RISMEDIA, October 26, 2009—Existing-home sales bounced back strongly in September with first-time buyers driving much of the activity, marking five gains in the past six months, according to the National Association of Realtors®. Existing-home sales–including single-family, townhomes, condominiums and co-ops–jumped 9.4% to a seasonally adjusted annual rate of 5.57 million units in September from a level of 5.10 million in August, and are 9.2% higher than the 5.10 million-unit pace in September 2008. Sales activity is at the highest level in over two years, since it hit 5.73 million in July 2007.
Lawrence Yun, NAR chief economist, said favorable conditions matched with a tax credit are boosting home sales. “Much of the momentum is from people responding to the first-time buyer tax credit, which is freeing many sellers to make a trade and buy another home,” he said. “We are hopeful the tax credit will be extended and possibly expanded to more buyers, at least through the middle of next year, because the rising sales momentum needs to continue for a few additional quarters until we reach a point of a self-sustaining recovery.”
Even with the improvement, Yun said the market is underperforming. “Despite spectacular gains in the stock market, principally from the financial sector recovery, most of the 75 million home owning families have more wealth tied to their homes. Home values could soon turn consistently positive and help the broad base of middle-class families, but we are not there yet,” he said. “We’re getting early indications of price stabilization, but we need a steady supply of qualified buyers to meaningfully bring inventories down and return us to a period of normal, steady price growth and to fully remove consumer fears, which would then revive the broader economy. Without a firm foundation for middle-class wealth recovery, the post-recession economic growth likely will be one of the weakest in U.S. history.”
Early information from a large annual consumer study to be released November 13, the 2009 National Association of Realtors® Profile of Home Buyers and Sellers, shows that first-time home buyers accounted for more than 45% of home sales during the past year. A separate practitioner survey shows that distressed homes accounted for 29% of transactions in September.
NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said affordability conditions remain historically high. “Potential first-time buyers can take heart in that affordability conditions this year are the highest on record dating back to 1970, but with the first-time buyer tax credit scheduled to expire at the end of next month, people could hold back from entering the market,” he said. “Our read is that housing overshot on the downside because homes are selling for less than replacement construction costs in much of the country, and the home price-to-income ratio has fallen below the historical average,” McMillan said.
Total housing inventory at the end of September fell 7.5% to 3.63 million existing homes available for sale, which represents an 7.8-month supply at the current sales pace, down from an 9.3-month supply in August. Unsold inventory totals are 15.0% below a year ago.
“The current housing supply is the lowest we’ve seen in two and a half years,” Yun said. “If we could continue to absorb inventory at this pace, home prices would return to normal, modest appreciation patterns next year.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 5.06% in September from 5.19% in August; the rate was 6.04% in September 2008. The national median existing-home price for all housing types was $174,900 in September, which is 8.5% lower than September 2008. Distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes in the same area.
Single-family home sales rose 9.4% to a seasonally adjusted annual rate of 4.89 million in September from a pace of 4.47 million in August, and are 7.7% above the 4.54 million-unit level in September 2008. The median existing single-family home price was $174,900 in September, which is 8.1% below a year ago. Existing condominium and co-op sales jumped 9.7% to a seasonally adjusted annual rate of 680,000 units in September from 620,000 in August, and are 9.7% above the 561,000-unit pace a year ago. The median existing condo price was $175,100 in September, down 11.7% from September 2008.
Saturday, October 31, 2009
Tuesday, October 27, 2009
Wall St vs. Main St: Courts Beginning To Side In Favor Of Foreclosed Property Owners
RISMEDIA, October 27, 2009—Agents involved in foreclosures and short sales may need to begin to disclose the possibility of serious property transfer defects associated with these types of lender controlled sales.
If recent court decisions are any indication, we could be headed for an explosion of litigation in this area.
And now, Massachusetts Courts have revealed the possibility that unlawful foreclosures, dating back to 1989, might be invalidated and that buyers of foreclosed properties and short sales may have clouded titles.
The implications are enormous for title companies, bankruptcy attorneys, real estate agents, those facing foreclosure, and those who have lost their homes.
The problem stems from the collision of two worlds. It illustrates what can happen when the new world fails to acknowledge or understand the old. It is change that takes place without the cooperation of all affected parties.
Real property law has an ancient tradition. But, its laws and their purpose are not always apparent to those who want to change those traditions to benefit themselves.
In the case of maintaining a public chain of title to real property, it was thought to be essential and generally required by the law.
For hundreds of years, no one ever thought of any reason to change it. It was thought to be part of the public good.
That is, until Wall Street saw the money making potential in credit derivatives.
Credit derivatives are packages of debts such as car loans, student loans, credit card debts, and mortgage loans to name a few. These are collected, rated according to their risk, and sold to investors around the world.
One small problem; if you are going to bundle mortgages from every county in the country, you would have to physically send someone to every county recorder’s office on multiple occasions and pay multiple recording fees. It was costly and cumbersome to those responsible for affecting the recordings.
Their solution? Stop recording the assignments in public and track them instead in an electronic data base that the major lenders would operate through a cooperative entity. That entity is known as Mortgage Electronic Registration Systems (MERS). In my opinion, not only did it save them a fortune in county fees and manpower, it turned out to be a cash cow.
Well, good for them, right? They figured out how to bring technology to the process and were handsomely rewarded. Never mind that the cost of maintaining a county recording system is paid, in part, by the recording revenue. They still have to maintain the apparatus, but now they aren’t receiving the revenue intended to maintain the system. Of course, this comes at a time when many counties are struggling to provide necessary services to their residents.
But, as with many new ideas, there are unintended consequences that are now coming to light as state after state are enforcing basic property rights.
If recent court decisions are any indication, we could be headed for an explosion of litigation in this area.
And now, Massachusetts Courts have revealed the possibility that unlawful foreclosures, dating back to 1989, might be invalidated and that buyers of foreclosed properties and short sales may have clouded titles.
The implications are enormous for title companies, bankruptcy attorneys, real estate agents, those facing foreclosure, and those who have lost their homes.
The problem stems from the collision of two worlds. It illustrates what can happen when the new world fails to acknowledge or understand the old. It is change that takes place without the cooperation of all affected parties.
Real property law has an ancient tradition. But, its laws and their purpose are not always apparent to those who want to change those traditions to benefit themselves.
In the case of maintaining a public chain of title to real property, it was thought to be essential and generally required by the law.
For hundreds of years, no one ever thought of any reason to change it. It was thought to be part of the public good.
That is, until Wall Street saw the money making potential in credit derivatives.
Credit derivatives are packages of debts such as car loans, student loans, credit card debts, and mortgage loans to name a few. These are collected, rated according to their risk, and sold to investors around the world.
One small problem; if you are going to bundle mortgages from every county in the country, you would have to physically send someone to every county recorder’s office on multiple occasions and pay multiple recording fees. It was costly and cumbersome to those responsible for affecting the recordings.
Their solution? Stop recording the assignments in public and track them instead in an electronic data base that the major lenders would operate through a cooperative entity. That entity is known as Mortgage Electronic Registration Systems (MERS). In my opinion, not only did it save them a fortune in county fees and manpower, it turned out to be a cash cow.
Well, good for them, right? They figured out how to bring technology to the process and were handsomely rewarded. Never mind that the cost of maintaining a county recording system is paid, in part, by the recording revenue. They still have to maintain the apparatus, but now they aren’t receiving the revenue intended to maintain the system. Of course, this comes at a time when many counties are struggling to provide necessary services to their residents.
But, as with many new ideas, there are unintended consequences that are now coming to light as state after state are enforcing basic property rights.
Monday, October 12, 2009
"Listen To What The Man Said"
And those aren't just the words from Paul McCartney's hit song of the same title...they're also words of advice for anyone who's considering buying a home or refinancing. Last week, Federal Reserve Chairman Ben Bernanke said that as the economy heals, the Fed will be very vigilant to protect against inflation. While inflation is not a problem at present...it will most certainly become a problem down the road. So why does this matter if you are considering purchasing or refinancing? Because inflation is the arch-enemy of Bondsand home loan rates, and just the knowledge of it coming has been causing both Bonds and home loan rates to worsen in recent days. Along with the fear of inflation, the Fed's purchasing program of Mortgage Backed Securities is already slowing down, with the end of their buying in sight - and the reduced demand for these Bonds is also driving homeloan rates higher. Bottom line: home loan rates are already on the rise, and we won't likely see these low historic levels again. Interest rates are still very near historic lows - George Washington couldn't have gotten a better interest rate - and the opportunity these low rates present is huge for homebuyers or people looking to refinance.
Thursday, October 8, 2009
MORTGAGE RATES: As Good As It Gets
Though the federal government's extraordinary steps to make interest rates low enough to pull reluctant homebuyers have been largely successful, some are now wondering whether it's become too much of a good thing.
"With the government now subsidizing risk by buying mortgage-backed securities and keeping rates low, buyers are almost demanding the lower rates," says Jesse Keenan, adjunct professor of housing law at the University of Miami.
But some analysts says a rise in rates could force some would-be home buyers off the fence—as has happened in the past.
"Higher rates will force people to buy," says David Dessner, director of sales at Guardhill Financial, a mortgage broker firm in Manhattan. "People will see current rates as historically low and see rising rates as a time to buy, thinking that rates will keep rising once they start up."
With rates so low in a battered economy, the only way for them to go may be up. A look at rates show how historically low they are. The average for a 30-year fixed is 5.18 percent, while the 15-year fixed 's is 4.63 percent. The 5/1 ARM is 4.21 percent.
"It's hard to imagine them going any lower," says Greg McBride, chief economist at Bankrate.
"I think people need to be worried about them going up," adds Mark Goldman, professor of real estate at San Diego State University.
In the past, the prospect of higher rates has typically led to a burst of mortgage activity, but in the current environment, particularly after the extenuating circumstances of the past two years, it's hard to say if that dynamic will play out again.
Higher rates (triggered by an apparent rebound in the economy) might drive some home buyers to sign on the dotted line, but they could also produce a marked slowdown in today's fragile housing market, say analysts.
"Higher rates put a damper on things," says Chuck Whitehead, a real estate broker with Coldwell Banker Associated Brokers in Temecula, California. "That works even for the seller. If rates go up then someone who qualifies for a loan now might not be able to with higher rates."
Current DateTime: 11:53:09 08 Oct 2009LinksList Documentid: 33117527
"Once you start increasing rates to that 6-percent mark, you take a big dent out of the market," adds Frank Nitschke, a principle at Maximus Advisors, a research group for CW Capital, a commercial real estate finance and investment management firm.
The traditional interest-rate dynamic may be different for other reasons as well this time. First- time buyers and foreclosure sales are accounting for an unusually high percentage of sales.
"They see very low prices and with the $8,000 tax credit for them about to expire (end of November) we've seen a 10 percent increase in unit sales the last six months," says David O'Neil, a broker, owner of Century 21 Spindler and O'Neil Associates in North Reading, Massachusetts.
There's been little move-up or trade-up business is many markets, especially the more expensive ones, partly because the credit applies to only first-time buyers.
"Low rates are not enough to keep the market going," says Cindy McClellan, a real estate broker in the Denver, Colorado area. "If the tax credit goes away and more jobs as well, low interest rates won't do much to help."
(The credit is set to expire Dec. 1, but there's growing speculation it will be extended or even expanded.)
"I think the market might soften," says Johnny Martinelli, broker/owner of LevyMart Real Estate Sales and Investments in Norman, Oklahoma. "The residential real estate market is starting to level out."
The slowdown may already be underway. Mortgage applications for purchases and refinancing fell on a week-to week basis in the period ending Sept. 25, despite the lowest lending rates in four months—4.81 percent for a 30 year—according to a Mortgage Bankers Association survey.. (Compared to a year ago—when the 30-year averaged 6.33 percent—applications were up some 44-percent.
Whether rates stay where they are now or move up, what happens to the housing market may turn out to be a case of psychology, says J. Andrew Hansz, director of the Gazarian Real Estate Center and professor at the Craig School of Business at Cal State University Fresno.
"Inflation and higher interest rates should encourage people to buy real estate sooner than later," says Hansz. "But real estate ownership is relatively out of favor now. In the bubble days, housing was an investment. But the sentiment has changed. Now it's a place to live. With jobs being cut, credit tight or tougher to get, consumers are not rushing into the market."
"With the government now subsidizing risk by buying mortgage-backed securities and keeping rates low, buyers are almost demanding the lower rates," says Jesse Keenan, adjunct professor of housing law at the University of Miami.
But some analysts says a rise in rates could force some would-be home buyers off the fence—as has happened in the past.
"Higher rates will force people to buy," says David Dessner, director of sales at Guardhill Financial, a mortgage broker firm in Manhattan. "People will see current rates as historically low and see rising rates as a time to buy, thinking that rates will keep rising once they start up."
With rates so low in a battered economy, the only way for them to go may be up. A look at rates show how historically low they are. The average for a 30-year fixed is 5.18 percent, while the 15-year fixed 's is 4.63 percent. The 5/1 ARM is 4.21 percent.
"It's hard to imagine them going any lower," says Greg McBride, chief economist at Bankrate.
"I think people need to be worried about them going up," adds Mark Goldman, professor of real estate at San Diego State University.
In the past, the prospect of higher rates has typically led to a burst of mortgage activity, but in the current environment, particularly after the extenuating circumstances of the past two years, it's hard to say if that dynamic will play out again.
Higher rates (triggered by an apparent rebound in the economy) might drive some home buyers to sign on the dotted line, but they could also produce a marked slowdown in today's fragile housing market, say analysts.
"Higher rates put a damper on things," says Chuck Whitehead, a real estate broker with Coldwell Banker Associated Brokers in Temecula, California. "That works even for the seller. If rates go up then someone who qualifies for a loan now might not be able to with higher rates."
Current DateTime: 11:53:09 08 Oct 2009LinksList Documentid: 33117527
"Once you start increasing rates to that 6-percent mark, you take a big dent out of the market," adds Frank Nitschke, a principle at Maximus Advisors, a research group for CW Capital, a commercial real estate finance and investment management firm.
The traditional interest-rate dynamic may be different for other reasons as well this time. First- time buyers and foreclosure sales are accounting for an unusually high percentage of sales.
"They see very low prices and with the $8,000 tax credit for them about to expire (end of November) we've seen a 10 percent increase in unit sales the last six months," says David O'Neil, a broker, owner of Century 21 Spindler and O'Neil Associates in North Reading, Massachusetts.
There's been little move-up or trade-up business is many markets, especially the more expensive ones, partly because the credit applies to only first-time buyers.
"Low rates are not enough to keep the market going," says Cindy McClellan, a real estate broker in the Denver, Colorado area. "If the tax credit goes away and more jobs as well, low interest rates won't do much to help."
(The credit is set to expire Dec. 1, but there's growing speculation it will be extended or even expanded.)
"I think the market might soften," says Johnny Martinelli, broker/owner of LevyMart Real Estate Sales and Investments in Norman, Oklahoma. "The residential real estate market is starting to level out."
The slowdown may already be underway. Mortgage applications for purchases and refinancing fell on a week-to week basis in the period ending Sept. 25, despite the lowest lending rates in four months—4.81 percent for a 30 year—according to a Mortgage Bankers Association survey.. (Compared to a year ago—when the 30-year averaged 6.33 percent—applications were up some 44-percent.
Whether rates stay where they are now or move up, what happens to the housing market may turn out to be a case of psychology, says J. Andrew Hansz, director of the Gazarian Real Estate Center and professor at the Craig School of Business at Cal State University Fresno.
"Inflation and higher interest rates should encourage people to buy real estate sooner than later," says Hansz. "But real estate ownership is relatively out of favor now. In the bubble days, housing was an investment. But the sentiment has changed. Now it's a place to live. With jobs being cut, credit tight or tougher to get, consumers are not rushing into the market."
Racing For The Homebuyer's Tax Credit? Here's Some Tips
Awareness for the First-Time Home Buyers Credit is high, but some perspective buyers are nevertheless confused as to whether they can qualify.
“Any time you talk about taxes it’s confusing,” Bob Meighan, vice president of TurboTax. “All these specific detailed rules can drive anyone crazy.”
The tax credit—which was designed to help stabilize the housing market—has first-time home buyers rushing to close on homes before the Dec. 1, 2009 deadline.
The tax credit, however, has generated sales. So much so that the real estate and housing industries are pushing for an extension of the program as well as an expansion that would not only increase the value of the credit to $15,000 credit but have it apply to all primary-residence buyers.
“Upwards of 50 percent of our sales are because of the tax credit,” says Diann Patton, sales manager and broker at Coldwell Banker Grass Roots Realty in Northern California.
The Internal Revenue Service announced this month that 1.4 million taxpayers have taken advantage of the program so far, and more are expected. The National Association of Realtors estimates that the credit will generate an extra 350,000 sales that would have otherwise not taken place. Overall, the organization expects that 1.8 to 2.0 million taxpayers will take advantage of the credit.
And, according to a survey by real estate Web site Zillow.com, nearly 18 percent of prospective first-time home buyers said extending the tax credit would be the primary factor in their decision to buy a home before the end of 2010.
But don't hold your breath. Experts say if you are planning to buy a home, waiting to see if the program is extended will backfire if it doesn't pass. Then, you're left with nothing.
If you’re considering buying a home, here’s a few tips from experts on common questions:
It doesn’t necessarily have to be your first house: "The First-Time Home Buyer’s Credit is a bit of a misnomer,” said Meighan.
You can have owned a primary home in the past, but just not within the past three years.
If you own either a vacation home or rental property and do not live in it, you still qualify too.
Income limitations: If you’re single, the amount of the tax credit you get begins to phase out by 5 percent for every $1,000 of income you earn over $75,000. For example, lets say you are eligible for an $8,000 credit and you earn $76,000 a year, $400 is shaved off the credit. Some one who makes $77,000 gets $800 taken off that credit, and so on. Any single person earning over $95,000 doesn’t qualify for the credit.
Married couples see the amount of their tax credit begin to phase out in the same way after they both earn over $150,000. The cutoff is $170,000 per couple.
Another tip: if you made too much money this year to qualify, but made below the cutoff limit last year, you can amend last year’s taxes, says CPA Fran Coet of Coet & Coet.
She offered the example of two married clients who graduated from college last year but made over $170,000 in 2009. They amended their taxes from last year because they worked only worked six months in 2008, allowing them to receive the credit.
Married couples cancel themselves out: If one person in a marriage qualifies, and the other doesn't, they both won't get the tax credit.
iStockphoto
However, if an unmarried couple buys a house together and one of them doesn't qualify, the qualifying person gets the full credit amount.
Unmarried and married couples who both qualify will share the credit and will not exceed $8,000 for the both of them.
Not always $8,000: It’s commonly referred to as the $8,000 tax credit, but the actual credit allotted is 10 percent of the home value or $8,000, whichever is less. So homes under $80,000 will get back a 10 percent tax credit.
Not just for homes: “There’s a lot of focus on the home…but an RV or motor home qualifies as well,” said Meighan, who is also a certified public accountant. Besides RVs and motor homes, he says that you can qualify even if you buy a houseboat, as long as they are used as primary residences.
Paying it back: If you move out of the home within three years of buying it, you have to pay back the credit you received.
Slow down: Real estate agents and sellers might put pressure on you to make a buy before the deadline, but Coet warns, “Don’t go and make a bad decision.”
The tax credit may be tempting, but making a purchase without doing enough research can cost you more.
“Any time you talk about taxes it’s confusing,” Bob Meighan, vice president of TurboTax. “All these specific detailed rules can drive anyone crazy.”
The tax credit—which was designed to help stabilize the housing market—has first-time home buyers rushing to close on homes before the Dec. 1, 2009 deadline.
The tax credit, however, has generated sales. So much so that the real estate and housing industries are pushing for an extension of the program as well as an expansion that would not only increase the value of the credit to $15,000 credit but have it apply to all primary-residence buyers.
“Upwards of 50 percent of our sales are because of the tax credit,” says Diann Patton, sales manager and broker at Coldwell Banker Grass Roots Realty in Northern California.
The Internal Revenue Service announced this month that 1.4 million taxpayers have taken advantage of the program so far, and more are expected. The National Association of Realtors estimates that the credit will generate an extra 350,000 sales that would have otherwise not taken place. Overall, the organization expects that 1.8 to 2.0 million taxpayers will take advantage of the credit.
And, according to a survey by real estate Web site Zillow.com, nearly 18 percent of prospective first-time home buyers said extending the tax credit would be the primary factor in their decision to buy a home before the end of 2010.
But don't hold your breath. Experts say if you are planning to buy a home, waiting to see if the program is extended will backfire if it doesn't pass. Then, you're left with nothing.
If you’re considering buying a home, here’s a few tips from experts on common questions:
It doesn’t necessarily have to be your first house: "The First-Time Home Buyer’s Credit is a bit of a misnomer,” said Meighan.
You can have owned a primary home in the past, but just not within the past three years.
If you own either a vacation home or rental property and do not live in it, you still qualify too.
Income limitations: If you’re single, the amount of the tax credit you get begins to phase out by 5 percent for every $1,000 of income you earn over $75,000. For example, lets say you are eligible for an $8,000 credit and you earn $76,000 a year, $400 is shaved off the credit. Some one who makes $77,000 gets $800 taken off that credit, and so on. Any single person earning over $95,000 doesn’t qualify for the credit.
Married couples see the amount of their tax credit begin to phase out in the same way after they both earn over $150,000. The cutoff is $170,000 per couple.
Another tip: if you made too much money this year to qualify, but made below the cutoff limit last year, you can amend last year’s taxes, says CPA Fran Coet of Coet & Coet.
She offered the example of two married clients who graduated from college last year but made over $170,000 in 2009. They amended their taxes from last year because they worked only worked six months in 2008, allowing them to receive the credit.
Married couples cancel themselves out: If one person in a marriage qualifies, and the other doesn't, they both won't get the tax credit.
iStockphoto
However, if an unmarried couple buys a house together and one of them doesn't qualify, the qualifying person gets the full credit amount.
Unmarried and married couples who both qualify will share the credit and will not exceed $8,000 for the both of them.
Not always $8,000: It’s commonly referred to as the $8,000 tax credit, but the actual credit allotted is 10 percent of the home value or $8,000, whichever is less. So homes under $80,000 will get back a 10 percent tax credit.
Not just for homes: “There’s a lot of focus on the home…but an RV or motor home qualifies as well,” said Meighan, who is also a certified public accountant. Besides RVs and motor homes, he says that you can qualify even if you buy a houseboat, as long as they are used as primary residences.
Paying it back: If you move out of the home within three years of buying it, you have to pay back the credit you received.
Slow down: Real estate agents and sellers might put pressure on you to make a buy before the deadline, but Coet warns, “Don’t go and make a bad decision.”
The tax credit may be tempting, but making a purchase without doing enough research can cost you more.
Thursday, October 1, 2009
Builder Confidence Edges Up Again in September
September 16, 2009 - Builder confidence in the market for newly built, single-family homes edged higher for a third consecutive month in September, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today. The HMI rose one point to 19 this month, its highest level since May of 2008.
“Builders are seeing some improvement in buyer demand as a result of the first-time home buyer tax credit, and low mortgage rates and strong housing affordability have also helped to revive some optimism,” noted Joe Robson, chairman of the National Association of Home Builders (NAHB) and a home builder from Tulsa, Okla. “However, the window is now basically closed for being able to start a new home that can be completed in time for buyers to take advantage of the tax credit before it expires at the end of November, and builders are concerned about what will keep the market moving once the credit is gone. Congress needs to act now to keep the credit from expiring just as its intended effect on buyer demand is starting to materialize.”
“Today’s report indicates that builders are starting to see some glimmers of light at the end of the tunnel in terms of improving sales activity,” said NAHB Chief Economist David Crowe. “However, the fact that the HMI component gauging sales expectations for the next six months slipped backward this month is a sign of their awareness that this is a very fragile recovery period and several major hurdles remain that could stifle the positive momentum. Those hurdles include the impending expiration of the $8,000 tax credit as well as the critical lack of credit for housing production loans and continuing problems with low appraisals that are sinking one quarter of all new-home sales. These concerns need to be addressed if we are to embark on a sustained housing recovery that will help bolster economic growth.”
Derived from a monthly survey that NAHB has been conducting for more than 20 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor.
Two out of three of the HMI’s component indexes recorded gains in September. The index gauging current sales conditions rose two points to 18, while the index gauging traffic of prospective buyers rose one point, to 17. Meanwhile, the index gauging sales expectations for the next six months declined one point, to 29.
All four regions posted gains in their HMI readings for September. The biggest improvement was registered in the Midwest, where a three-point gain brought its HMI to 19, the highest level since July of 2007. The Northeast posted a two-point gain to 24, the South posted a two-point gain to 19, and the West posted a one-point gain to 18, respectively.
“Builders are seeing some improvement in buyer demand as a result of the first-time home buyer tax credit, and low mortgage rates and strong housing affordability have also helped to revive some optimism,” noted Joe Robson, chairman of the National Association of Home Builders (NAHB) and a home builder from Tulsa, Okla. “However, the window is now basically closed for being able to start a new home that can be completed in time for buyers to take advantage of the tax credit before it expires at the end of November, and builders are concerned about what will keep the market moving once the credit is gone. Congress needs to act now to keep the credit from expiring just as its intended effect on buyer demand is starting to materialize.”
“Today’s report indicates that builders are starting to see some glimmers of light at the end of the tunnel in terms of improving sales activity,” said NAHB Chief Economist David Crowe. “However, the fact that the HMI component gauging sales expectations for the next six months slipped backward this month is a sign of their awareness that this is a very fragile recovery period and several major hurdles remain that could stifle the positive momentum. Those hurdles include the impending expiration of the $8,000 tax credit as well as the critical lack of credit for housing production loans and continuing problems with low appraisals that are sinking one quarter of all new-home sales. These concerns need to be addressed if we are to embark on a sustained housing recovery that will help bolster economic growth.”
Derived from a monthly survey that NAHB has been conducting for more than 20 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor.
Two out of three of the HMI’s component indexes recorded gains in September. The index gauging current sales conditions rose two points to 18, while the index gauging traffic of prospective buyers rose one point, to 17. Meanwhile, the index gauging sales expectations for the next six months declined one point, to 29.
All four regions posted gains in their HMI readings for September. The biggest improvement was registered in the Midwest, where a three-point gain brought its HMI to 19, the highest level since July of 2007. The Northeast posted a two-point gain to 24, the South posted a two-point gain to 19, and the West posted a one-point gain to 18, respectively.
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