Wednesday, February 3, 2010
Tuesday, February 2, 2010
Pending Home Sales Stabilize
Pending home sales have leveled from a market swing driven by response to the home buyer tax credit, according to the NATIONAL ASSOCIATION OF REALTORS®.
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in December, increased 1 percent to 96.6 from 95.6 in November, and remains 10.9 percent above December 2008 when it was 87.1.
In November, the monthly index had fallen by 16.4 percent from surging activity in preceding months.
Lawrence Yun, NAR chief economist, says it’s important to recognize how the tax credit is skewing market data.
“There are easily understood swings in contract activity as buyers respond to a tax credit that was expiring and was then extended and expanded,” he says. “These swings are masking the underlying trend, which is a broad improvement over year-ago levels."
December activity was the fifth highest monthly tally in two years.
The Tax Credit Impact
Buyers who have a contract in place to purchase a primary residence by April 30, 2010, have until June 30, 2010, to finalize the transaction to qualify for a tax credit of up to $8,000 for first-time buyers and $6,500 for repeat buyers.
Yun projects the extended and expanded tax credit will encourage 2.4 million households to take the credit in 2010.
“While new-home sales will remain low due to a lack of construction, existing-home sales are projected to rise to around 5.6 million in 2010,” Yun says. Last year there were 5.16 million existing-home sales.
He added that one of the greatest benefits of rising sales will be firming home prices.
“For several months now we’ve been seeing stabilization in all of the home price measures as inventory is pulled down,” Yun says. “As a result, the housing wealth for many middle class families has begun to stabilize.”
Regional Data
Here's a breakdown by region for the PHSI:
—NAR
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in December, increased 1 percent to 96.6 from 95.6 in November, and remains 10.9 percent above December 2008 when it was 87.1.
In November, the monthly index had fallen by 16.4 percent from surging activity in preceding months.
Lawrence Yun, NAR chief economist, says it’s important to recognize how the tax credit is skewing market data.
“There are easily understood swings in contract activity as buyers respond to a tax credit that was expiring and was then extended and expanded,” he says. “These swings are masking the underlying trend, which is a broad improvement over year-ago levels."
December activity was the fifth highest monthly tally in two years.
The Tax Credit Impact
Buyers who have a contract in place to purchase a primary residence by April 30, 2010, have until June 30, 2010, to finalize the transaction to qualify for a tax credit of up to $8,000 for first-time buyers and $6,500 for repeat buyers.
Yun projects the extended and expanded tax credit will encourage 2.4 million households to take the credit in 2010.
“While new-home sales will remain low due to a lack of construction, existing-home sales are projected to rise to around 5.6 million in 2010,” Yun says. Last year there were 5.16 million existing-home sales.
He added that one of the greatest benefits of rising sales will be firming home prices.
“For several months now we’ve been seeing stabilization in all of the home price measures as inventory is pulled down,” Yun says. “As a result, the housing wealth for many middle class families has begun to stabilize.”
Regional Data
Here's a breakdown by region for the PHSI:
- Northeast: rose 2.3 percent to 76.1 in December and is 14.9 percent higher than December 2008.
- Midwest: increased 5.2 percent to 86.9 and is 8.7 percent above a year ago.
- South: rose 2.2 percent to an index of 98.4, and are 5.5 percent higher than December 2008.
- West: fell 3.8 percent to 119.9 but is 18.6 percent above a year ago.
—NAR
Saturday, January 30, 2010
Home Prices May Still Be Too High
Adjusted for inflation, housing prices are still 15 percent to 20 percent higher than they were in the mid-1990s, calculates housing economist Dean Baker, co-director of the nonpartisan Center for Economic and Policy Research.
“There’s no plausible fundamental explanation for that,” he says.
Baker believes economic fundamentals translate to a weak recovery at best. “People who say this is a temporary story, there’s no real reason to believe anything like that,” he says. “If anything, I expect housing to be weaker than normal rather than stronger over the next decade.”
Baker is opposed to the housing tax credit.
"As a matter of policy I can’t see that we want people to buy a house in 2009 that’s 10-20 percent higher than it would sell for in 2011,” he says. “In so far as the FHA was encouraging people to buy homes in bubble markets that were not deflated, that’s not good for the FHA and you didn’t help the home owner. We didn’t do those people a favor.”
Source: Bloomberg News, Nick Timiraos (01/26/2010)
“There’s no plausible fundamental explanation for that,” he says.
Baker believes economic fundamentals translate to a weak recovery at best. “People who say this is a temporary story, there’s no real reason to believe anything like that,” he says. “If anything, I expect housing to be weaker than normal rather than stronger over the next decade.”
Baker is opposed to the housing tax credit.
"As a matter of policy I can’t see that we want people to buy a house in 2009 that’s 10-20 percent higher than it would sell for in 2011,” he says. “In so far as the FHA was encouraging people to buy homes in bubble markets that were not deflated, that’s not good for the FHA and you didn’t help the home owner. We didn’t do those people a favor.”
Source: Bloomberg News, Nick Timiraos (01/26/2010)
Freddie Mac CEO: Housing Is Near Bottom
The inventory of foreclosed houses still hampers the recovery of the housing sector, but overall, the U.S. housing market appears to be at or near bottom, Freddie Mac CEO Charles Haldeman told the Detroit Economic Club on Tuesday.
He predicted that the 30-year fixed mortgage rate would remain between 5 percent and 6 percent through 2010.
"The big downside risk to all this is a large wave of homes now in foreclosure potentially hitting the market at prices that are destructive," Haldeman said.
Source: Reuters News, Soyoung Kim (01/26/2010)
He predicted that the 30-year fixed mortgage rate would remain between 5 percent and 6 percent through 2010.
"The big downside risk to all this is a large wave of homes now in foreclosure potentially hitting the market at prices that are destructive," Haldeman said.
Source: Reuters News, Soyoung Kim (01/26/2010)
Treasury to Cut Foreclosure Relief Paperwork
The Treasury Department is announcing a plan Thursday to reduce the burdensome paperwork surrounding the foreclosure relief plan.
Two changes expected to make a big difference are:
Participating mortgage service companies will be required to acknowledge that they have received a borrower’s application within 10 days and approve or deny the application within 30 days. Borrowers will still be required to make three months of trial payments before the modification is made permanent.
Treasury officials are also reportedly devising a plan to give unemployed borrowers a break on payments – probably for six months – but because the details aren’t decided, the announcement won’t be made this week.
Source: Associated Press, Alan Zibel (01/27/2010)
Two changes expected to make a big difference are:
- Lenders will be required to collect two pay stubs at the start of the process.
- Borrowers will be required to give the Internal Revenue Service permission to provide their most recent tax returns.
Participating mortgage service companies will be required to acknowledge that they have received a borrower’s application within 10 days and approve or deny the application within 30 days. Borrowers will still be required to make three months of trial payments before the modification is made permanent.
Treasury officials are also reportedly devising a plan to give unemployed borrowers a break on payments – probably for six months – but because the details aren’t decided, the announcement won’t be made this week.
Source: Associated Press, Alan Zibel (01/27/2010)
New Home Sales Continue to Decline
New home sales fell 7.6 percent in December, the U.S. Commerce Department reported Wednesday.
This was the second-straight month that new home sales declined.
The Commerce Department also reported that new home sales in 2009 were down 22.9 percent compared with 2008, hitting a record low of 374,000 units.
The Federal Reserve responded on Wednesday by leaving short-term lending rates at near zero and pledged to keep them low.
"This report does not totally ruin the notion that housing is recovering, but it does underscore the fragility of that recovery. It's not good news for broader economic growth," said Dana Saporta, an economist at Stone & McCarthy Research in Princeton, N.J.
Source: Reuters News, Lucia Mutikani (01/27/2010)
This was the second-straight month that new home sales declined.
The Commerce Department also reported that new home sales in 2009 were down 22.9 percent compared with 2008, hitting a record low of 374,000 units.
The Federal Reserve responded on Wednesday by leaving short-term lending rates at near zero and pledged to keep them low.
"This report does not totally ruin the notion that housing is recovering, but it does underscore the fragility of that recovery. It's not good news for broader economic growth," said Dana Saporta, an economist at Stone & McCarthy Research in Princeton, N.J.
Source: Reuters News, Lucia Mutikani (01/27/2010)
Report: Record Year for Foreclosures Predicted
Las Vegas had the highest U.S. foreclosure rate in 2009, according to a foreclosure report released today by RealtyTrac.
Other cities with the nation’s highest rates are:
A record 3 million homes will be seized this year, the report forecasts.
“The dam will break and we’ll see a significant increase in foreclosures,” Michael Lea, a finance professor at San Diego State University, said in an interview. “The banks can’t continue to hope the economy starts growing.”
Source: Bloomberg, Dan Levy (01/28/2010)
Other cities with the nation’s highest rates are:
- Cape Coral-Fort Myers, Fla.
- Merced, Calif.
- Riverside-San Bernardino, Calif.
- Stockton, Calif.
- Modesto, Calif.
- Orlando-Kissimmee, Fla.
- Phoenix
- Port St. Lucie, Fla.
- Miami-Fort Lauderdale-Pompano Beach, Fla.
A record 3 million homes will be seized this year, the report forecasts.
“The dam will break and we’ll see a significant increase in foreclosures,” Michael Lea, a finance professor at San Diego State University, said in an interview. “The banks can’t continue to hope the economy starts growing.”
Source: Bloomberg, Dan Levy (01/28/2010)
Subscribe to:
Posts (Atom)