New home sales, prices rise in April

New single-family home sales rose solidly in April and prices pushed higher, offering further evidence the housing market was turning the corner.

The Commerce Department said on Wednesday sales increased 3.3 percent to a seasonally adjusted 343,000-unit annual rate after a 332,000-unit pace in March.

The report, whose details were fairly bullish, came on the heels of news on Tuesday that home resales hit a two-year high in April and suggested the housing market recovery was gaining traction.

It also highlighted the economy’s underlying strength, even though job growth has slowed in recent months. The weak housing market had been the Achilles heel of the economy’s recovery from the 2007-09 recession.

“It’s encouraging. These are signs that we might be forming a bottom in housing,” said Omer Esiner, chief analyst at Commonwealth Foreign Exchange in Washington. “We’ll need to see housing shore up before we can talk about a meaningful recovery in the U.S.”

Stocks opened lower on worries about Greece’s debt problems, while Treasury debt prices rose. The dollar extended gains against the euro after the home sales data.

Compared to April last year, new home sales were up 9.9 percent. Signs of life in the housing market were also bolstered by a 4.9 percent rise in the median price of a new home last month to $235,700 from a year ago.

A separate report from the Federal Housing Finance Agency showed house prices rose 1.8 percent in March after gaining 0.3 percent in February. Prices were up 2.7 percent from year ago.

The improving housing market picture helped Toll Brothers Inc, the largest luxury home builder, report a higher-than-expected quarterly profit and a strong jump in new orders.

“The spring selling season has been the most robust and sustained since the downturn began,” Chief Executive Douglas Yearley said in a statement.

Despite the rise in sales, the housing market continues to be hamstrung by an oversupply of previously owned homes on the market – especially from foreclosures, many of which sell well below their market value.

A separate report from the Mortgage Bankers Association showed applications for loans to buy houses fell for a second week in a row last week, even though mortgage rates dropped to a record low.

While the inventory of new homes on the market rose 1.4 percent to 146,000 units last month, it remained near record lows. At April’s sales pace it would take 5.1 months to clear the houses from the market, down from 5.2 months in March.

New home sales last month were buoyed by a 28.2 percent jump in the Midwest. Sales in the Northeast rose 7.7 percent, to the highest level in over a year, while in the West sales soared 27.5 percent. Sales were down 10.6 percent in the South.

New home sales account for about 7.6 percent of the overall housing market and face stiff competition from previously the owned home segment despite low levels of stock.

 

By Lucia Mutikani

WASHINGTON | Wed May 23, 2012 10:35am EDT

http://www.reuters.com/article/2012/05/23/us-new-home-sales-prices-rise-in-april-idUSBRE84M0U320120523

 

Home sales surge in April

 The housing market surged in April, with home affordability at record levels.
 Sales hit 4.62 million homes during the month on an annualized basis, a rise of 3.4% compared with a month earlier and up 10% from April 2011, according to the National Association of Realtors.
 NAR reported that the median price for homes sold during the month was $177,400. That’s a jump of more than 10% compared with a year earlier.
 The housing market’s improvement was widespread, as all four regions in the nation recorded gains. That’s a good indication that there is a sustainable recovery afoot, according to Gus Faucher, a senior economist for PNC Financial.
 ”The fundamentals for a recovery have been in place for a while,” he said. “Only confidence was lacking.”
 A decline in the proportion of distressed property sales — homes either in default or already repossessed by lenders — helped boost home prices. These properties normally sell at big discounts to conventional sales and drag down the overall median price.
 In April, distressed properties accounted for 28% of sales, down from 37% 12 months earlier.
     Click here     Pat Newport, a housing market analyst at IHS Global Insight, said he thinks the market is turning but that it will be a slow process.
 ”The market won’t pick up much steam this year,” he said. “The key issue is credit: It’s still tight both for mortgage borrowers and for home builders.”
 There’s no sign that credit will loosen up anytime soon, but the fact that interest rates are at record lows does make financing easier for buyers.
 NAR chief economist Lawrence Yun notes that it’s no longer just investors who are jumping into the market. “A return to normal home buying for occupancy is helping home sales across all price points,” he said.
 As prices stabilize, homeowners may be encouraged to put their homes on the market. Inventory rose 9.5% to 2.54 million homes in April, which is common in the spring, as sellers try to capitalize on the selling season.
 Overall, the supply of homes for sale has dropped more than 20% from 12 months ago and is well down from the record high of 4.04 million in July 2007.

 

 Les Christie  May 22, 2012: 01:13 PM EDT  http://cnnmoney.mobi/primary/_RR63RP-iD9P1Wx9LF

Sales Are Up. Prices Still Have a Way To Go.

We believe the housing market is recovering. We believe that sales will be robust through the rest of the year. However, we also believe that the increase in demand will not impact prices in a big way as we think there will also be an increase in the supply of homes coming to the market. This increase in supply will offset the increase in demand. The increase in supply will be fueled by two categories of inventory:

1. Foreclosures entering the market as a result of the National Mortgage Settlement
2. Pent up supply of homeowners who have been unable to sell their homes over the last several years

There have been several recent headlines making strong statements about home values in the country. We must be sure to read the ENTIRE report – not just the headlines. Here are four headlines and the portion of the report that reflects the caution in their ‘cautious optimism’.

HEADLINE:

LPS Home Price Index Shows U.S. Home Price Increase of 0.2 Percent in February; Early Data Suggests Further Increase of 0.3 Percent is Likely During March

CAUTION:

“Reasons for caution are clear, as we’ve been here before. Non-seasonally adjusted prices increased for a few months in early 2009, 2010 and 2011 – trends that all ended by summer, after which all the gains – and then some – were lost. As is true this month, those temporary increases were on low sales volumes – about 30 percent lower than at any point since 1998. Furthermore, the inventory of distressed homes remains high, which will continue to put a drag on prices.”

HEADLINE:

Foreclosure hotspots show signs of housing turnaround

CAUTION:

“However, much will depend on the continued health of our economy, specifically job rates, and how lenders will release their foreclosure inventories now that the 49 state AG Agreement has been signed.”

HEADLINE:

Fiserv Expects Home Prices to Stabilize

CAUTION:

“On the other hand, nearly one-half of the metro areas, or 191, saw prices decrease by more than 2 percent, including double-digit losses in Atlanta (-12.8 percent), Reno, Nevada (-10.8 percent), and Tucson, Arizona (-10 percent).

In the fourth quarter of 2011, the average price of a U.S. single-family home fell four percent from the year-ago period, and Fiserv Case-Shiller projects a further decline of 0.8 percent by the end of 2012.”

HEADLINE:  

Home Prices in March Show Monthly Gain: CoreLogic

CAUTION:

“Even with price gains above 5 percent for leading states and CBSAs, Capital Economics said in response to the CoreLogic report that over the year, prices are more likely to stabilize rather than make a dramatic climb.

“There are fears in some quarters, triggered by recent disappointing GDP and payrolls data, of a sharp slowdown in economic growth which could derail the fledgling improvement in the housing market,” said Paul Diggle, property economist for Capital Economics.”

 

Reblogged from: http://www.kcmblog.com/2012/05/15/sales-are-up-prices-still-have-a-way-to-go/

A Reassuring Look at the Housing Market

Published: April 27, 2012
By: Meghan Smith

 

Well-priced listings, short sales move faster; Congress urged to move renewal of flood insurance program.

As home inventories shrink in some markets and new-home sales exceed projections for the month of March, some buyers are taking advantage of what seems to be a light at the end of the housing crisis tunnel. Lower mortgage rates and new rules for short sales are just some of the developments helping to turn around the market. These stories and more in our weekly housing news round-up.

The Seattle Times: Housing Market No Longer Yours for a Steal

In local markets where inventories are tight and competition for homes rising, realty agents say that buyers looking to steal houses by lowballing their offers are ending up at the back of the line — their contracts either rejected out of hand or countered close to the original asking price. It’s not something that economists routinely track, but it provides a rough sense of what’s happening in local real estate markets. Call it the lowball index.

Bloomberg Business Week: Sales of New U.S. Homes Exceeded Estimates in March: Economy

Demand for new U.S. homes was stronger than projected in March, showing more jobs and cheaper borrowing costs are helping stabilize the market.

Washington Post: Housing Downturn Spurs a Boom in Foreclosure-to-Rental Conversions

With home prices at historic lows and rental rates on the rise, a growing number of investors with cash to spare are seeking lucrative returns by gobbling up foreclosures in distressed markets across the country and turning them into rentals. “The investors are seeing bargain opportunities,” said Lawrence Yun, chief economist for the NATIONAL ASSOCIATION OF REALTORS®.

The Hill: FEMA Warns Congress Clock is Ticking on Flood insurance Program

The Federal Emergency Management Agency on Wednesday stepped up pressure on Congress to reauthorize the National Flood Insurance Program. The program is set to expire at the end of May, and FEMA warned that after that time NFIP won’t be able to issue new policies. The program is seen as key for limiting the costs of natural disasters. The House and Senate were unable to agree on a NFIP reauthorization last year, and extended the program without changes until May 31.

HouseLogic: It’s Time to Make Short Sales Shorter

New Fannie Mae and Freddie Mac rules plus two bipartisan bills aim to hasten the bureaucratic and drawn-out short-sale process to prevent more home owners from slipping into foreclosure.

Read more: http://www.houselogic.com/blog/why-home-ownership-matters/friday-five-reassuring-look-housing-market/##ixzz1tdGXiXJn

We love to hear this: “stability in market”

Housing scorecard points to stability in market

The Obama administration’s housing scorecard for March shows mortgage delinquencies down over last year and home prices unchanged and remaining at historic lows.  

Homes sales dipped slightly while refinancings rose compared to the previous quarter.

The scorecard, which is released by the U.S. Department of Housing and Urban Development and the Treasury, showed existing-home sales in January and February reaching their strongest start levels in five years, which was promoted as good news by the administration. Meanwhile, existing-home sales remained somewhat steady in the most recent reporting falling slightly to 382,500, compared to 385,800 in 4Q and 351,700 last year.

On the downside, home price growth is anemic, marking its fifth month of seasonal lows in March, the scorecard said.  

Seriously delinquent prime mortgages fell to 1.42 million in the most recent quarter from 1.43 million in the fourth quarter of 2011. Both numbers are well below the 1.6 million delinquencies documented a year earlier. 

Seriously delinquent subprime loans, meanwhile, declined to 1.7 million from 1.74 million in the last period. Both figures are below the 1.8 million seriously delinquent subprime mortgages recorded a year ago. 

Mortgage originations tied to refinancing activity also grew to 1.3 million filings, compared to 900,000 in the fourth quarter of 2011 and 1.6 million a year ago.  

Purchase originations, on the other hand, fell from 519,000 in the fourth quarter to 396,400.

The number of underwater borrowers also grew slightly from the fourth quarter, with 11.1 million borrowers upside down in the most recent scorecard, up from 10.7 million in the final quarter of 2011.

Mortgage rates also are way down, with the average 30-year, fixed-rate mortgage hovering at 3.99%, compared to 4.86% a year earlier.

 

http://www.housingwire.com/news/housing-scorecard-says-signs-market-stability-emerge

Buying cheaper than renting in nearly 100 major U.S. markets

Buying cheaper than renting in nearly 100 major U.S. markets: Trulia

By Justin T. Hilley

• March 21, 2012 • 6:00am

Buying is more affordable than renting in 98 out of the nation’s 100 largest metropolitan areas — even in New York, Los Angeles and Boston, according to real estate company Trulia‘s rent vs. buy index.

The index is based on asking prices for rental units and homes for sale on the company’s website between Dec. 1, 2011, and Feb. 29.

“As rents rise and prices stagnate, homeownership is becoming even more affordable, but rising rents create a dilemma for people who can’t afford to buy yet,” says Jed Kolko, Trulia’s chief economist. “Rising rents make it harder for people to save for a down payment, which is the biggest barrier to buying a home that aspiring homeowners face.”

Homeowners are choosing, or being forced, to rent rather than buy even though the latter is cheaper in key markets Trulia reviewed.

But as they turn to renting, the influx of demand squeezes the nation’s rental supply, pushing monthly rents higher.

The nation’s median rent stands at $712 per month — well above the average monthly mortgage cost of $647, Paul Dales, senior economist at Capital Economics, recently found. He estimated decreased vacancies in the home-rental market will push average rental rates up as much as 5% by early 2013, compared to 2.4% in January.

As a consequence of less willingness and ability to buy a home, households in rentals will rise by at least 850,000 a year over the next few years, Dales said.

He expects rents to rise at an annual rate of 3% this year and remain at that level in 2013. “Assuming that the economic recovery gains firmer footing, in future years there is scope for rents to rise by around 4% a year,” Dales said.

Only in Honolulu and San Francisco is renting often a better deal than buying. However, Trulia points out that buying a home in these markets might make sense for people who plan to stay in their next home for at least five years and can benefit from the mortgage-interest tax deduction.

“Metros where homeownership is expensive tend to have stronger long-term economic growth and little room to build new homes, like Boston and the San Francisco Bay Area, where people expect home prices to increase over time,” Kolko says.

“Buying is much cheaper than renting in slow-growing places with high vacancy rates and land to spare, like Detroit and Cleveland, where prices are unlikely to improve much in the future,” he says.

Top 10 metros in which to buy versus renting, according to Trulia:

Good News! “Ready to Rebound”

It hit with the ferocity of an Old Testament plague, wiping out large populations of homeowners in the U.S. Five million of the country’s 76 million mortgage holders have lost their homes to foreclosure or lender-ordered short sales since 2006, and an estimated 14 million more owe more on their homes than their properties are currently worth. In all, some $7.4 trillion in homeowners’ equity has been destroyed, according to Mark Zandi, chief economist at Moody’s Analytics, and more than two million jobs in the home-building industry disappeared.

At year end 2011, the S&P/Case-Shiller National U.S. Home Price Index fell to a record low, 33.8% below the boom peak level, recorded in 2006′s second quarter. The descent has been all the more hideous in such once-manic markets as Las Vegas, Phoenix and Miami, which, according to the Case-Shiller 20-City Composite Index, have fallen 61%, 55% and 51%, respectively, from their high-water marks.

Everyone has shared the pain. The negative wealth effect from the price decline both contributed to the virulence of the Great Recession and crimped the subsequent recovery.

Yet as grim as these year-end readings appear to be, there are signs that the long nightmare for American homeowners is in its terminal stage, and that, maybe, just maybe, home prices will bottom and begin to turn by the spring of 2013—if not before. Certainly, the economy is doing better these days—the sine qua non for improved demand for housing. Jobs numbers have been up sharply three months in a row, leading to a jump in consumer confidence of late.

The near-record low in mortgage rates and concomitant slide in home prices has made houses and condos stunningly affordable (although stiff underwriting standards have made getting home loans more difficult). This is captured in the National Association of Realtors Housing Affordability Index, which measures how much purchasing power a median-income family needs in order to buy a median-priced home, using conventional mortgage financing.

This measure stood at 206 in January, which meant that the typical family has more than double the income needed to purchase an average home. That reading is more than twice the 102.7 at the peak of the bubble in July 2006.

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