Rising Home Sales Support Case for Housing Recovery

Original Post Date: June 27, 2012

By: Nick Timiraos

Home-sales data released Wednesday provided fresh support for the view that the strong start to the spring home-buying season marks the beginning of a recovery, not a temporary blip due to an unusually warm winter.

An index that measures the number of contracts signed to purchase previously owned homes rose in May to match its March level, which was the highest point in nearly two years. Pending home sales rose 5.9% from April and stood 13.3% above year-ago levels, according to the National Association of Realtors.

May’s reading showed strength in every part of the U.S. Contract activity stood at its highest level in more than one year in the Northeast, which was up by 19.8% from last year, and the Midwest, which was up 22.1%.

The pending home-sales report was the strongest for the month of May since 2006, when the housing bubble peaked. Since 2007, contract activity has been stronger only in five other months—three in 2009 and two in 2010—all in periods when federal tax credits fueled a surge in sales.

To be sure, contract activity has been a less-reliable indicator of future sales activity than it was in the past because many deals fall through, either because buyers can’t qualify for mortgages or because appraisals are too low. Also, some sellers need bank approval to complete a short sale, where the bank allows the home to sell for less than the amount owed.

Still, a growing number of economists say that recent housing indicators point to a market that is recovering. Dean Baker, co-founder of the Center for Economic and Policy Research who has long maintained a bearish outlook on housing, on Tuesday wrote that the sector “has hit bottom and started an upswing.”

Some homebuilders are sounding optimistic. Lennar Corp., LEN +5.28%the Miami-based builder, reported a sharply higher profit for the quarter ending May 31, buoyed by a 40% increase in new-home orders and a tax-related gain. “Evidence from the field suggests that the ‘for sale’ housing market has, in fact, bottomed and that we have commenced a slow and steady recovery process,” said Chief Executive Stuart Miller in a statement Wednesday.

Sales have been fueled in recent months by mortgage rates that have fallen to their lowest levels on record. The average 30-year fixed-rate mortgage stood at 3.88% last week, the Mortgage Bankers Association said Wednesday.

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California home sales and prices rise in May

Original Post Date: June 14, 2012

By: Alejandro Lazo

Home sales and prices strengthened throughout California in May, providing the latest evidence that housing might be snapping out of its long slumber.

Sales popped 9.3% from April and jumped 17.6% from May 2011 to total 41,790 new and previously owned houses bought statewide, according to real estate research firm DataQuick of San Diego. The state’s median home price hit $270,000, rising 2.3% from the prior month and up 8.4% from May 2011.

“It’s not exactly a stampede, but people are starting to move off the housing market sidelines in numbers we haven’t seen in quite a while,” DataQuick President John Walsh said. “And it’s not just first-time buyers and investors. There are more move-up buyers in mid- to high-end coastal counties.”

Home sales in the Golden State have posted year-over-year gains for 10 consecutive months, and foreclosures have steadily been making up a smaller share of the market. Sales of distressed homes made up 46.2% of the market, the lowest figure since April 2008.

Just slightly more than 1 in 4 homes sold in California were foreclosures last month, while just under 1 in 5 homes were short sales, according to the data.

In Southern California, the number of homes sold soared 21% compared with a year earlier, while the median price rose 5.4%. In the Bay Area, sales were up 26.1% from May of last year and the median rose 7.5%.

Although the foreclosure problem is improving, a RealtyTrac report underscored that the large number of distressed properties remains a headache, particularly in some areas. The Inland Empire, for instance, had the highest foreclosure rate out of the nation’s 20 biggest metropolitan regions last month.

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Home price index shows April strength

Original Post Date: June 5, 2012

By: Alejandro Lazo

National home prices marked their second year-over-year increase in April, according to a widely watched index, signaling that housing strengthened during the critical spring shopping season.

The home price index by research firm CoreLogic increased 1.1% over April 2011, notching the second consecutive year-over-year increase since June 2010. The index includes sales of foreclosed and other so-called distressed properties.

Excluding sales of those distressed homes, prices were up 1.9% from the same period a year earlier, a rate of improvement not seen since late 2006, and better than the brief period of housing strength in 2010 that was driven by popular buyer tax credits. CoreLogic forecast that prices will continue to rise in coming months due to a lack of homes available for sale.

“Home prices are responding to a restricted supply that will likely exist for some time to come — an optimistic sign for the future of our industry,” said Anand Nallathambi, president and chief executive of CoreLogic.

The most widely watched measure of home prices, the Case-Shiller index, has painted a different portrait of the national housing picture. Released last week, the index showed prices in the U.S. ended the first quarter at their lowest point since the housing crisis, with values in 20 major cities dropping 2.6% in March, compared with the same period a year earlier.

But many analysts have turned optimistic on housing despite those disappointing numbers, noting that given the lag in the Case-Shiller data, a turnaround in housing values will probably not be captured until well after its occurrence. While the Case-Shiller numbers are the industry standard, the CoreLogic numbers are followed by the Federal Reserve as well as many analysts.

Any significant housing rebound is unlikely to get underway until the shaky jobs market shows sustained improvement. A report last week showing that the nation’s unemployment rate in May rose for the first time in nearly a year, to 8.2%, and created on net just 69,000 jobs last month, convinced several economists that the U.S. is entering another summer slump.

But given the improvement in the CoreLogic data, as well as a steady increase in sales, the housing market looks poised to avoid the results of last year’s silent spring, in which the traditionally busy season posted a largely lackluster performance.

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Freddie Mac: Mortgage rates set record low for sixth week in row

Original Post Date: June 7, 2012

By: E. Scott Reckard

Mortgage rates fell to new lows for the sixth straight week, with lenders offering the 30-year fixed-rate loan at an average 3.67%, down from 3.75% a week ago, home finance giant Freddie Mac said.

The 15-year fixed-rate loan averaged 2.94%, down from 2.97% last week, according to Freddie’s latest weekly survey.

Freddie Mac economist Frank Nothaft attributed the decline to reports showing weak growth in jobs and the economy. Those factors make inflation less likely and pressure central bankers to keep rates down.

The gross domestic product, originally reported as rising 2.2% during the first quarter, was cut back to 1.9%, Nothaft noted. What’s more, the economy in May added fewer than half the jobs than had been expected.

Freddie Mac polls lenders each Monday through Wednesday on the terms they are offering solid borrowers on popular loans. In the latest survey, the borrowers would have paid 0.7% of the loan amount to the lenders upfront to obtain the fixed-rate loans.

The next survey appears likely to reverse the downward trend. The economic news has looked brighter over the last two days, sending stocks higher and driving up the yield on the 10-year Treasury note — a benchmark for fixed mortgage rates — from 1.47% last Friday to 1.66% Thursday morning.

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