly $4 trillion over the next decade.

The proposal comes as Democrats and Republicans rushed on Thursday to rework rival deficit reduction plans to avert a crippling U.S. default.

The government has allowed home buyers to deduct a portion of the interest paid on mortgages for decades as a way to promote home ownership.

Efforts to curtail the deduction have gained ground as a way to curb the nation's growing debt, and while the latest dueling deficit-cutting plans in Congress do not commit to take the tax break away, plans to curb it could resurface.

The plan left it to congressional committees to decide how the tax break would be trimmed, but any legislation should "reform, not eliminate" the deduction.

The deduction, which costs the U.S. Treasury about $100 billion a year, is the largest subsidy for homeowners and the nation's third-largest tax break, according to the Center for American Progress, a liberal policy research group.

About 35 million households claimed the mortgage interest deduction in 2009, according to the Joint Committee on Taxation, the congressional scorekeeper on taxes.

The deduction's popularity and its connection to the American dream of home ownership has made it sacrosanct politically. But that may have changed.

"There is more interest in the mortgage interest deduction, and it has more momentum than it has had in the past," said Brian Gardner, senior vice president for Washington research at Keefe Bruyette & Woods Inc.

Source: Reuters

Mortgage Tax Break Eyed to Help Cut Debt

Remodeling Activity Slows Under Economic Uncertainty

Thursday, July 28, 2011

Source: NAHB

Mortgage Applications Ease After Recent Jump: MBA

Wednesday, July 27, 2011

Applications for U.S. home mortgages slipped last week after a sharp jump the week before and as interest rates edged up, an industry group said on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, fell 5.0 percent in the week ended July 22.

The MBA's seasonally adjusted index of refinancing applications lost 5.5 percent after a 23.1 percent jump the previous week. The gauge of loan requests for home purchases was down 3.8 percent.

The refinance share of mortgage activity dipped to 69.6 percent of total applications from 70.1 percent the week before.

Fixed 30-year mortgage rates averaged 4.57 percent, rising from 4.54 percent.

Source: Reuters

Housing: Still Groping for a Bottom

Wednesday, July 27, 2011

Tuesday brought another round of housing data and another opportunity for optimists to seek signs of a bottom, including a Commerce Department report showing a 7.2% year-over-year increase in June median home prices and a drop in the supply of new homes on the market.

But these positive signs were more than offset by the unexpected 1% drop in new home sales, as well as the 4.5% year-over-year decline in the May S&P/Case-Shiller Index.

For all the talk about the 1% month-over-month improvement in the Case-Shiller data, it was flat on a seasonally adjusted basis. Moreover, the 20-city index remains just a hair above its recent lows, and bouncing along the bottom seems to be the best-case scenario.

"Housing probably bottomed in the fourth quarter of last year or first of this year and while we certainly do not expect a strong move upwards anytime soon, significant declines from current levels would be hard to come by absent a shift in the macro landscape," writes Dan Greenhaus, chief global strategist at BTIG.

Call me crazy, but I'd say a self-inflicted default by the U.S. government and/or a loss of America's triple-A rating would count as "a shift in the macro landscape" -- especially if interest rates surge or banks become even less willing to lend as a result.

Even with Washington looking more dysfunctional than normal, many observers believe that's a highly unlikely scenario. Still, the idea of removing the mortgage interest deduction as part of a "grand bargain" to raise the debt ceiling is reportedly back on the table; that too would count as "a shift in the macro landscape" in my book.

Perhaps most importantly, the outlook for housing depends on the job market, which has taken another turn for the worse in recent months.

In a separate report Tuesday, the Conference Board said U.S. consumer confidence unexpectedly rose in July.

This too is a hopeful sign because buying a house is the ultimate sign of confidence, especially now that it's obvious you can lose money in real estate, contrary to popular wisdom during the boom years.

But it's hard to be confident if your biggest asset is still falling in value and the job market remains tenuous, at best. Finally, I'll note the Conference Board's survey was taken before the debt-ceiling debate reached critical mass and it's hard to be confident watching what's going in Washington, regardless of your political affiliation.

Source: Yahoo Finance, Daily Ticker

Home Prices Ticked Higher in May

Tuesday, July 26, 2011

The housing market showed signs of life again in May. Home prices rose for the second consecutive month following an eight-month slide.

Prices for an index of 20 major metro areas increased 1% compared with April, according to the S&P/Case-Shiller home price index. The 10-city index rose 1.1% month-over-month.

David Blitzer, a spokesman for S&P, was cautious in detailing the index gains.

"While the monthly data were encouraging, most [metro areas] and both composites fared poorly in annual terms," he said. "The 10-City Composite was down 3.6% and the 20-City Composite was down 4.5% in May 2011 versus May 2010."

Prices are also still off more than 32% from their highs, set in July, 2006 and hover at about the same level they were in mid-2003.

Blitzer attributed much of the home price increase for May to seasonal effects. Spring is the hottest time of year for home buying and the added demand usually drives prices higher.

Taking those seasonal factors into account, the 20-city index was flat and the 10-city showed a gain of just 0.1%

Source: CNN Money

Outlook Volatile For Home Improvement Spending

Thursday, July 21, 2011

After showing signs of recovery, spending on home improvements is expected to remain volatile and weak over the next several quarters, according to a report released today by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University. The Leading Indicator of Remodeling Activity (LIRA) projected that annual remodeling spending through the first quarter of 2012 will be down 4%. The Census Bureau’s improvements spending series, to which the LIRA is benchmarked, was recently revised downwards as well.

“The recent slowdown in the economy has caused home improvement spending to weaken again,” said Eric Belsky, managing director of the Joint Center. “Falling consumer confidence levels have undermined interest in discretionary remodeling projects.”

“What looked to be a promising upturn in home improvement spending earlier this year has begun to stall,” added Kermit Baker, director of the Remodeling Futures Program at the Joint Center. “Housing starts, existing-home sales and house prices have all been disappointing lately, which has dimmed prospects for home improvement spending gains this year.”

The Remodeling Futures Program, initiated by the Joint Center for Housing Studies in 1995, is a comprehensive study of the factors influencing the growth and changing characteristics of housing renovation and repair activity in the United States. It seeks to produce a better understanding of the home improvement industry and its relationship to the broader residential construction industry.

Source: Home Channel News

Cancellations Deflate Existing-Home Sales

Wednesday, July 20, 2011

Existing-home sales dipped in June by 0.8%, to 4.77 million from 4.81 million in May, according to the National Association of Realtors (NAR). This figure remains 8.8% below the 5.23 million unit level in June 2010, which was the scheduled closing deadline for the home buyer tax credit, the organization noted.

Sales gains in the Midwest and South were offset by declines in the Northeast and West. Single-family home sales were stable, while the condo sector weakened.

Lawrence Yun, NAR’s chief economist, said home sales had been trending up without the tax stimulus, but an unusual spike in contract cancellations this past month weighed on the market.

“The underlying reason for elevated cancellations is unclear, but with problems including tight credit and low appraisals, 16% of NAR members report a sales contract was canceled in June, up from 4% in May, which stands out in contrast with the pattern over the past year.”

Yun cited other factors in the sales performance. “Pending home sales were down in April but up in May, so we may be seeing some of that mix in closed sales for June. However, economic uncertainty and the federal budget debacle may be causing hesitation among some consumers or lenders.”

The national median existing-home price for single-family homes was $184,600 in June, up 0.6% from a year ago. The median existing condo price was $182,300 in June, up 1.8% from June 2010.

Distressed homes -- foreclosures and short sales generally sold at deep discounts -- accounted for 30% of sales in June, compared with 31% in May and 32% in June 2010.

Total housing inventory at the end of June rose 3.3% to 3.77 million existing homes available for sale, which represents a 9.5-month supply at the current sales pace, up from a 9.1-month supply in May.

All-cash transactions accounted for 29% of sales in June; they were 30% in May and 24% in June 2010; investors account for the bulk of cash purchases. First-time buyers purchased 31% of existing homes in June, down from 36% in May; they were 43% in June 2010 when the tax credit was in place.

Regionally, existing-home sales in the Northeast fell 5.2% to an annual pace of 730,000 in June and are 17.0% below June 2010. The median price in the Northeast was $261,000, up 3.1% from a year ago.

Existing-home sales in the Midwest rose 1.0% in June to a pace of 1.04 million but are 14.0% below a year ago. The median price in the Midwest was $147,700, down 5.3% from June 2010.

In the South, existing-home sales increased 0.5% to an annual level of 1.86 million in June but are 5.6% below June 2010. The median price in the South was $159,100, down 0.1% from a year ago.

Existing-home sales in the West declined 1.7% to an annual pace of 1.14 million in June and are 2.6% below a year ago. The median price in the West was $240,400, up 9.5% from June 2010.

Source: Home Channel News

Mixed Expectations for Forest Product M&A

Tuesday, July 19, 2011

An article just released by Standard & Poor's Ratings Services predicted that mergers and acquisitions among forest product companies will continue to increase over the next few quarters due to strong balance sheets and attractive financing terms. But this M&A activity will largely be contained to the paperboard and packing sectors, according to "Top Investor Questions For The U.S. And Canadian Forest Products Sector In 2011."

Consolidation in the “highly fragmented” building products sector is unlikely to occur over the next 12 months, the report said, without a recovery in housing.

"We expect most of our ratings on industry players to remain stable, in light of a gradual economic recovery in the U.S. and moderate recovery in new residential construction in 2011 after a steep and prolonged downturn," said Standard & Poor's credit analyst Tobias Crabtree.

Most U.S. and Canadian forest product companies have modest debt maturities over the next two to three years, and S&P is not particularly concerned about their credit worthiness. But in its “risk assessment” for each category over the next 12 months, converted wood products -- which takes in most lumber, panel and engineered wood product suppliers -- were given a “higher-than-average” risk. This was due to the highly cyclical housing market; substantial industry overcapacity; and fragmented supply base, especially in lumber. Timber, on the other hand, was categorized as a “lower-than-average” investment risk because of harvest flexibility, market diversity and long-term reductions in Canadian supply.

Source: Home Channel News

Builder Confidence Rises

Tuesday, July 19, 2011

Builder confidence in the market for newly built, single-family homes improved by two points in July to 15 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). The gain largely offsets a three-point dip recorded in June, and marks the ninth time out of the past 10 months in which the index has held within the same three-point range.

"The improvement in builder confidence in July is a positive sign that the outlook perhaps isn't quite as bleak as was feared in June," said National Association of Home Builders (NAHB) chairman Bob Nielsen and a home builder from Reno, Nev. "While builders continue to confront serious challenges with regard to competition from foreclosed properties that are priced below replacement cost, inaccurate appraisals of new homes, and a very restrictive lending environment for new home construction, select markets are showing gradual improvement as consumers begin to take advantage of very favorable buying conditions."

"We view the upward movement in the July HMI as a correction from an exceptionally weak number in June that was at least partly attributable to negative economic news and the close of a disappointing spring selling season," said NAHB chief economist David Crowe. "The strong rebound in sales expectations for the next six months likewise marks a return to trend. Basically, the market continues to bounce along the bottom, with conditions in some locations beginning to improve."

The NAHB has been conducting its monthly builder confidence survey for more than 20 years, asking builders of single-family homes to rate their sales expectations for the next six months as "good," "fair" or "poor." The survey also asks builders to gauge traffic of prospective buyers as "high to very high," "average" or "low to very low." The index is then calculated and seasonally adjusted. Any number over 50 indicates that more builders view sales conditions as good than poor.

Source: Home Channel News

Housing Shows Glimmer of Progress

Tuesday, July 19, 2011

New home construction ticked higher in June, the government said Tuesday, as two key measures topped expectations.

Housing starts, the number of new homes being built, rose 14.6% in June to an annual rate of 629,000 units, up from a revised 549,000 in May, the Commerce Department said.

That's the highest level since January, when 636,000 housing starts were reported. Economists had expected an annual rate 570,000 units, according to consensus estimates from Briefing.com.

The report also said there were 624,000 building permits issued in June, 2.5% above the revised May rate of 609,000. Building permits were forecast to have remained steady at an annual rate of 609,000 units.

While construction has shown some resilience recently, the market for new homes has been stifled by a glut of foreclosed properties.

In addition, the overall housing market has been hindered by high levels of unemployment, despite a modest pick up in hiring this year. Homebuilders have also had trouble financing projects, as credit remains tight.

Source: CNNMoney

May Was a Record Month for a Remodeling Index

Monday, July 18, 2011

The BuildFax Remodeling Index for May 2011 reported that despite high unemployment rates and falling home prices, remodeling activity has reached a new high. The index, released July 18, was reported to be up 22% with a value of 124.3 for May, the highest number since the index’s introduction in 2004. Furthermore, BuildFax reported, May marked the 19th straight month for year-over-year gains in the remodeling industry. Consumers, the data show, are continuing to invest in remodeling and are choosing to remodel rather than purchase new homes.

The BFRI reports trends in remodeling activity by region (Northeast, Midwest, South, and West), as well as remodeling data for the entire United States. The May 2011 index reported month-over-month gains in all regions, and year-over-year gains in all regions except the Midwest, which has lagged behind the other regions in year-over-year comparisons for the last three months.

In month-over-month comparisons, the Northeast index rose 12%, the South 7%, the Midwest 18% and the West 7%. Year-over-year data showed that the Northeast was up 9%, the South 10%, the West 21%, and the Midwest had declined by11%.

Source: Home Channel News

Banks Continue Robo-Signing

Monday, July 18, 2011

America's leading mortgage lenders vowed in March to end the dubious foreclosure practices that caused a bruising scandal last year.

But a Reuters investigation finds that many are still taking the same shortcuts they promised to shun, from sketchy paperwork to the use of "robo-signers."

In its effort to seize the two-bedroom ranch house of 87-year-old Margery Gunter in this down-on-its-luck Florida town, OneWest Bank recently filed a court document that appears riddled with discrepancies. Mrs. Gunter, who has lived in the house for 40 years and gets around with the aid of a walker, stopped paying her loan back in 2009, her lawyer concedes. To foreclose, the bank submitted to the Collier County clerk's office on March 3 a "mortgage assignment," a document essential to proving who owns a mortgage once the original lender sells it off.

But OneWest's paperwork is problematic. Among the snags: state law permits lenders to file to foreclose only if they already legally own a mortgage. Yet the key document establishing ownership wasn't signed and officially recorded until months after OneWest filed to foreclose on Mrs. Gunter. OneWest declined to comment on the case.

Reuters has found that some of the biggest U.S. banks and other "loan servicers" continue to file questionable foreclosure documents with courts and county clerks. They are using tactics that late last year triggered an outcry, multiple investigations and temporary moratoriums on foreclosures.

In recent months, servicers have filed thousands of documents that appear to have been fabricated or improperly altered, or have sworn to false facts.

Reuters also identified at least six "robo-signers," individuals who in recent months have each signed thousands of mortgage assignments -- legal documents which pinpoint ownership of a property. These same individuals have been identified -- in depositions, court testimony or court rulings -- as previously having signed vast numbers of foreclosure documents that they never read or checked.

Among them: Christina Carter, an employee of Ocwen Loan Servicing of West Palm Beach, Florida, a "sub-servicer" which handles routine mortgage tasks for banks. Her signature -- just two "C"s -- has appeared on thousands of mortgage assignments and other documents this year.

In a case involving a foreclosure by HSBC Bank USA, a New York state court judge this month called Carter a "known robo-signer" and said he'd found multiple variations of her two-letter signature on documents, raising questions about whether others were using her name. That and other red flags prompted the judge to take the extraordinary step of threatening to sanction HSBC's chief executive officer.

In a phone interview, Carter acknowledged signing large numbers of mortgage assignments this year, but said they all were legally done. To her knowledge, she added, no one else used her name.

Source: Reuters

Builder Confidence Regains Two Points in July

Monday, July 18, 2011

Builder confidence in the market for newly built, single-family homes rose two points to 15 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for July, released today. The gain largely offsets a three-point dip recorded in June, and marks the ninth time out of the past 10 months in which the index has held within the same three-point range.

"The improvement in builder confidence in July is a positive sign that the outlook perhaps isn't quite as bleak as was feared in June," said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. "While builders continue to confront serious challenges with regard to competition from foreclosed properties that are priced below replacement cost, inaccurate appraisals of new homes, and a very restrictive lending environment for new home construction, select markets are showing gradual improvement as consumers begin to take advantage of very favorable buying conditions."

"We view the upward movement in the July HMI as a correction from an exceptionally weak number in June that was at least partly attributable to negative economic news and the close of a disappointing spring selling season," said NAHB Chief Economist David Crowe. "The strong rebound in sales expectations for the next six months likewise marks a return to trend. Basically, the market continues to bounce along the bottom, with conditions in some locations beginning to improve."

Two out of three of the HMI's component indexes rebounded in July from declines in the previous month. The component gauging current sales conditions rose two points to 15, returning to its May level, while the component gauging sales expectations in the next six months rose seven points to 22, which is where it stood in April. The component gauging traffic of prospective buyers held even with the previous month, at 12.

Regionally, the HMI inched up one point to 12 in the Midwest and posted three-point gains in both the South and West, to 17 and 14, respectively. Only the Northeast posted a decline, slipping two points to 15.

Source: NAHB

Big Mortgages Are Back

Friday July 15, 2011

Low interest rates are driving high-end home buyers to supersized mortgages at a pace unseen since the housing boom. But the deals may have a limited shelf life.

So-called jumbo loans—generally those bigger than $417,000—are a better bargain now than they have been in years. The average rate on a 30-year jumbo mortgage is 5.15%, down from 6.41% two years ago, according to mortgage data firm HSH Associates. That means the monthly payment on a 30-year $600,000 home loan is now about $3,280, some $480 less than the cost of the same loan two years ago, for an annual savings of nearly $5,800.

Not only are jumbo loans cheap relative to historical rates, they are cheap relative to smaller "conforming" loans, which are backed by Fannie Mae, Freddie Mac and federal agencies. The difference between the rates on a jumbo mortgage and a conforming loan is just 0.43 percentage point, the narrowest spread since 2007.

That makes borrowing bigger amounts more attractive than it has been in recent years, and also presents opportunities for buyers who might have been previously locked out of pricey markets due to higher rates, says Stuart Gabriel, director of the Ziman Center for Real Estate at the University of California, Los Angeles.

Buyers already have taken advantage. Jumbo loans accounted for almost one in every six new mortgages, including new-home purchases and refinances, in the first quarter of 2011, according to Inside Mortgage Finance.

At that pace, the number of jumbo loans issued in 2011 could be the highest in five years, when the housing market was near its peak. That is in part because people are trying to lock in a government-backed jumbo loan now ahead of a planned limit reduction.

Starting in October, the federal government will start easing its support of jumbo loans as large as $729,750, which it began as an emergency measure three years ago. The new limits will vary by location, but will drop to $625,500 in top-tier markets such as New York, Los Angeles and Washington, D.C.

Many potential buyers are trying to take advantage of substantial price declines of expensive homes over recent years, Mr. Gabriel says. That includes people who bought well before the housing bubble and who are still significantly above water now and want to trade up while prices are low.

Other prospective buyers who sat out the boom but stayed employed and saved money during the downturn now have money for pricier houses, and the jumbo loan is their ticket in.

Right now, some of the cheapest jumbo mortgages can be found at independent mortgage firms, some of which are Web-based. Those include Ultra Mortgage LLC, WCS Lending LLC and Multi-State Home Lending Inc., where the annual percentage rate on a 30-year fixed nonconforming jumbo loan ranges from 4.64% to 4.99%, according to LendingTree LLC, which tracks mortgage rates.

Depending on location, jumbo loans typically require a down payment of 20% to 30%, says Keith Gumbinger, vice president of HSH Associates—double or triple the typical 10% down payment for a smaller loan. Buyers also need to be able to document their income, assets and net worth, including two years of tax returns and recent brokerage and bank statements, he says. They also will need high credit scores, at least 740 to 760 on the FICO-score range.

But borrowers should act quickly. Since lenders won't be able to sell as many jumbo loans to government-backed agencies—thereby unloading risk—they may not originate as many, says Mr. Gumbinger. What's more, the added risk means they likely will raise their interest rates. The upshot: buyers could have fewer choices and face pricier loans.

Many lenders will have to stop originating mortgages over the $625,500 limit by the end of July for home purchases and by mid-August for refinances, Mr. Gumbinger says, since mortgages can take up to two months to close.

All of this could make it harder for home buyers to get financing, possibly leading to fewer home sales and pushing down prices.

Still, some housing analysts say that with the government out of the way, more lenders will eventually start competing against one another—perhaps as early as next year. The renewed competition could result in easier lending standards over time.

Source: The Wall Street Journal

Foreclosures Plunge in First Half of 2011

Thursday, July 14, 2011

Foreclosure filings fell dramatically during the first half of the year as processing delays at the banks, which are strapped with excess inventory of repossessed homes, continued to skew the numbers -- and falsely raise hopes that the housing market is staging a recovery.

Foreclosure filings plunged 29% compared with the same period a year ago and were down 25% from the last six months of 2010, according to the latest report from RealtyTrac, an online marketer of foreclosed properties.

Through June 30, 1.2 million U.S. homeowners -- or one in every 111 households -- received a foreclosure filing, according to RealtyTrac.

The deceleration in defaults continued as the year wore on with second quarter filings -- at 608,235 households -- marking the lowest quarterly total since the end of 2007, when the mortgage meltdown was still in its youth.

RealtyTrac's CEO, James Saccacio, sounded a sour note, however, contending that the drop-off in filings can be traced not to economic improvement or a pick-up in the housing market, but to processing delays brought on by the robo-signing scandal in which it was discovered that bank employees were signing foreclosure documents without following proper protocols.

"[That's what is] pushing foreclosures further and further out -- we estimate that as many as 1 million foreclosure actions that should have taken place in 2011 will now happen in 2012, or perhaps even later," Saccacio said.
As a result, it will only prolong the housing slump, he said.

"This casts an ominous shadow over the housing market where recovery is unlikely to happen until the current and forthcoming inventory of distressed properties can be whittled down to a manageable number," said Saccacio.

Evidence of delays

In the past, banks acted rapidly, often sending out notice of default a few weeks after not receiving a check. These days, they wait much longer, according to Rick Sharga, a spokesman for RealtyTrac.

This is partially due to the fact that banks are already saddled with a large number of repossessed homes and aren't eager to take on more. Following the robo-signing scandal, banks are also taking longer to process foreclosures that are filed to make sure they are done legally.

The average time to process a foreclosure -- from the initial notice to the final sheriff's or trustee's sale -- rose to 318 days in the second quarter, up nearly 7% from 298 in the first quarter and 15% year-over-year, according to RealtyTrac.

In New York, the process now takes an average of 966 days -- or more than two and half years. In New Jersey, it's 944; and in Florida, 676. Texas is quickest out the door with a scant 92 days, followed by Virginia at 106.

Due to this slowdown, the number of homes that were repossessed by the banks has been declining, too. During the second quarter, a total of 203,876 homes were taken back, down 5% from the 215,046 recorded in the first three months of the year.

Even initial filings, the notices of default banks send borrowers who start to miss payments, are being delayed.

In California, RealtyTrac found the average amount of missed payments documented in notices of default had jumped to $70,000 in 2011, up from $17,000 in 2007.

Sharga believes the disparity is not due to an increase in loan value, which was only 10% to 15% higher in 2011, but because the initial foreclosure filings come at a much later stage of default, when many more monthly payments had been missed.

Delaying the inevitable

Ultimately, the artificial foreclosure delays are prolonging the housing market's ills, said Arnold Kling, an economist with the Mercatus Center at George Mason University and formerly with Freddie Mac.

"The government should be trying to speed foreclosures, not stop them," he said. "Postponing foreclosures may simply be putting off the inevitable market bottom. We need to remove barriers to foreclosures."

In fact, he believes the litany of government foreclosure prevention programs are doing more harm than good.

"Instead of housing returning to somewhat normal condition by 2014, we're looking at 2015 or even 2016," he said.

Source: CNNMoney

June Jobs Report: Hiring Slows, Unemployment Rises

Friday, July 8, 2011

The job market hit a major roadblock last month, as hiring slowed to a crawl and the unemployment rate unexpectedly rose.

The economy gained just 18,000 jobs in June, the government reported Friday, sharply missing most expectations and coming in even weaker than the paltry 25,000 jobs added in May.

It marked the weakest month since September, when the economy was still losing jobs. Immediately after the release, stock futures plummeted and bond prices rose.

"At first, when I heard it, I thought maybe they had announced the wrong numbers, they were so bad," said Robert Brusca of Fact and Opinion Economics.

Economists were expecting government job losses, but few had predicted that private businesses would pull the reins back so tightly.

Private businesses added only 57,000 jobs in June - the weakest growth since May 2010. Earlier this year, businesses had been adding more than 200,000 jobs each month.

"You look at the charts for private sector growth and you could see, we were building a nice, steady crescendo," Brusca said. "All of a sudden the bottom fell out!"

The main culprit economists are point to: uncertainty.

Businesses are hesitant to hire given uncertainty surrounding federal spending cuts and tax policy, as Congress still has yet to reach an agreement on the debt ceiling and long-term measures for trimming the nation's deficit.

"I think a lot of this is the backlash to the impasse in Washington," Brusca said. "If you're a small business man, you sit back and say I'm not doing anything, I'm not hiring -- until I see what happens in Washington."

But a variety of other factors also could have contributed to the recent weakness.

"There isn't a single silver bullet -- there are a number of factors coming together," said John Silvia, chief economist for Wells Fargo. "The tsunami, floods, higher gas prices, and the stalemate in Washington all create a lot of uncertainty."

More bad news: June's jobs report follows an already dismal report from May. Economists, for the most part, were hopeful that June would be better, predicting about 125,000 jobs added during the month, according to a CNNMoney survey.

But instead, the June jobs report brought bad news on nearly every front.

The government revised the jobs numbers for April and May both downward, average weekly hours and wages fell, and the unemployment rate rose to 9.2% from 9.1% in May.

Meanwhile, the total number of unemployed people rose to 14.1 million.

A whopping 44% of those folks, or 6.3 million people, have been unemployed for 6 months or more.

The underemployment rate, which includes people who want to work full-time but are forced to work part-time, rose to 16.2%, its highest rate since December.

Overall, the job market is still far from a full recovery. The economy needs to add about 150,000 jobs a month just to keep pace with population growth.

So far, the nation has only gained back about a fifth of the 8.8 million jobs lost during the recession.

Playing politics: Speaking via his first-ever Twitter town hall earlier this week, President Obama admitted job creation hasn't been as robust as previously hoped, but defended his administration against Republican claims that stimulus funding did little to create jobs.

His Council of Economic Advisors estimates that the Recovery Act saved at least 2.4 million jobs that would have otherwise been lost if not for the stimulus.

The disappointing jobs report on Friday immediately became a springboard for political rhetoric launched from both sides.

"The American people are still asking the question: where are the jobs?" Republican Speaker of the House John Boehner said in a statement. "Today's report is more evidence that the misguided 'stimulus' spending binge, excessive regulations, and an overwhelming national debt continue to hold back private-sector job creation in our country."

Source: CNNMoney

News Flash! It's Still a Sluggish Recovery!

Tuesday, July 8, 2011

Remember when market bears and some naysayer economists were shouting "Double-dip recession!" from the rooftops just last month after some tepid jobs data? Pay them no mind.

But don't get duped into thinking that Thursday's stronger-than-expected ADP private payrolls number, as well as some solid data about the manufacturing sector in the past week, is a sign that the economy is back on solid footing either.

It's human nature to try and view the world in black vs. white absolutes. Traders with itchy trigger fingers make it worse by jumping on every report (no matter how consequential) as if it's a sign that the economy is either deteriorating or rebounding.

Sadly, people in my profession also don't help matters by fanning the flames with sensationalistic headlines about the economy and markets.

A 100-point drop in the Dow is often treated like it's a natural disaster or apocalyptic event. The adjectives and verbs we use can be overly dramatic. Guilty as charged. The financial media needs to do a better job of telling it as it is without hyperbole. I'll start now.

Here's the simple truth. The economy is not going to Hades in a hand basket. But it's also not going to head back to pre-Great Recession gangbusters growth anytime soon.

The ADP numbers are undeniably a good sign. It's encouraging that 157,000 jobs were added in June following 36,000 in May. It's also nice to see that jobless claims ticked lower.

However, job growth of 157,000 in the private sector is still not robust. We need employers to add even more jobs (probably in excess of 250,000 a month for several months) in order to make a big dent in the chronically high unemployment rate.

What's more, initial jobless claims were still 418,000 last week. That number needs to get below 400,000 and stay there. Until then, it's premature to declare that there is a sustainable turnaround in the labor market.

Madeline Schnapp, director of macroeconomic research at TrimTabs, a research firm in Sausalito, Calif., described what's going on as the "hamster wheel economy." We're running faster and faster but still going nowhere.

Schnapp pointed out that consumers need to be making more money as well. More jobs are not sufficient to get the economy moving again.

"The economy is finally creating jobs, but net of inflation, income growth is barely positive," she wrote in a report this week. "Subtract government stimulus, and income growth is actually negative."

I realize that nobody, especially Mr. and Mrs. Market, likes the color gray. Yet that's the best way to describe this economy.

The excessive optimism at the start of 2011 was misguided. So was the excessive pessimism this spring after oil prices shot up and the world dealt with the aftermath of the Japan earthquake.

"It's still a muted recovery," said Ray Stone, economist with Stone & McCarthy Research Associates, an economic and fixed income research firm in Princeton, N.J. "Things looked better earlier in the year than they did today. But with the April and May lull, things looked a lot worse than they do now."

It's foolish to think the economy can recover so quickly from a debt-fueled collapse that was decades in the making. But it's equally foolish to view every bit of negative data as a sign that we're doomed to head back to 2008.

The economy should grow solidly in the second half of the year -- assuming the blowhards in Washington don't screw it up by failing to raise the debt ceiling. But as I wrote just last week, predictions of an annualized increase of 4% or higher in gross domestic product seem fanciful at best.

"We could have 3% GDP growth in the second half of the year but that's lackluster when you compare it to previous expansions," Stone said. "Housing is not really making a contribution at all to the economy."

There are going to be more fits and starts for a long period of time. There will be good data points and not-so good ones. Get used to it. It's why I dubbed this the BBQ recovery -- low and slow -- last year. Nothing's changed since then.

Nothing.

Source: CNNMoney

Housing Prices: No Rebound in Sight

Thursday, July 7, 2011

Housing prices are likely to keep falling the rest of this year, and probably won't show much improvement next year either, according to a survey of economists.

A CNNMoney exclusive survey of 27 economists showed the battered housing market is facing myriad problems and won't turn around anytime soon.

Of the 22 who had specific predictions for the closely watched Case-Shiller home price index, the median forecast was for a 3.9% decline in the second quarter compared to a year earlier, and a 2.9% drop in prices over the course of the full year.

Only three economists expect prices to rise this year.

The outlook for 2012 is only modestly better -- a 2% increase in home values, with six of the economists forecasting another drop in prices next year.

Economists are fairly evenly split on what it will take to turn the housing market around.

Nearly half were looking for a significant improvement in the labor market to boost housing, while the rest believe it will just take time to work through the inventory of foreclosed homes.

One economist, Kevin Giddis, head of fixed income at Morgan Keegan, said he believed it would take further significant declines in home prices in order to set a true bottom for the market.

Giddis is forecasting a 4% drop in prices this year.

Several others said all of those things need to occur before the housing market can show meaningful improvement
.
Source: CNN Money

Arizona Home Builder to Exit Chapter 11

Wednesday, July 6, 2011

Fulton Homes, one of Arizona’s largest privately-owned home builders, has announced the confirmation of its reorganization plan in U.S. Bankruptcy Court. The company filed for Chapter 11 in 2009.

"Fulton Homes Corporation will repay all our creditors in full and has money in the bank," said CEO Douglas Fulton . "Our projections reflect that we will be able to self-finance our cash needs over the next four years and will not need any new bank financing." In addition, Fulton noted the company would operate as normal and continue developing new communities in the Valley.

According to Steve Walters, Fulton Homes' CFO, the banks will immediately receive $57.5 million dollars.

"Fulton Homes is coming out of the reorganization completely solvent and will operate without outside financial assistance," said Walters. "We are exceeding the projected sales and cash flows provided to the banks in our restructuring proposal."

Since filing in 2009, Fulton Homes Corporation has doubled its market share and has added several new communities, according to the RL Brown Report, the agency that measures home building activity.

Currently, Fulton Homes is adding five communities in Chandler and Queen Creek within the next year. Monterey Bay, their most recent community, is 90% sold out after being on the market for only four months, the company said.
Fulton Homes Sales Corp., which oversees and manages all sales and marketing functions, including customer care and home warranties did not file for bankruptcy protection. Fulton Homes Corporation handles land and acquisition duties for the home builder.

Source: Home Channel News

Secrets to Getting a Mortgage with So-So credit

Tuesday July 5, 2011

Getting a mortgage can be tough these days -- even people with near-perfect credit have been rejected for loans.

But for some lucky borrowers, things aren't as bad as the doom-and-gloom crowd says.

At a recent press conference, Federal Reserve Chairman Ben Bernanke said lending standards for mortgages have tightened so considerably that "the bottom third of people who might have qualified for a prime mortgage in terms of, say, FICO scores a few years ago -- cannot qualify today."

Indeed, roughly one-in-four mortgage applicants was denied in 2010, up from about 18% in 2003, according to data from the Federal Financial Institutions Examination Council. And those are just the ones that apply -- many discouraged potential borrowers don't even bother to apply anymore.

Yet, there is money to lend. Bob Ryan, the acting commissioner for the U.S. Department of Housing and Urban Development, or HUD, recently said that mortgage money "is flowing, it's stable, it's tightened from the boom years, but it's there."

And many of those potential home buyers sitting on the sidelines may just have a shot at it -- as long as they take a few crucial steps.

"The belief is that you can't get a mortgage at all -- but you can," Keith Gumbinger, of the mortgage information provider HSH Associates.

What you need for traditional mortgages
Most of the major mortgage underwriters have only returned to the more prudent standards of the days before the housing bubble. Now, according to Tuck Bradford, a branch manager with lender Mortgage Master, borrowers usually must meet four criteria in order to get a mortgage backed by Fannie Mae or Freddie Mac, the two government-run mortgage giants:

The ability to make a 20% down payment, plus closing costs.
A good credit score. Borrowers usually need a minimum credit score of 620.
Enough income to afford payments. The general rule of thumb: no more than 28% of your gross income should go toward housing costs.
A loan-to-value ratio of 80%. Lenders want the home value to far exceed the mortgage balance because if a borrower defaults, the bank sells the home to recoup the loss.

In today's market, however, even having all four of these factors in place doesn't always guarantee that you will get a loan. Steve Habetz, a loan officer in Westport, Conn. had a client who was seeking to refinance but he had a single blemish scarring an otherwise spotless credit report. The client had a couple million dollars in assets, high income, ample home equity -- and a strong credit score of 700.

"This guy was a Boy Scout when it came to paying debts," said Habetz. "He had never been late."

Yet, Habetz couldn't get him a mortgage. The problem: an investment property the client had owned and tried to unload but couldn't (thanks to the housing bust). He eventually resorted to a short sale -- a deal in which the proceeds of the sale are insufficient to pay the amount owed on the mortgage and the bank agrees to forgive the losses.

Not only did the short sale lop 100 points or so off his credit score, but it also resulted in an automatic rejection of his refinance application.

"It's maddening," said Habetz. "Other than that one detail, he's very low risk. Because he had the short sale, he's out of the box for two years."

But, for every client like Habertz's who gets rejected, there are those who have been much luckier at landing mortgage loans. And typically, they have turned to the Federal Housing Administration for help.

"The FHA is just about as free and easy as it was in the go-go days," said Gumbinger.

Standards for these loans, insured by the FHA and issued by regular mortgage lenders, are flexible and aimed at making mortgage borrowing easier, especially for working-class Americans.

For years, the FHA had no minimum credit score requirement at all. Now though, it requires a minimum of 580 to qualify for a 3.5%-down loan and 500 for a 10%-down mortgage.

In practice, however, some banks will impose higher standards, according to Scott Sheldon, a loan officer with First California Mortgage in Sonoma County, Calif.

"We FHA lenders have to protect ourselves and we've been going with a 640 minimum for a 3.5% mortgage," he said.

How one high-risk borrower got lucky
Sheldon had one client who seemed like an impossible case. The client was buying a home in Healdsburg, California, the heart of Sonoma's wine country. His credit score was just over 600, he was paying alimony and child support and he only had enough money for a small down payment. And there was one additional tiny problem: He had just emerged from bankruptcy in April 2009.

In other ways, he was low-risk borrower. He grossed $10,000 a month, ample enough to satisfy debt-to-income guidelines on the $315,000 home he was buying, and he was able to document a stable work history.

The client knew he had to raise his credit score above the 600 level in order to improve his chances. So he paid a credit repair service, Lexington Law, about $500 to find and correct errors in his records. That helped boost his score above 640.

The client got the loan and closed on a home a couple weeks ago. The bankruptcy made it tough -- but not impossible.

As Melanie Russo, a spokeswoman for the FHA explained, the agency is willing to overlook a blemish on a credit report -- even a big one -- if other factors are favorable.

In today's unforgiving housing market, that's music to a borrower's ears.

Source: CNN Money

Newest Govt. Solution to Housing Mess: Free Money for Struggling Homeowners

Friday, July 1, 2011

Struggling to pay your mortgage? Late on your payments? In danger of being foreclosed? The federal government has cooked up a sweet deal that could result in a loan you don't have to repay.

The $1 Billion Emergency Homeowners Loan Program is the latest attempt by the Department of Housing and Urban Development to slow down the glut of foreclosures on the market. The program offers interest-free loans of up to $50,000 for people who have lost their jobs. The best part is the loans don't actually need to be repaid, in some cases.

Here's how it works:
"Payments go directly to the lender for a portion of the borrower's monthly mortgage, including missed payments or past due charges. And when the assistance period -- which runs for up to two years -- ends, 20% of the loan is forgiven with each passing year. In other words, for qualified borrowers who stay in their home for at least five years after the assistance period and who don't fall behind on their mortgage again, this money doesn't have to be paid back."

That's a tough pill to swallow for homeowners who are paying their mortgages on time. Unfortunately, there aren't an easy answers to the problem, Gerri Detweiler of credit.com tells The Daily Ticker's Aaron Task.

"The truth is with this housing market, no matter what solution we're going to come up with there's going to be some unfairness involved," she says. "If you're a homeowner in a neighborhood where there are foreclosures -- every single foreclosure drops your home value" by an average of 11%.

The other problem, Detweiler points to is, "the program is only aimed at 30,000 homeowners" out of the 4 to 4.5 million Americans currently underwater or late on their payments.

Even if the program did cover more people, there remains a pricing imbalance in the housing market that can't be fixed. "There's a lot of underlying mortgages that are still unaffordable and there are a lot of second mortgages that are interest only, that have to eventually be amortized and are really no longer backed up by collateral in the home," Detweiler says.

The only real solution is to allow homeowners to modify their mortgages in bankruptcy, she suggests. Banks have been reluctant to allow this as it would mean a principle write-down in the loans and a loss of revenue. But, I'd be willing to bet most Americans would prefer that to sponsoring what amounts to a $50,000 gift from Uncle Sam.

Source: Yahoo Finance

California Housing Starts Rise in May

Thursday, June 30, 2011

Housing production in California, fueled largely by multi-family building projects, posted the highest monthly permit total for the year in May, according to statistics compiled by the Construction Industry Research Board (CIRB).

Permits were pulled for 4,630 total housing units in May, up 42% from the same month a year ago and up 28% from April. Permits for single-family homes totaled 1,908, down 7% from May 2010 and down 6% from the previous month, while multi-family permits totaled 2,722, up 124% from a year ago and up 71% from April.

Mike Winn, president and CEO of the California Building Industry Association, noted that CIRB is now forecasting that a total of 51,400 permits will be issued in 2011, up from 2010’s total of 44,762 permits, but still down from 2008’s total of 64,962.

“While it seems we had a great month in May, these gains are largely attributed to the multi-family sector,” Winn said. “The construction industry as a whole is still struggling, and we must continue to encourage our lawmakers to ‘do no harm’ as the industry continues to recover.”

Source: Home Channel News

Banks Abandon Reverse-Mortgage Business

Thursday, June 30, 2011

No need to panic, financial advisers are saying in the wake of Wells Fargo and Bank of America leaving the reverse mortgage business. Homeowners who have reverse mortgages with those banks have no reason to worry, as the banks will continue to service those loans.

What's more, homeowners who might be seeking a reverse mortgage will still have at least one large provider — MetLife Bank — and plenty of small independent firms from which to choose.

But though there's no reason to panic, there are still plenty of questions to be answered. What does Wells Fargo and Bank of America leaving the business mean for the reverse mortgage product and the industry? What does their departure say about the future direction of housing prices in the U.S.? Do Wells Fargo and Bank of America have a crystal ball that others don't? And what should folks who might need or want reverse mortgage do now or in the future?

By way of background, reverse mortgages are — in the big scheme of things — a relatively new product in the world of retirement income, and there's much confusion over how they work. In essence, here's what the national trade group, the National Reverse Mortgage Lenders Association, says about them: "Reverse mortgages are available to seniors 62 years old and older with significant home equity. They are designed to enable elderly homeowners to borrow against the equity in their homes without having to make monthly payments as is required with a traditional 'forward' mortgage or home equity loan. Under a reverse mortgage, funds are advanced to the borrower and interest accrues, but the outstanding balance is not due until the last borrower leaves the home, sells or passes away. Borrowers may draw down funds as a lump sum at loan origination, establish a line of credit or request fixed monthly payments for as long as they continue to live in the home."

No need to worry
Those who have a reverse mortgage originated by Wells Fargo or Bank of America have no need to worry, said Peter Bell, president and CEO of the National Reverse Mortgage Lenders Association. "All current Wells Fargo reverse mortgage borrowers will continue to be serviced and funds made available," Bell said in a statement. Ditto those who had one with Bank of America.

Why did Wells Fargo exit the reverse mortgage business?
In a statement, Wells Fargo said it was leaving the reverse mortgage business in part because of "unpredictable home values." And Bank of America said in February that the staff and resources used by the operation were needed in other parts of the company.

Experts, however, said Wells Fargo's departure was less about falling house prices and had more to do reputational risk and the business line's contribution to company's revenues and profits. "To really understand what caused Wells Fargo to leave the industry, you also need to understand how small their reverse mortgage division really is," said Colette A Gray, a senior loan officer and reverse mortgage specialist at Home Safe Reverse Mortgage. "With a 26% share of the market and a No. 1 position in the industry, their reverse mortgage division represents only a tiny 1.2% of their overall retail volume. The potential damage to their reputation in foreclosing on the comparative few in technical default is overwhelming. It simply isn't worth the risk to them."

What does it mean for the product and the reverse mortgage industry?
With Wells Fargo and Bank of America gone from the business, there will be just one major bank — MetLife Bank, a part of MetLife Inc.— and lots of smaller independent players in the business. "Homeowners interested in a reverse mortgage will still have plenty of providers from which to choose," said Bell. "Wells Fargo's departure means that a significant portion of market share will be re-distributed among other participants in the reverse mortgage business."

And that redistribution could be good news for providers and customers alike. As one member of a group focused on reverse mortgages on LinkedIn said: "It is a shame that most of 'the big guys' are abandoning the reverse product but at least for those who still have outlets to place their loans, perhaps the playing field will become more level again."

And the fact that the providers are small should be of no concern to homeowners seeking a reverse mortgage, said Jeff Lewis, the chairman of Generation Mortgage Company. "The product is government insured, so consumers should not be concerned about whether their provider is a large institution or not," he said. "Actually, they can continue to expect to get more personalized service from smaller organizations, as they have in the past.

What does Wells Fargo's departure suggest about housing prices?
"Housing prices are clearly still volatile," said Bell. But he noted that Federal Housing Authority (FHA), which operates the Home Equity Conversion Mortgage (HECM), periodically calibrates the terms of its program. "Over the past few years, for example, FHA has adjusted mortgage insurance premiums and the amount of funding made available to borrowers at closing in response to changing market conditions," said Bell. Of course, all program adjustments only affect new loans originated after they are implemented, he said.

According to Lewis, that big banks are leaving the business speaks to their exposure to a volatile and uncertain market. "Wells and the other large banks have massive real estate exposure, not just in the reverse space," Lewis said. "One can certainly imagine that they are concerned about the anemic performance of residential real estate over the past 12 months."

For her part, Gray said the big bank's departure doesn't suggest anything in particular about housing prices, any more than if they decided to stay in the business. "Likewise, I don't believe it spells doom and gloom for the reverse mortgage industry in general," she said. "The immediate challenge for our industry is to find out what's causing these defaults to occur and how to deal with them."

Defaults, suitability, misinformation are the problems
Defaults, especially because of homeowners defaulting on their real estate taxes and property insurance bills, are indeed of concern. And who's to blame for those defaults is a shared responsibility, experts said. Some says lenders have not done enough to make sure homeowners are suitable candidates for a reverse mortgage. And others note that more could (and will be done) to educate and consult homeowners applying for a reverse mortgage.

Indeed, Gray and others noted that the Department of Housing and Urban Development (HUD) has already increased counseling programs and has been offering help to those who have defaulted on a case-by-case basis.
"My belief is that suitability is going to remain the key factor with the lenders who continue to provide this product," said one member of a group focused on reverse mortgages on LinkedIn. "The time involved in educating a potential borrower is necessary to establish the suitability issue. This is not profitable for the 'hard sell' people who push what makes the most money as opposed to what is best for the consumer and only the lenders dedicated to servicing the needs and wants of seniors will remain strong in this field."
Said Gray in one LinkedIn discussion: "Suitability and a deep knowledge of how these products work, how they combine with and positively affect other life planning tools will be the key factors in continuing acceptance by the public."

One reverse mortgage professional on LinkedIn also said misinformation about reverse mortgages plagues the industry.

New regulations coming
For its part, the NRMLA issued a statement saying that it has been working with HUD to develop and implement procedures to undertake a financial assessment of prospective borrowers' income and expenses to determine their ability to pay taxes and insurance charges after obtaining a HECM or to establish a set-aside of funds to pay such charges. And the trade group anticipates that HUD will be issuing a rule change in the future to provide HECM lenders with the discretion to make these necessary underwriting changes.

Lewis noted that one of the best features of a reverse mortgage, from a consumer standpoint, is that the loan has been purely asset-based, with virtually no underwriting of consumer credit. However, "that is likely to change in the coming months as FHA and the lending community agree on tools that lenders can use to differentiate borrowers who can live up to their obligations primarily taxes and insurance and those who cannot," he said.

One way to reduce defaults
Gray said by email that the industry might reduce the number of technical defaults by using what's called a Home Equity Conversion Mortgage for Purchase, a loan typically used to help seniors downsize. According to HUD, HECM for Purchase allows seniors, age 62 or older, to buy a new principal residence using loan proceeds from the reverse mortgage. "The program was designed to allow seniors to purchase a new principal residence and obtain a reverse mortgage within a single transaction, HUD reports on its website. The program was also designed to enable senior homeowners to relocate to other geographical areas to be closer to family members or downsize to homes that meet their physical needs."

Gray the program does require a higher down payment but the loan balance is rolled into a reverse mortgage at close of escrow so there are no more payments. "With this type of reverse mortgage, a senior would typically sell their current home or use other assets to get that down payment," she said. "Often there's a net gain in this scenario which allows the senior to pay ongoing expenses like taxes and insurance and more."

Advice for those who still want a reverse mortgage
Gray and others also said the time to consider a HECM is now due to changing regulations. For one, on Oct. 1, 2011, the temporary maximum lending limit of $625,500 is scheduled to return to $417,000. "We've heard Congress talk about doing for several years but this is the first time they've actually set a date to do it," she said. "Waiting past Oct. 1 could potentially cost any given borrower $208,500, the difference between the current and pending maximum lending limits."

What's more, at the same time, the actuarial tables will be reset to reflect longer life spans. And that too could mead a reduction in the reverse mortgage benefit should borrowers wait, Gray said.

And three, Lewis predicts that "we are likely to see some kind of credit underwriting introduced to reduce the number of consumers taking out the loan who cannot handle their obligations."

Gray also said homeowners would not be well served waiting for the real estate market to rebound. "Those who have been waiting for real estate values to recover to pre-recession values before obtaining a reverse mortgage are likely to find this to be a poor strategy," she said. "That being said, on the off chance that real estate values could return to pre-recession rates much faster than anyone thinks, the HECMs can be refinanced in that event."

According to Bell, those shopping for a reverse mortgage should:
• Shop and get proposals from a couple of lenders
• Prepare for and take the required counseling seriously
• Do an assessment of their financial situation to figure out if they will be able to pay their expenses, including taxes, insurance and property upkeep after getting the reverse mortgage
• Think realistically about the duration of time they think they would like to remain in their home
When shopping for a lender, Bell noted that members of the NRMLA are committed to a "code of ethics and professional responsibility" designed to assure that consumers have a positive experience. A state-by-state list of NRMLA members is available at the NRMLA website.
More information about reverse mortgages is available at HUD's website.

Source: Marketwatch

Fixed Mortgage Rates Hold Steady Near Yearly Lows

Thursday June 30, 2011

Fixed mortgage rates were mostly unchanged this week, hovering near their annual lows.

The average rate on the 30-year loan rose slightly to 4.51 percent, Freddie Mac said Thursday. It hit its lowest level of the year three weeks ago, at 4.49 percent.

The average rate on the 15-year fixed mortgage, a popular refinancing option, stayed at 3.69 percent. It reached its low point of the year two weeks ago, at 3.67 percent.

Rates typically track the yield on the 10-year Treasury note, which has been rising in the past week.

That could change this week when the Federal Reserve's $600 billion bond buying program ends.

The Fed has purchased around $75 billion worth of bonds each month since November. That drove the yield on the 10-year Treasury note lower than 3 percent this spring. As a result, rates on mortgages and other loans also fell.

Still, low mortgage rates and plummeting home prices have done little to boost the troubled housing market.

Tougher lending standards and bigger down payment requirements have prevented many people from taking advantage of the ultra-low rates. Many people who can qualify are holding off, worried that prices have yet to bottom out.

Fewer people purchased previously occupied homes in May. Sales fell to their lowest level of the year. Since the housing market went bust in 2006, sales have fallen in four of the past five years and hit a 13-year low last year.

New-home sales fell last month to a seasonally adjusted annual rate of 319,000 homes. That's fewer than half the 700,000 that economists say must be sold to sustain a healthy housing market.

Federal Reserve Chairman Ben Bernanke said last week that the housing market is dragging down the broader economy. For the market to recover, he said foreclosures must be cleared from the pipeline of homes for sale.

Most economists say home prices will keep falling through the rest of the year. Many forecasts don't anticipate a rebound in prices until at least 2013.

To calculate average mortgage rates, Freddie Mac collects rates from lenders across the country on Monday through Wednesday of each week. Rates often fluctuate significantly, even within a single day.

The average rate on a five-year adjustable-rate mortgage fell from 3.25 percent to 3.22 percent, the lowest rate on records dating back to 2005. The average rate on a one-year adjustable-rate loan fell to 2.97 percent, slightly above the record low of 2.95 percent.

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

The average fees for the 30-year and 15-year fixed loans were 0.7, according to Freddie Mac's survey. The average fees for the five-year and one-year ARM were 0.6.

Source: Associated Press

The 15 Worst Housing Markets For The Next Five Years

Thursday, June 30, 2011

If you bought a home in Miami in 2005, we're sorry: over the following six years it depreciated in value by more than 54.3%.

And the rebound -- if there is a rebound -- won't come soon.

Between Q2 2011 and Q2 2016, Miami home prices will decline at an annualized rate of 0.7%, according to data provided by Fiserv Case Shiller.

Fiserv identified 15 housing markets that will appreciate at an annualized rate of less than 1.5% -- a pretty lousy investment. If you stay out of these markets, the national average is slightly better at 3.7%.

Here are the 15 Worst Housing Markets For The Next Five Years

The worst place to invest: Miami, Florida

Cumulative growth from 2005 to 2011: -54.3%

Annualized growth from 2011 to 2016: -0.7%

Trough: Q3 2012

The second worst place to invest: Atlantic City, New Jersey

Cumulative growth from 2005 to 2011: -34.05%

Annualized growth from 2011 to 2016: 0.2%

Trough: Q3 2012

3. Nassau County, New York

Cumulative growth from 2005 to 2011: -27.3%

Annualized growth from 2011 to 2016: 0.7%

Trough: Q4 2011

#4 (tie) Fort Lauderdale, Florida

Cumulative growth from 2005 to 2011: -52.9%

Annualized growth from 2011 to 2016: 0.8%

Trough: Q4 2012

#4 (tie) Midland, Texas

Cumulative growth from 2005 to 2011: -40.95%

Annualized growth from 2011 to 2016: 0.8%

Trough: Q1 2009

#4 (tie) Washington, D.C.

Cumulative growth from 2005 to 2011: -28.1%

Annualized growth from 2011 to 2016: 0.8%

Trough: Q1 2009

#7 Abilene, Texas

Cumulative growth from 2005 to 2011: -18.9%

Annualized growth from 2011 to 2016: 1.0%

Trough: Q1 2009

#8 Morgantown, West Virginia

Cumulative growth from 2005 to 2011: -4.15%

Annualized growth from 2011 to 2016: 1.1%

Trough: N/A

#9 (tie) Austin, Texas

Cumulative growth from 2005 to 2011: 2.63%

Annualized growth from 2011 to 2016: 1.2%

Trough: Q4 2012

#9 (tie) Waterloo-Cedar Falls, Iowa

Cumulative growth from 2005 to 2011: -2.73%

Annualized growth from 2011 to 2016: 1.2%

Trough: N/A

#11 (tie) Baton Rouge, Louisiana

Cumulative growth from 2005 to 2011: -14.48%

Annualized growth from 2011 to 2016: 1.4%

Trough: Q1 2012

#11 (tie) Amarillo, Texas

Cumulative growth from 2005 to 2011: -10.5%

Annualized growth from 2011 to 2016: 1.4%

Trough: Q4 2012

#11 (tie) Lancaster, Pennsylvania

Cumulative growth from 2005 to 2011: -5.15%

Annualized growth from 2011 to 2016: 1.4%

Trough: Q2 2012

#11 (tie) Monroe, Louisiana

Cumulative growth from 2005 to 2011: -11.31%

Annualized growth from 2011 to 2016: 1.4%

Trough: N/A

#11 (tie) Shreveport, Louisiana

Cumulative growth from 2005 to 2011: -10.38%

Annualized growth from 2011 to 2016: 1.4%

Trough: Q3 2011

Source: The Business Insider

Despite Fears, Owning Home Retains Allure, Poll Shows

Wednesday, June 29, 2011

Owning a house remains central to Americans’ sense of well-being, even as many doubt their home is a good investment after a punishing recession.

Nearly nine in 10 Americans say homeownership is an important part of the American dream, according to the latest New York Times/CBS News poll. And they are keen on making sure it stays that way, for themselves and everyone else.

Support for helping people in financial distress over housing is higher than support for helping those without a job for many months.

Forty-five percent of the respondents say the government should be doing more to improve the housing market, while 16 percent say it should be doing less. On the politically contentious issue of direct financial assistance to those having trouble paying their mortgages, slightly more than half of those polled, 53 percent, say the government should help. And almost no one favors discontinuing the mortgage tax deduction, a prized middle-class benefit that has been featured on some budget-cutting proposals.

President Obama, who has been criticized for both doing too much to help the housing market and for not doing enough, was given poor marks. Only 36 percent of those polled approve of what Mr. Obama has done, while 45 percent disapprove.

In assessing blame for the housing crash, people are increasingly seeing financial institutions as the central culprit. Amid the swirl of recent disclosures about banks following improper and illegal procedures in pursuing foreclosures, 42 percent blame lenders, while 29 percent blame regulators. When the question was asked in early 2008, as the crisis was still building, the numbers were reversed, with 40 percent blaming regulators and 28 percent blaming lenders. Only a handful of respondents at either moment blamed the borrowers themselves for taking loans they could not afford.

“I believe the financial institutions willingly and knowingly allowed people to apply and receive credit at a rate higher than they could afford and this has degraded our economy,” said Steven Goode, an environmental health manager in Las Vegas, in a follow-up interview.

Making an offer for a house, something often done in past generations with little apprehension, is now riddled with worry. Only 49 percent call it a safe investment, while 45 percent feel it is risky. In a market where prices are consistently dropping, there is no easy exit.

“For the average person, it might not be a good idea today to buy,” said another respondent, Beth Lovcy of Troutdale, Ore., who bought a year ago. The value has already shrunk, but Mrs. Lovcy is unfazed. “It works out better financially than renting now because we can claim the interest on the mortgage.”

As the housing market slumped over the last few years with a speed and magnitude not seen since the Great Depression, aspects of homeownership have been debated as never before. There are tough questions about the role the government should take. These include how much of a down payment lenders should demand, whether lenders should be restrictive or expansive in granting new loans, how much assistance to give those on the verge of foreclosure, and whether real estate will ever again be the retirement savings vehicle it once was.

While the debate has been loud, there was little evidence of people’s views that went beyond the anecdotal. This poll offers a window onto widespread opinions at a critical juncture.

Before the crash, housing was widely deemed one of the safest possible investments. Few experts thought there was the possibility of a nationwide downturn. But after it happened, the effects were widespread and painful.
Diane Sherrell, a substitute teacher in North Carolina who retired on disability, traded up to a bigger house four years ago to accommodate an adopted son. “It’s been very difficult since then and we’re barely making it,” she said.

Half of those surveyed say the market’s continuing downward spiral has affected their long-term plans. One in five people say the crisis has prevented them from moving to another city or taking a different job. Nearly one-quarter of homeowners say their home is now worth less than what they owe on their mortgage, a condition known as being underwater. Families in this predicament are much more prone to foreclosure if they suffer job losses or other setbacks.

Over all, people are bleaker about the economic outlook than those surveyed in October. While most still think the current downturn is temporary, those saying it is permanent rose to 39 percent, up from 28 percent.

In the last two years, the stock market has recovered strongly while house prices have gone sideways at best. Yet those polled dismissed stocks as a long-term savings vehicle in favor of a savings or money market account (22 percent), a house (26 percent) or a 401(k) or individual retirement account (41 percent).

Who should be helped to buy is another contentious issue. Whether buyers need to come up with a 20 percent down payment — the standard for decades, but beyond the reach of many families now — is hotly debated. Fifty-eight percent of respondents say lenders should require this, while 36 percent say they should not.

People who cannot pay their mortgage are foreclosed upon. If they can pay but feel that doing so is pointless on a property that has lost so much of its value, it is called strategic default. While two-thirds of Americans say strategic default is not justified, 28 percent think that it is.

When houses are abandoned for any reason, it causes trouble for the neighbors. Three-quarters of those surveyed say foreclosures are a problem in their communities.

“Our home is worth much less now because houses are foreclosing around us,” said William Mack, an assembly line worker in Taylor, Mich.

Beyond all these ills, however, a persistent belief endures that the market will eventually improve and housing will regain its traditional importance.

Donna Boyd, a transportation supervisor in Cuyahoga Falls, Ohio, acknowledged “it might take a long time” for property values to go back up.

“But I don’t think I’m throwing my money away,” she said in a follow-up interview. “I rented for years when I was younger, and I just don’t like the idea of putting money in someone else’s pocket for something I will never own.”

The nationwide telephone poll was conducted June 24-28 with 979 adults and has a margin of sampling error of plus or minus three percentage points for all adults.

Source: New York Times

Contracts to Buy Homes Rose Sharply in May

Wednesday June 29, 2011

The number of people who signed contracts to buy homes rose sharply in May, pushed higher by an influx of spring buying.

The National Association of Realtors said Wednesday that its index of sales agreements for previously occupied homes rose 8.2 percent last month, to a reading of 88.8. That followed April's seven-month low of 82.1.

A reading of 100 is considered healthy by economists. The last time the index reached that level was in April 2010, the final month when buyers could qualify for a federal tax credit. Signings are now 17 percent above June's reading of 75.9, the lowest figure since the housing market went bust nearly four years ago.

Contract signings are typically a reliable indicator of where the housing market is headed. That's because there's usually a one- to two-month lag between a sales contract and a completed deal.

But the Realtors group says a growing number of buyers have cancelled contracts ahead of closings after appraisals showed the homes were worth less than they bid. A sale isn't final until a mortgage is closed.

Homes are now the most affordable they've been in years. But bargain prices and super-low mortgage rates have done little to boost sales. Economists say it could be several years before the nation's housing market recovers.

Sales of previously occupied homes sank in May to a seasonally adjusted annual rate of 4.81 million homes.

That's far below the 6 million sales per year that economists say is typical in healthier times. And it's not much better than the 4.91 million homes sold last year, the worst showing in 13 years.

Contract signings in May increased in every region of the country: It rose 12.9 percent in the West, 10.5 percent in the Midwest, 7.3 percent in the Northeast and 4.1 percent in the South.

The trade group said Wednesday's report "implies that home values in many localities are or will soon be stabilizing."

Still, high unemployment, hard-to-get loans and a lingering fear that home prices will just keep falling are keeping many Americans from buying homes. And waves of foreclosures could soon hit the housing market soon as more Americans default on their mortgages.

Prices rose in 13 of the 20 cities tracked by the Standard & Poor's/Case-Shiller home-price index, according to the April report released Tuesday. The increase in April was the first rise since July.

But the positive data came with a notable caveat: The figures weren't adjusted for seasonal factors, such as the buying that normally picks up in spring. Once the numbers are adjusted, prices actually fell in April.

Source: Associated Press

Home Prices Rise, Snapping 8-Month Drop treak

Tuesday, June 28, 2011

The downward cycle in home prices broke in April after eight consecutive months of decline, according to a survey released Tuesday.

According to the S&P/Case Shiller 20-city index, prices rose 0.7% compared with March, although they fell 0.1% when adjusted for the strong spring selling season. Prices were down 4% year-over-year.

"In a welcome shift from recent months, this month is better than last -- April's numbers beat March," said David Blitzer, S&P's spokesman, in a statement. "However, the seasonally adjusted numbers show that much of the improvement reflects the beginning of the spring-summer home buying season."

"It is much too early to tell if this is a turning point or simply due to some warmer weather," Blitzer added.

Any hint of good news in the troubled housing market will likely bring cheer to the industry, and there are some signs that market conditions are not quite as dire as some of the other statistics may indicate. Foreclosures, for example have been falling.

That has translated in a decline of 16% in the sales volume of distressed properties this year, while volume of non-distressed sales rose 11%, according to Joseph LaVorgna, chief economist for Global Markets Research.

That's good news because much of the price drop over the past year can be blamed on severe price slashing for homes in foreclosure, as Federal Reserve chairman Ben Bernanke pointed out in a press conference last Wednesday. Prices for homes sold by regular sellers have held up much better.

"That suggests," said Bernanke, "if we can reduce the current number . . . maybe 40% of home sales, which are on a distressed basis, that would do a lot for stabilizing the market and helping give people confidence that they can buy and not be buying into a falling market."

Still, the fact that prices perked up in April is not necessarily something to write home about, said Mike Larson, a housing market analyst for Weiss Research.

"It happens every spring," he said "It's very clear there's a seasonal component. Even non-statisticians can see that. The report was, however, better news than what people were expecting."

Metropolitan Washington continued to be the strongest of the 20 cities covered by the report. Prices rose 3% in April there and have been on the plus side year-over-year, up 4%.

The worst performing market for the month was Detroit, where prices fell 2.9%. The biggest year-over-year drop was recorded by Minneapolis, where prices have plunged 11.1% since last April.

The big picture is that a housing market recovery has yet to gain any steam, according to Larson.

"We're not falling off a cliff anymore, but we're only going sideways," he said.

The year-over-year price comparisons could start to become more favorable, according to LaVorgna. For many months, price changes have looked worse than they might actually have been because they were being compared to months when the home buyer tax credit was in effect, which boosted prices.

"[W]ith the homebuyer tax credit having expired in June 2010, we will soon be getting "clean" housing data unencumbered by artificial distortion," he said.

Source: CNNMoney

Year Off to Dismal Start in Home Prices

Tuesday, June 28, 2011

Data released today by the S&P/Case-Shiller Home Price Indices showed further declines in U.S. home prices in January 2011. Of the 20 MSAs covered by the indices, 13 showed further deceleration in their annual growth rate.

The same 11 cities that had posted recent index level lows in December 2010 posted new lows in January.

The 10-City Composite dropped 2%, and the 20-City Composite fell 3.1% from their January 2010 levels.

San Diego and Washington, D.C., were the only two markets to record positive year-over-year changes. These are the only two cities whose annual rates remained positive throughout 2010.

“Keeping with the trends set in late 2010, January brings us weakening home prices with no real hope in sight for the near future,” said David Blitzer, chairman of the Index Committee at Standard & Poor's. “These data confirm what we have seen with recent housing starts and sales reports. The housing market recession is not yet over, and none of the statistics are indicating any form of sustained recovery. At most, we have seen all statistics bounce along their troughs; at worst, the feared double-dip recession may be materializing.

Blitzer also said that he was seeing “renewed weakness” in some cities that were among the last to reach their peaks, including Atlanta; Charlotte; Portland, Ore.; and Seattle, where new lows are being recorded. Dallas, which peaked late, has so far stayed above its low mark of home prices in February 2009.

Source: Home Channel News

Housing Recovery Hampered by Lending

Monday, June 27, 2011

An analysis published by the Wall Street Journal showed that the nation’s 10 largest mortgage lenders denied 26.8% of loan applications in 2010, an increase from 23.5% in 2009.

The mortgage data analyzed, which was obtained from banking regulators, included refinance requests as well as new-home loans. Among home purchase applicants, lenders denied 19.9%, up from 18.2% in 2009. The refi applications were denied 27.2% of the time, compared with 24.4% the previous year.

The Wall State Journal was able to obtain the data as the result of the Home Mortgage Disclosure Act, which requires lenders to disclose these figures. The top 10 lenders accounted for 70% of loan originations last year, although many were obtained after smaller firms approved the loans.

The analysis showed that denials increased in every state except Delaware. They were highest in Miami, Detroit and New Orleans and lowest in Raleigh, N.C.; Bethesda, Md.; and San Jose, Calif.

Source: Home Channel New

New Recession Begins Next Year, Shilling Says

Friday, June 24, 2011

That's the debate going on these days from executive offices to the local malls. Business owners, workers and, yes, even economists are trying to decide whether the U.S. economy has hit a speed bump or is heading for a collision.

We all know growth is tepid, unemployment is a bear and housing, well, stinks. That's why major Wall Street firms, the International Monetary Fund and, on Wednesday, the Federal Reserve all slashed their estimates for U.S. GDP growth this year.

Housing remains critical, so I looked up one of the few people who saw the housing bust and financial crisis coming years before they happened: Gary Shilling, economist and author of "The Age of Deleveraging." While his steadfast bearishness didn't surprise me, his blunt assessment did.

"I'm predicting another recession next year," he told me.

Not a double dip, he emphasized, because we're already two years from the end of the last recession and 3 ½ years from the business cycle's previous peak, in December 2007.

Historically, he said, economic expansions last about three years, especially in long down cycles of the kind he thinks we've been in since 2000.

So, he's looking for a brand new cyclical recession beginning in 2012.

Many Americans will be forgiven if they can't see the difference between that and the recovery we've been experiencing.

That's Shilling's point. Usually, deep recessions like the one we just lived through are followed by strong snapbacks, like a growth slingshot.

This time, however, the recovery has been "distinctly subpar," in his words. "As of the first quarter, ..real GDP is barely above its peak in the fourth quarter of 2007, whereas earlier recoveries were well above their previous tops 13 quarters later," he wrote in a recent edition of his newsletter, Insight.

Translation: More than three years after the peak, we're still not back to where we were.

Sputtering economy
There are good reasons for that, beyond the particularly tough toll financial crises take on growth.

The economy, he says, is like a four-cylinder engine, and a recovery usually requires all four to be firing. They are consumer spending, employment, housing and the reversal of the inventory cycle.

Shilling thinks only the last is really recovering — i.e., companies that brutally liquidated inventories during the recession have had to rebuild them through boosting production and some additional hiring as demand bounced off its lows.

But consumer spending has made only a partial comeback, concentrated among more-affluent buyers. Everyone else has been weighed down by weak job and income growth and the continued housing catastrophe.

We have seen some improvement in employment, albeit slow of late, and it's nowhere near what we've had in past recoveries. Mostly employers have just stopped laying people off, and when they hire, it's often on a part-time or temporary basis.

And then there's housing.

Year after year, many have predicted the bottom of the housing market (and for the record, I was one of them in 2011), and year after year housing prices have kept falling.

Shilling, of course, isn't one of the optimists. He's actually looking for another 20% drop in housing prices before we hit bottom in 2013.

Since housing prices nationally already have fallen by a third from their peak, that means that, if he's right, they'll end up a stomach-churning 45% off their early 2006 highs. Yale Prof. Robert Shiller, co-creator of the Standard & Poor's/Case-Shiller Home Price index, has a similar prediction.

Too many homes for sale
For Shilling, it's all about inventories: He estimates there are upwards of two million homes on the market that people want to sell but can't. That's deflated new-home sales, which now stand at about a third of their normal 1.5 million a year.

From a high 6.3% of GDP in the fourth quarter of 2005, residential construction now represents only 2.2% of GDP. Not only is that a half-a-trillion-dollar gap; housing's volatility makes it an important force in a cyclical recovery, said Shilling, and the paucity of home building has clearly taken a toll on this one.

A further 20% decline in home prices would raise the percentage of homes worth less than the value of their mortgages to a stunning 40%, from the mid-20% range now. Shilling estimated it would also cut homeowners' equity to a mere 8% of total home values, from 19% now and 50% in the early 1980s.

Lenders have foreclosed on 3.5 million American homes since 2007; Shilling expects millions of more foreclosures in the years ahead.

If this happens, "you know what that will do to consumer spending," said Shilling. "That's a recession — an easy forecast."

And once housing markets hit bottom, it can take a decade for them to recover, as in Texas after the oil bust or Southern California after the end of the Cold War. That could mean subpar growth — average annual GDP gains of 2% — for years to come, he predicted.

The government and the Federal Reserve have thrown everything at the economy, with minimal results. The Fed's quantitative easing programs did little except boost commodities prices and stimulate the stock market, he said, and he thinks the commodities mini-bubble already has burst.

The Obama administration's own attempt to "fix" the housing market — the Home Affordable Modification Program (HAMP) — was, in Shilling's words, "a miserable failure."

What's ahead
But slow growth will get politicians of both parties antsy to "do something" in an election year. "If the economy is still weak going into next year, we could have fiscal stimulus," he told me
.
Politicians do not "want to face voters with a weak economy," he said.

As for investing, Shilling has returned to an old favorite: the 30-year Treasury bond, which is currently yielding around 4.21%. "I think they're going to 3%," he said. "I think [the 10-year is] going to 2%." The 10-year Treasury note was yielding near 3% Wednesday. Take that, Bill Gross!

Naturally, Shilling's not looking for much from equities, and he recommends only blue-chip dividend-paying stocks.

Shilling's not infallible, of course. He has been predicting deflation since the late 1980s and in earnest since 1998. We've had two potentially deflationary episodes, in 2002 and after the financial crisis, but the Fed was able to dispatch them.

He also was very bearish on stocks, expecting new lows in early 2009 and pretty much missed the recent bull market. So, he's not the guy who's going to call bottoms or identify bullish inflection points.

And I think we'll probably get by with slower growth but without a new recession, based on strong overseas business and spending by affluent consumers here. Recent strong reports from companies like FedEx and CarMax show the economy may not be nearly as bad as Shilling thinks it is.

But I hesitate to second guess him on housing, where his track record has been stellar. That's why his predictions should be sobering indeed for homeowners, investors and policymakers alike.

Source: Yahoo Finance

Economic Growth Still Weak

Friday, June 24, 2011

The U.S. economy was a little stronger than originally believed but still struggling in the first three months of the year, according to the government's final reading on the first quarter.
Gross domestic product, the broadest measure of the nation's economic activity, grew at an annual rate of 1.9% in the quarter, the Commerce Department reported Friday.

That's up from the previous estimate of 1.8%. Economists surveyed by Briefing.com had forecast no change from the prior reading.

But growth of 1.9% is still disappointingly weak, and there is widespread concern that the economy has slowed even more since the end of March. Hiring ground to a near halt in May and consumer spending and manufacturing slowed.

Economic growth of 3% or better is generally considered necessary to spur the level of hiring by employers needed to make a big dent in the unemployment rate. The U.S. economy typically grows at a 3.6% rate during an economic expansion.

On Wednesday, the Federal Reserve significantly cut its economic growth forecasts, and raised its unemployment and inflation estimates for the rest of this year as well as for 2012. Fed Chairman Ben Bernanke said he was frustrated by the fact that declines in unemployment will be slow and painful.

Another drag on growth in the first half of the year was a jump in the price of food and energy, which sapped consumers' ability to spend more on other goods.

Since the GDP reading is adjusted for inflation, higher prices means the economy has to grow faster just to keep pace with inflation.

Many economists have been cutting their forecasts for growth in the second quarter and the rest of 2011.

A CNNMoney survey earlier this month found that top economists are forecasting growth of just 2.3% in the second quarter, which is down from estimates of 3% only a month earlier.

Economists also see a greater risk of another recession, although they still believe that's a long-shot.

"Recent data suggests that the economy has slowed further since the first quarter, and some leading indicators are pointing to softness in the latter half of the year as well," said Jim Baird, chief investment strategist for Plante Moran Financial Advisors.

Bernanke said Wednesday he believed that some of the current weakness in the economy is due to temporary factors, such as the spike in oil prices following political turmoil in the Middle East and supply chain disruptions caused by the Japanese earthquake.

But he admitted he couldn't say how much of the weakness is due to those temporary factors and how much are more serious, longer-lasting issues such as consumers still struggling with too much debt and continued weakness in housing.

Economists said Friday's report leaves that key question still unanswered.

"We are not yet prepared to write-off a solid second half economic performance, particularly if the labor market regains momentum next quarter," wrote Carl Riccadonna, senior U.S. economist for Deutsche Bank.

"In the near term, it will be critical to determine if economic output in general and factory output in particular are stabilizing as the supply disruptions ease, and also if households and small businesses respond swiftly to lower gas prices."

John Silvia, chief economist with Wells Fargo Securities, also said he's still hopeful that the economy could rebound in the second half of the year.

But with growth so weak, he's worried that the economy would be vulnerable to any other shocks that might occur, such as a default of Greek sovereign debt, a new oil price spike due to more political turmoil in the Middle East or a U.S. government shutdown due to the debate over raising the debt ceiling.

"You can't get a shock to the system and walk away from that," he said.

A rebound is a best case scenario, Silvia added. But it's been a while since the economy enjoyed a best case scenario.

Source: CNNMoney

New Home Sales Slip 2%

Thursday, June 23, 2011

Sales of new homes fell 2.1% in May, after rising for two months in a row, as the housing market continues to struggle.

The Census Bureau reported an annual sales rate of 319,000 new homes last month. That was down from a revised rate of 326,000 in April. But compared to a year ago, sales are up 13.5%.

And the rate in May was better than expected. Economists had forecast a sales rate of 305,000 in May, according to consensus estimates from Briefing.com.

After falling to an all-time low of 278,000 in February, new home sales have been one of the weakest sectors of the economy.

Sales peaked in July 2005. But ever since the recession took hold in 2008, home builders have remained reluctant to boost production -- especially with unemployment still painfully high.

The glut of foreclosures on the market has also sliced demand for new homes, as financially strapped consumers look for better bargains.

A separate report from the National Association of Realtors on Tuesday showed that sales of existing homes dropped 3.8% in April, slightly more than expected.

The average price of new homes sold in May was $266,400, according to the report. That was up from $265,000 in April.

There were an estimated 166,000 new homes for sale. At the current sales rate, it would take 6.2 months to sell through that inventory, the report said.

New home sales in the Northeast declined the most last month, dropping 27%. The only region to see sales rise was the South, which reported a 2.4% increase.

Source: CNN Money

Fed Acknowledges Economy is Growing More Slowly

Wednesday June 22, 2011

The Federal Reserve acknowledged Wednesday that the economy is growing more slowly than it expected. But it said it will complete its $600 billion Treasury bond buying program by June 30 and announced no further efforts to boost the economy.

Ending a two-day meeting, the Fed repeated a pledge to keep interest rates at record lows near zero for "an extended period," a promise it's made for more than two years.

Fed officials said in a statement summarizing their discussions that they think the main causes of the economy's slowdown, such as high gas prices and supply disruptions from Japan's natural disaster, are temporary. Once those problems subside, Fed officials said the economy should rebound.

As expected, the central bank said it would keep its holdings of Treasury bonds at current levels, a policy intended to keep consumer and business loan rates at low levels to stimulate spending.
The Fed noted that inflation has risen. But it said it expects those pressures to be temporary as well.

Bernanke and his colleagues are trying to keep a fragile economy on track two years after the Great Recession officially ended. A spike in gasoline prices earlier this year made consumers and businesses more cautious about spending. Employers scaled back hiring in May.

Economic growth slowed to 1.8 percent in the first three months of the year. It isn't expected to be much higher in the current quarter.

Beyond high gas prices and supply disruptions caused by the earthquake and tsunami in Japan, the Fed is now facing a new problem: renewed jitters that a debt crisis in Greece could spread to other heavily indebted European nations and send shockwaves through global financial markets.

The Fed has kept rates at ultra-low levels since December 2008. Once the Fed decides to abandon the "extended period" language, it would be viewed as a signal that it is getting ready to reverse course and start boosting interest rates. Many private economists think it will be another full year before the economy has recovered enough for the Fed to actually start raising interest rates.

The Fed is also winding down its Treasury bond-buying program, an effort to drive down long-term interest rates. Supporters say the bond purchases have worked, in part by keeping rates low and encouraging spending. Low long-term rates are vital for consumers buying homes and cars and for companies making investments.

They also argue that those lower rates fueled a stock rally. When Bernanke outlined plans for the bond-buying program in late August, the Standard & Poor's 500 index was down 6 percent for the year. Eight months later, the S&P 500 was up 28 percent. Lower rates made stocks more attractive to investors than bonds, whose yields were falling.

Falling bond yields have also helped keep mortgage rates near record lows. The average rate on a 30-year mortgage has stayed below 5 percent for all but two weeks this year and was 4.5 percent last week. Still, low rates have done little to boost home sales, which fell in May to the lowest level in since November.

Critics, including some Fed officials, saw things differently. They warned that by pumping so much money into the economy, the Fed increased the risks of high inflation later.

Source: Associated Press

California Redwood Co. Completes Purchase of Siskiyou Lumber

Wednesday, June 22, 2011

The California Redwood Co. completed the acquisition of the assets of Siskiyou Lumber Products, a California-based company specializing in remanufacturing and wholesale lumber distribution.

Siskiyou's Woodland, Calif., operations and its Ukiah, Calif., fence plant will now operate as part of The California Redwood Co., distributing redwood lumber products, Douglas fir lumber and treated lumber.

"A year ago, we announced a long-term marketing strategy of working with retailers to better understand and serve the needs of consumers," said Carl Schoenhofer, VP and general manager for The California Redwood Co., based in Eureka, Calif. "The acquisition of Siskiyou Lumber Products provides us the opportunity to get closer to consumers and allows us to offer a full range of premium redwood products directly to retail."

The products include decking, railing, fencing and garden accessories.

"We also plan to expand our product development efforts and value-added applications for redwood," Schoenhofer said.

Source: Home Channel News

Housing Market's Silver Lining

Tuesday June 21, 2011

Amid the clouds of gloom hovering over the nation's housing market there is a silver lining. Steven Liberati sees it. The 28-year old heating, ventilation and air conditioning systems salesman and his fiancé are about to purchase their first home -- a co-op apartment in White Plains, New York -- for a fraction of what they thought it would cost just a couple of years ago.

"I'm always trying to take advantage of a situation. I feel like two years ago was a good time to rent," said Liberati. "Now it seems very affordable. We had to jump on the situation."

For much of the nation that silver lining remains invisible, as housing is stuck in its worst slump in decades. Each monthly data point -- sinking home prices, slow sales, sluggish housing starts -- has fallen like a hammer on the coffin nails of an industry that shows few signs of life.

But housing may soon rise from the dead, argue some economists. And, the severity of the slump may in fact accelerate the arrival of a recovery.

"The truth is the correction in house prices and the low level of home building is really the cure for the housing industry's problems," said Jim Glassman, senior economist at J.P. Morgan Chase & Co.

The lower prices fall the more affordable homes are becoming, even factoring in a decline in household income over the past few years due largely to the high level of unemployment.

In fact, home affordability has improved dramatically since the peak of the housing boom. A family earning the national median of $62,000 pays 13.5% of its monthly income for a mortgage payment on a median priced home ($163,000), according to the National Association of Realtors.

The current year will achieve the highest affordability condition in 40 years," said Lawrence Yun, chief economist of the National Association of Realtors.

Buying a home today looks even more affordable when compared to renting, which is becoming more expensive, as measured by the government's Consumer Price Index. So, in theory, more potential buyers should start thinking like Steven Liberati.

Problem is, there's a psychological "X" factor. Price declines convince many potential home buyers that they should keep waiting because they'll get an even better bargain a year from now.

"We're facing a lack of urgency on part of potential buyers," said Chris Herbert, research director of the Joint Center for Housing Studies at Harvard University.

To stabilize prices, supply and demand need to come into balance. That's where the lousy housing starts data can be helpful. While it's true that homebuilders are suffering mightily, the last thing the housing market needs right now is an explosion of new home construction. The slower the pace of new home building, the faster the imbalance between supply and demand should be corrected.

"All the bad news isn't bad news. Sometimes bad news is good news," said Drew Matus, senior economist at UBS Securities. "You want to limit the amount of new supply coming on the market."

In other words, today's lousy headlines should be building the foundation for a recovery in housing. Matus predicts home prices will stabilize by the end of the year.

Source: CNN Money

Existing Home Sales Drop 3.8%

Tuesday, June 21, 2011

Sales of existing homes fell in May, as severe weather and high gas prices weighed on the shaky housing market.

Home sales fell 3.8% to a seasonally adjusted annual rate of 4.81 million, down from a revised rate of 5 million in April, the National Association of Realtors said Tuesday.

Sales were more than 15% lower than in May 2010.

Economists had expected a May sales rate of 4.79 million existing homes, according to consensus estimates from Briefing.com. "Spiking gasoline prices along with widespread severe weather hurt house shopping in April, leading to soft figures for actual closings in May," said NAR chief economist Lawrence Yun.

Gas prices surged earlier this year, pinching household budgets and putting a damper on consumer spending. In addition, sales were hurt by tornados and flooding in May that devastated parts of the South and Midwest.

Sales fell more than 6% in the South and were down over 5% in the Midwest. By contrast, sales fell 2.5% in the Northeast and were flat in the West.

Yun called the drop in May sales "disappointing," but he expects the market to pick up in the second half of the year, given the recent decline in gas prices.

NAR also said that the national median price for existing homes of all types fell 4.6% in May to $166,500.

While sales had stabilized somewhat earlier this year, the market for existing homes has been working through aglut of foreclosed properties for years -- a trend that has weighed on prices.

In May, distressed homes accounted for 31% of all sales, which typically sell for about 20% less than homes that aren't in foreclosure, according to NAR.

Yun said the long and painful drop in home prices "could be diminishing" as some buyers look to take advantage of what he called the highest affordability conditions in 40 years.

He warned, however, that existing home sales are being held back by "restrictive loan underwriting standards."

"There's been a pendulum swing from very loose standards which led to the housing boom to unnecessarily restrictive practices as an overreaction to the housing correction -- this overreaction is clearly holding back the recovery," said Yun.

Source: CNNMoney

Remodeling Activity Up for 18th Consecutive Month

Friday, June 17, 2011

Residential remodeling activity continued to rise across the United States, showing a 15% increase in April 2011 in year-over-year comparisons, according to an index compiled by BuildFax, which uses a national database of building permit data.

The latest BuildFax Remodeling Index (BFRI) indicates that residential remodeling activity registered its eighteenth-straight month gain.

“April traditionally sets a baseline for the rest of the year in residential remodeling activity, and April 2011 is the best we’ve seen since the beginning of the index in April 2004,” said Joe Emison, VP research and development at BuildFax. “The BFRI is indexed to start at 100 in April 2004 and here we are seven years later, after significant drops in housing value, and the index is almost 110. That means there were almost 10% more residential remodels in April 2011 than in April 2004. Given the relatively pessimistic economic news that we heard about in April, including a slowing recovery, this is a nice surprise for the industry."

In April, all regions posted month-over-month gains, and only the Midwest posted a year-over-year loss. The West was up 18% year-over-year and up 5.3 points, or 5%, month-over-month. The Midwest was down 19% year-over-year and up 17% month-over-month, recovering slightly from a lower-than-average March. The Northeast was up 5% year-over-year and 14% month-over-month, and the South was up 11% year-over-year and 12% month-over-month.

Based in Austin, Texas, and Asheville, N.C., BuildFax bases its index on a proprietary property intelligence engine that contains building and permitting information from 4,000-plus cities and counties across the United States.

Source: Home Channel News

Housing Starts Bounce Up 3.5% in May

Thursday, June 16, 2011

With seemingly nowhere to go but up, housing starts in May increased 3.5% from the upwardly revised April figure to a seasonally adjusted annual rate of 560,000. Single-family starts increased 3.7% to a rate of 419,000.

The figures had easy comparisons from a month ago, when the Commerce Department's New Residential Construction report posted depressing numbers. While the month-to-month gains are a welcome sign for the industry, year-over-year statistics are negative -- total starts were down 3.4%, and single-family starts were down 8.9%.

The May numbers were slightly higher than those of 2009, the slowest year of housing starts on record.

On a regional basis, the West had the best numbers across the board, showing an 18.1% month-to-month gain and a 20.2% year-over-year gain. The West also showed a 15.6% improvement in single-family starts compared with April.

The Northeast struggled the most of the four regions. Year-over-year starts dropped 18.3%, and year-over-year single-family starts dropped 32.1%, according to the data released today.
Building permits, meanwhile, increased to a rate of 612,000 in May, up 8.7% from April, and up 5.2% compared with May 2010.

Source: Home Channel News

Foreclosures Fall For 8th Straight Month

Thursday, June 16, 2011

Foreclosure filings experienced their eighth straight month of declines, according to RealtyTrac.

In May, filings fell 33% from a year earlier and 2% month-over-month, according to the online marketplace of foreclosed properties. The number of homes that were repossessed (referred to as REOs or real estate-owned properties) in May also declined to 66,879, down 3.8% from April and 29% year-over-year, the firm said.

The huge year-over-year drop in foreclosures doesn't necessarily mean the housing market is staging a recovery, however.

James Saccacio, the CEO of RealtyTrac, says the declines are likely due to lingering effects of the "robo-signing" scandal, which broke last September, when it was discovered that banks were playing fast and loose with foreclosure documents.

In some cases, it was found that banks brought foreclosure proceedings upon homeowners when they had no standing to do so. Sloppy paperwork sometimes made it impossible to tell which entity was the rightful owner of the mortgage notes.

To help fix the mess, foreclosure proceedings were temporarily suspended. Even though the suspension has since been lifted, the pace of foreclosures remains significantly slower as banks more thoroughly review each case to ensure they are being handled legally and properly.

"Foreclosure processing delays continue to mask the true face of the foreclosure situation," said Saccacio. "Lenders are somewhat unevenly pushing batches of bad loans through foreclosure as they overhaul their paperwork and documentation procedures."

There's another factor at play, as well. The banks can't sell the homes they've already seized so they aren't as incentivized to repossess more homes.

"[There's] weak demand from buyers, making it tough for lenders to unload their REO inventory," said Saccacio. "Even at a significantly lower level than a year ago, the new supply of REOs exceeds the amount being sold each month."

The banks don't want to take on the expense of maintaining the homes -- property taxes, heating costs, repairs and insurance -- if they can't sell them quickly.

Selling off the inventory of repossessed homes is crucial to the housing market, said Jim Gillespie, CEO of Coldwell Banker. Sold at steep discounts, REOs compete with new homes for buyers and have severely depressed new home sales.

"That's a critical element for the economic recovery," said Gillespie. "If new homes were selling anywhere close to their levels of five years ago, it would add a full point to the GDP."

The steepest drops in filings have come from judicial states, ones in which the courts are involved in repossessions. In these states, where foreclosure proceedings are subject to the scrutiny of the courts, it appears banks are taking special care to make sure they've stamped out the last vestiges of the robo-signing issues.

Nevada, where most cases are handled outside of court, continued to be foreclosure central. One of every 103 households received a notice of some kind in May. However, that was an improvement of 23% compared with May 2010. Arizona, with one filing for every 210 households, and California, one for every 259, were second and third.

The judicial state of Florida, where the housing market is no better, has seen a much greater drop-off in filings over the past year, down 62%. It now has the eighth highest foreclosure rate, of one filing for every 461 households. A year ago, it was in the top four, along with the other "Sand States."

Source: CNN Money

Housing Market to Remain in the Doldrums: Reuters Poll

Thursday, June 16, 2011

The beaten-down housing market is expected to sink further this year and prices will virtually flatline in 2012, a Reuters poll predicted.

While theeconomy has slowly been recovering from the worst recession since the Great Depression, a housing market rebound has remained elusive despite multi-billion dollar federal programs and record low interest rates.

Home prices -- as measured by Standard & Poor's 20-City Composite Home Price Index -- will fall 5.0 percent in 2011 as a whole before finding a floor and rising just 0.5 percent in 2012, according to the median forecast of the 21 economists who provided price forecasts in the Reuters poll.

The findings were bleaker than those of the previous Reuters housing poll in March, which saw prices falling 2.3 percent this year and rising 1.2 percent in 2012.

A rise in "distressed" home sales at depressed prices has helped clear a backlog of homes for sale on the market, but a glut of homes for sale still remains. The rampant pace of foreclosures hitting the market has abated but is still grim with more than a quarter of homeowners owing more on their mortgage than what their homes are worth.

This negative equity not only prevents homeowners from selling but these borrowers tend to be more prone to defaults and foreclosures.

"It is hard to see the housing market doing better until the massive headwind of foreclosures is removed and that will likely take a couple of years," said Mark Vitner, senior economist at Well Fargo Securities in Charlotte, North Carolina.

By the third quarter of 2011, the pace of U.S. existing home sales will only edge up to a 5.10 million annualized rate compared with 5.05 million in April, according to the median forecast of 22 economists who gave an outlook for sales.

Forecasts for changes in the CaseShiller price index next year ranged widely, from a rise of 5 percent to a fall of 6 percent, highlighting the differences among economists on whether the housing slump has played out.

Home sales have mostly been falling since the expiration of popular home-buyer tax credits last year. Home sales in April, the most recent month available from the National Association of Realtors, was 12.9 percent below its year-ago level.

With home prices still falling, many potential buyers are sidelined and banks are more stringent with loan applications and credit scores, Wells Fargo's Vitner said.

"It is not that I am pessimistic about the housing market, it is just that I am not optimistic and a gradual recovery probably will not happen until 2013 or 2014, with a full normalization not until 2015," he said.

Another contributing factor to the dour outlook for the U.S. housing market is stubbornly high unemployment and underemployment.

Home prices will fall another 3 percent from their current levels, according to the median forecast in the poll.

The total price drop from the peak of the housing market in 2006 will be 35 percent, the poll showed.

One glimmer of hope for the hard-hit U.S. housing market is the high level of home affordability.

The average 30-year fixed U.S. mortgage rate will probably settle at 4.82 percent this year, the poll showed, up from a rate of 4.49 percent in the latest week.

The rate touched 4.19 percent in mid-October of 2010, the lowest since 1951, according to U.S. mortgage finance agency Freddie Mac, and economists say rates below 5 percent are historically low.

Source: Reuters

6 Ways to Fix the Housing Market

Thursday June 16, 2011

Not even the blistering summer heat has thawed the housing market, which has been kept frozen for two years by underwater homeowners and tight credit. Every month brings new numbers and guesses about when the thaw will come, and Thursday's data on new residential construction will shed some light on the health of the U.S. housing market.

The annual rate of new housing starts has been bouncing around between 500,000 and 700,000 for the last two years. In April, that rate was at 523,000, and May's figure is not expected to change drastically. That range is is alarmingly low compared to the high of nearly 2.3 million new starts in January 2006 as well as the rates of the late 1990s and early 2000s, before the peak of the housing boom, when starts averaged around 1.6 million per month.

Other recent housing statistics are discouraging as well. The March Case-Shiller composite housing price index for 20 major U.S. cities showed that housing prices have dropped by 32 percent from their 2006 peak. And home prices may have yet to hit bottom. Speaking at a conference in New York last week, Yale economist Robert Shiller, cocreator of the Case-Shiller Index, told an audience that home prices may still drop by another 10 to 25 percent.

According to experts, a variety of factors could be key to dragging the housing market out of the doldrums: improved economic fortunes, greater assistance to indebted homeowners, and simple patience may be necessary to remove this heavy weight on the economic recovery. Here are six ways to help speed the recovery of the U.S. housing market.

It's the Economy, Stupid
Fixing the rest of the economy first is admittedly more easily said than done. But the key point is that housing will most likely follow, not lead, the rest of the economy out of a slump. "Housing prices are going to be driven by the health of the economy," says . "It's become a following indicator. ... In the past, housing was a major part of the economic expansion."

Jobs are perhaps the area of the economy most inextricably linked to the housing sector. Mark Zandi, chief economist at Moody's Analytics, says that jobs are the most significant weight on housing right now. "People can't buy a home unless they have a job or are confident that they will hold onto a job," says Zandi. And people with homes that cannot sell are limited in their mobility and cannot cast wide nets in their job searches. Additionally, the housing market's poor health, and particularly the lack of new housing starts, is making the construction industry one of the toughest in which to find a job.

Trim the Fat
Earlier this month, Federal Reserve Vice Chairman Janet Yellen told an audience at the Cleveland Federal Reserve Bank that housing recovery would take time. She elaborated, "Even once it begins to take hold, recovery in the housing market likely will be a long, drawn-out process." Even with fixes to the rest of the economy, some economists estimate that full recovery will take as long as five years.

One reason behind that long recovery period is the excess of vacant homes on the market. Even once credit is freed up enough for would-be buyers to begin house-hunting in earnest, the market will have to be cleared of those empty properties before home-building can pick up again. Shrinking the oversized supply of housing will also better allow housing prices to increase, so current owners will be more able and willing to sell their homes.

Depend on Uncle Sam
Zandi says that governmental intervention options are limited given the current political and budgetary constraints. But one low-cost option would be to maintain the current limits on conforming loans, which are mortgages that are equal to or less than the conforming loan limit set by the government. Starting in 2008, the government temporarily increased the limits on these loans. But on October 1, the loan limit will drop again to the permanent limit. The increased loan limits were generally established on a county-by-county basis, and in some places, the decrease that will happen on October 1 will be substantial. For example, in some places designated as "high-cost" areas, the maximum loan will drop from $729,750 to $625,500. Zandi estimates that the new loan caps will affect 5 to 10 percent of the housing market nationwide, particularly high-priced markets like the Northeast and the West.

Zandi believes that in the long run, less government involvement in mortgages could be a good thing, but that the already-fragile housing market is not ready for the government to substantially reduce its influence. "I don't think that [decreased loan limits are] a bad idea, longer-run. In fact, it's a good way to try to get the government out of mortgage market, at least to start extricating itself from the mortgage market," says Zandi. "But it's probably premature to do that on October 1."

Don't HAMP-er the Recovery
The Home Affordable Modification Program, better known as HAMP, was established a part of the larger Troubled Asset Relief Program, or TARP. It was designed to help struggling homeowners modify their loans to be affordable. "HAMP has been a badly designed program, badly executed," says Stephen Malpezzi, professor of real estate at the University of Wisconsin. That sentiment was reflected in a report that the special inspector general for TARP presented to Congress in April. The report characterized HAMP as "beset by problems from the outset," many caused by mortgage servicers with "extraordinarily poor" performances in areas like evaluating which homeowners meet income requirements. Last week, the Treasury found Bank of America, J.P. Morgan Chase, and Wells Fargo to be in need