March 24, 2010 - Sales of newly built, single-family homes fell 2.2 percent in February to a seasonally adjusted annual rate of 308,000 units, the Commerce Department reported today. While this figure marked a new record low for overall sales activity, only one region (the South) hit its own record low.
“The very slow pace of new-home sales in February was partly due to unusually poor weather conditions, but was also tied to consumers’ ongoing concerns about the poor job market and sluggish economy,” said Bob Jones, chairman of the National Association of Home Builders (NAHB) and a home builder from Bloomfield Hills, Mich.
“Unusually bad weather certainly played a role in the large regional declines depicted in today’s new-home sales report,” agreed NAHB Chief Economist David Crowe. “In addition, many potential buyers remained nervous about their job security and their ability to qualify for a mortgage in light of tight underwriting standards. That said, we are still expecting to see some improvement in consumer demand as the deadline for taking advantage of home buyer tax credits nears. Going forward, other factors such as pent-up demand, new household formations among echo-boomers and excellent affordability conditions will support a 20 percent gain in new-home sales this year compared to 2009.”
While nationwide home sales fell to a record low in February, two out of four regions actually posted gains and all but the South remained above their record lows. Sales inched up 2 percent in the Midwest and 20.8 percent in the West, but declined by a respective 20 percent and 4.6 percent in the storm-battered Northeast and South.
The nationwide inventory of new homes on the market rose by a marginal 1.3 percent in February, to 236,000 units. Due to the slower sales pace, the month’s supply of new homes for sale rose from 8.9 in January to 9.2 in February.
Wednesday, March 24, 2010
Tuesday, March 23, 2010
New Fannie Mae, Freddie Mac Structures Should Ensure Availability of Mortgage Capital and Protect Taxpayer Dollars, Says NAR
Government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac should be restructured as government-chartered, non-shareholder owned authorities, the National Association of Realtors® said in congressional testimony today.
“We want to ensure a flow of capital into the mortgage market regardless of the state of the market or economy,” Vince Malta, NAR vice president and liaison to government affairs, testified to the House Financial Services Committee. “The new Fannie and Freddie must ensure there is always mortgage capital available for creditworthy buyers and that taxpayer dollars are protected.”
In outlining NAR’s proposal, Malta cautioned Congress and the administration about moving too quickly in restructuring the GSEs. “The housing recovery is still too fragile for the government to completely step away, and any disruption in the marketplace now by doing something too radical would be harmful,” he said. “Our goal is to help Congress and our industry design a secondary mortgage model that will serve America’s best interest today, and in the future.”
Neither a fully privatized entity nor a fully nationalized structure for the secondary mortgage market giants effectively addresses the critical issues of loan availability and taxpayer protection, he said. A fully private entity would foster mortgage products more aligned with business goals rather than the nation’s housing policy for consumers. “In difficult markets, like today’s, private lenders have not been willing to make loans without government backing,” said Malta.
A fully federal structure would put taxpayers at risk. “We want to eliminate any scenario that would place taxpayers on the hook to protect these entities. And to combine the two, or merge them with Ginnie Mae, would remove competition in the secondary market, and the new entity could lose focus on it missions to serve low- and moderate-income families and maintain liquidity in the mortgage markets,” he said.
The new authorities should be subject to tighter regulations on products, profitability and minimal, retained portfolio practices in a way to ensure protection of taxpayer monies. The new entities would also concentrate on standard mortgage products that are the foundation of the housing finance market.
“While that might curtail some private participation and alternative products in this market, we believe privates will offer innovations that meet consumer needs. The new entities would focus on safe mortgage products, including 15- and 30-year fixed rate mortgages and traditional adjustable rate mortgages.”
“We want to ensure a flow of capital into the mortgage market regardless of the state of the market or economy,” Vince Malta, NAR vice president and liaison to government affairs, testified to the House Financial Services Committee. “The new Fannie and Freddie must ensure there is always mortgage capital available for creditworthy buyers and that taxpayer dollars are protected.”
In outlining NAR’s proposal, Malta cautioned Congress and the administration about moving too quickly in restructuring the GSEs. “The housing recovery is still too fragile for the government to completely step away, and any disruption in the marketplace now by doing something too radical would be harmful,” he said. “Our goal is to help Congress and our industry design a secondary mortgage model that will serve America’s best interest today, and in the future.”
Neither a fully privatized entity nor a fully nationalized structure for the secondary mortgage market giants effectively addresses the critical issues of loan availability and taxpayer protection, he said. A fully private entity would foster mortgage products more aligned with business goals rather than the nation’s housing policy for consumers. “In difficult markets, like today’s, private lenders have not been willing to make loans without government backing,” said Malta.
A fully federal structure would put taxpayers at risk. “We want to eliminate any scenario that would place taxpayers on the hook to protect these entities. And to combine the two, or merge them with Ginnie Mae, would remove competition in the secondary market, and the new entity could lose focus on it missions to serve low- and moderate-income families and maintain liquidity in the mortgage markets,” he said.
The new authorities should be subject to tighter regulations on products, profitability and minimal, retained portfolio practices in a way to ensure protection of taxpayer monies. The new entities would also concentrate on standard mortgage products that are the foundation of the housing finance market.
“While that might curtail some private participation and alternative products in this market, we believe privates will offer innovations that meet consumer needs. The new entities would focus on safe mortgage products, including 15- and 30-year fixed rate mortgages and traditional adjustable rate mortgages.”
Monday, March 22, 2010
Single-Family Starts Hold Firm In February
The pace of single-family home production remained virtually unchanged in February, with a 0.6 percent decline to a seasonally adjusted annual rate of 499,000 units, according to figures released today by the U.S. Commerce Department. Meanwhile, a large decline on the more volatile multifamily side brought the overall number of housing starts down 5.9 percent to a seasonally adjusted annual rate of 575,000 units.
“Today’s single-family numbers are fairly encouraging, in that the level of building activity held firm even as large portions of the country experienced abnormal weather conditions,” noted Bob Jones, chairman of the National Association of Home Builders (NAHB) and a home builder from Bloomfield Hills, Mich.
“This latest data indicates that the single-family sector is gradually finding more stable ground, particularly in light of the poor weather conditions that hampered new building activity in two out of four regions last month and the continued difficulties that builders faced in accessing financing for new projects,” said NAHB Chief Economist David Crowe. “With the deadline for purchasers to take advantage of home buyer tax credits fast approaching at the end of April, improvement in single-family building activity was expected and may have continued into early March. Moreover, the very thin inventory of new homes now on the market, the pent-up demand from three-plus years of low household formations and good affordability conditions will provide the platform for a 25 percent gain in new-home construction in 2010 over 2009.”
While the combined pace of single- and multifamily housing starts fell 5.9 percent to 575,000 units in February, that decline was mostly due to a 30.3 percent dip in multifamily starts to a 76,000-unit pace following a double-digit increase on that side in the previous month. Meanwhile, single-family starts held virtually even, with a 0.6 percent decline to a 499,000-unit pace.
On a regional basis, combined starts activity declined 9.6 percent in the Northeast and 15.5 percent in the South, where unusually poor weather conditions were a factor in February. Meanwhile, starts activity posted gains of 14.3 percent in the Midwest and 7.9 percent in the West.
Permit issuance, which can be an indicator of future building activity, declined 1.6 percent overall to a seasonally adjusted annual rate of 612,000 units in February. This reflected a statistically insignificant 0.2 percent decline to 503,000 units on the single-family side and a 7.6 percent decline to 109,000 units on the multifamily side.
Regionally, permit issuance was mixed in February, with the Northeast posting no change, the Midwest posting an 11.7 percent gain, the South registering a 5.8 percent decline and the West recording a 2.1 percent decline.
“Today’s single-family numbers are fairly encouraging, in that the level of building activity held firm even as large portions of the country experienced abnormal weather conditions,” noted Bob Jones, chairman of the National Association of Home Builders (NAHB) and a home builder from Bloomfield Hills, Mich.
“This latest data indicates that the single-family sector is gradually finding more stable ground, particularly in light of the poor weather conditions that hampered new building activity in two out of four regions last month and the continued difficulties that builders faced in accessing financing for new projects,” said NAHB Chief Economist David Crowe. “With the deadline for purchasers to take advantage of home buyer tax credits fast approaching at the end of April, improvement in single-family building activity was expected and may have continued into early March. Moreover, the very thin inventory of new homes now on the market, the pent-up demand from three-plus years of low household formations and good affordability conditions will provide the platform for a 25 percent gain in new-home construction in 2010 over 2009.”
While the combined pace of single- and multifamily housing starts fell 5.9 percent to 575,000 units in February, that decline was mostly due to a 30.3 percent dip in multifamily starts to a 76,000-unit pace following a double-digit increase on that side in the previous month. Meanwhile, single-family starts held virtually even, with a 0.6 percent decline to a 499,000-unit pace.
On a regional basis, combined starts activity declined 9.6 percent in the Northeast and 15.5 percent in the South, where unusually poor weather conditions were a factor in February. Meanwhile, starts activity posted gains of 14.3 percent in the Midwest and 7.9 percent in the West.
Permit issuance, which can be an indicator of future building activity, declined 1.6 percent overall to a seasonally adjusted annual rate of 612,000 units in February. This reflected a statistically insignificant 0.2 percent decline to 503,000 units on the single-family side and a 7.6 percent decline to 109,000 units on the multifamily side.
Regionally, permit issuance was mixed in February, with the Northeast posting no change, the Midwest posting an 11.7 percent gain, the South registering a 5.8 percent decline and the West recording a 2.1 percent decline.
Wednesday, March 17, 2010
Pending Home Sales Down; Severe Weather Impacting Market
Pending home sales are down and additional declines are expected from abnormal weather conditions, according to the National Association of Realtors®.
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in January, fell 7.6 percent to 90.4 from an upwardly revised 97.8 in December, but remains 12.3 percent higher than January 2009 when it was 80.5.
Lawrence Yun, NAR chief economist, said weather is likely to impact housing data. “January pending sales, though still higher than one year ago, remain much lower than expected given that a large number of potential buyers are eligible for the expanded home buyer tax credit. Moreover, the abnormally severe and prolonged winter weather, which affected large regions of the U.S., hampered shopping activity in February,” he said.
As such, abnormal swings are expected in housing data. “We will see weak near-term sales followed by a likely surge of existing-home sales in April, May and June,” Yun said. “The real question is what happens in the second half of the year. If there is sufficient job creation, housing can become self-sustaining with stable to modestly rising home prices because inventory has been trending downward.”
The PHSI in the Northeast fell 8.7 percent to 71.3 in January but is 20.5 percent higher than January 2009. In the Midwest the index dropped 8.9 percent to 81.2 but is 11.8 percent above a year ago. Pending home sales in the South slipped 2.1 percent to an index of 98.1, but the index is 18.0 percent higher than January 2009. In the West the index dropped 13.2 percent to 102.9 but is 1.4 percent above a year ago.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in January, fell 7.6 percent to 90.4 from an upwardly revised 97.8 in December, but remains 12.3 percent higher than January 2009 when it was 80.5.
Lawrence Yun, NAR chief economist, said weather is likely to impact housing data. “January pending sales, though still higher than one year ago, remain much lower than expected given that a large number of potential buyers are eligible for the expanded home buyer tax credit. Moreover, the abnormally severe and prolonged winter weather, which affected large regions of the U.S., hampered shopping activity in February,” he said.
As such, abnormal swings are expected in housing data. “We will see weak near-term sales followed by a likely surge of existing-home sales in April, May and June,” Yun said. “The real question is what happens in the second half of the year. If there is sufficient job creation, housing can become self-sustaining with stable to modestly rising home prices because inventory has been trending downward.”
The PHSI in the Northeast fell 8.7 percent to 71.3 in January but is 20.5 percent higher than January 2009. In the Midwest the index dropped 8.9 percent to 81.2 but is 11.8 percent above a year ago. Pending home sales in the South slipped 2.1 percent to an index of 98.1, but the index is 18.0 percent higher than January 2009. In the West the index dropped 13.2 percent to 102.9 but is 1.4 percent above a year ago.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.
Thursday, March 4, 2010
Existing-Home Sales Down in January 2010 but Higher Than Year Ago
Existing-home sales fell in January 2010 but are above year-ago levels, according to the National Association of Realtors. Existing-home sales- including single-family, townhomes, condominiums and co-ops- dropped 7.2% to a seasonally adjusted annual rate of 5.05 million units in January from a revised 5.44 million in December, but remain 11.5% above the 4.53 million-unit level in January 2009.
Lawrence Yun, NAR chief economist, said there is still some delay between shopping and closing that affected current sales. “Most of the completed deals in January were based on contracts in November and December. People who got into the market after the home buyer tax credit was extended in November have only recently started to offer contracts, so it will take a couple months to close those sales,” he said. “Still, the latest monthly sales decline is not encouraging, and raises concern about the strength of a recovery.”
Total housing inventory at the end of January fell 0.5% to 3.27 million existing homes available for sale, which represents a 7.8-month supply at the current sales pace, up from a 7.2-month supply in December. Raw unsold inventory is 9.6% below a year ago, and is at the lowest level since March 2006.
“Activity should be picking up strongly in late spring as buyers take advantage of the tax credit, which is critical to absorb distressed properties reaching the market and to continually chip away at inventory,” Yun said. “With a downtrend in the number of homes on the market, especially in the lower price ranges, values are beginning to firm but with great variance around the country.”
The national median existing-home price for all housing types was $164,700 in January, unchanged from a year earlier. Distressed homes, which accounted for 38% of sales last month, continue to downwardly distort the median price because they typically are discounted in comparison with traditional homes in the same area.
A parallel NAR practitioner survey shows first-time buyers purchased 40% of homes in January, down from 43% in December. Investors accounted for 17% of transactions in January, up from 15% in December; the remaining sales were to repeat buyers. The survey also shows that buyer traffic increased 9.4% in January.
NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz., said buying a home in the current environment has become more challenging. “First-time buyers and others who need a mortgage are increasingly losing out to all-cash investors for the best bargains in many areas, particularly for foreclosed homes where cash is king,” she said. “Inventory conditions vary by price range, and of course there are major differences depending on location. Realtors are the best buyer resource for strategies on winning bids in increasingly competitive markets,” Golder said. “The bidding for more desirable homes will only accelerate between now and the April 30 contract deadline to qualify for a tax credit of up to $8,000.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage edged up to 5.03% in January from 4.93% in December; the rate was 5.05% in January 2009.
Single-family home sales fell 6.9% to a seasonally adjusted annual rate of 4.43 million in January from a level of 4.76 million in December, but are 8.6% above the 4.08 million pace in January 2009. The median existing single-family home price was $163,600 in January, down 0.4% from a year ago.
Existing condominium and co-op sales dropped 8.1% to a seasonally adjusted annual rate of 620,000 in January from 675,000 in December, but are 38.1% above the 449,000-unit level a year ago. The median existing condo price was $172,400 in January, which is 1.4 % higher than January 2009.
Lawrence Yun, NAR chief economist, said there is still some delay between shopping and closing that affected current sales. “Most of the completed deals in January were based on contracts in November and December. People who got into the market after the home buyer tax credit was extended in November have only recently started to offer contracts, so it will take a couple months to close those sales,” he said. “Still, the latest monthly sales decline is not encouraging, and raises concern about the strength of a recovery.”
Total housing inventory at the end of January fell 0.5% to 3.27 million existing homes available for sale, which represents a 7.8-month supply at the current sales pace, up from a 7.2-month supply in December. Raw unsold inventory is 9.6% below a year ago, and is at the lowest level since March 2006.
“Activity should be picking up strongly in late spring as buyers take advantage of the tax credit, which is critical to absorb distressed properties reaching the market and to continually chip away at inventory,” Yun said. “With a downtrend in the number of homes on the market, especially in the lower price ranges, values are beginning to firm but with great variance around the country.”
The national median existing-home price for all housing types was $164,700 in January, unchanged from a year earlier. Distressed homes, which accounted for 38% of sales last month, continue to downwardly distort the median price because they typically are discounted in comparison with traditional homes in the same area.
A parallel NAR practitioner survey shows first-time buyers purchased 40% of homes in January, down from 43% in December. Investors accounted for 17% of transactions in January, up from 15% in December; the remaining sales were to repeat buyers. The survey also shows that buyer traffic increased 9.4% in January.
NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz., said buying a home in the current environment has become more challenging. “First-time buyers and others who need a mortgage are increasingly losing out to all-cash investors for the best bargains in many areas, particularly for foreclosed homes where cash is king,” she said. “Inventory conditions vary by price range, and of course there are major differences depending on location. Realtors are the best buyer resource for strategies on winning bids in increasingly competitive markets,” Golder said. “The bidding for more desirable homes will only accelerate between now and the April 30 contract deadline to qualify for a tax credit of up to $8,000.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage edged up to 5.03% in January from 4.93% in December; the rate was 5.05% in January 2009.
Single-family home sales fell 6.9% to a seasonally adjusted annual rate of 4.43 million in January from a level of 4.76 million in December, but are 8.6% above the 4.08 million pace in January 2009. The median existing single-family home price was $163,600 in January, down 0.4% from a year ago.
Existing condominium and co-op sales dropped 8.1% to a seasonally adjusted annual rate of 620,000 in January from 675,000 in December, but are 38.1% above the 449,000-unit level a year ago. The median existing condo price was $172,400 in January, which is 1.4 % higher than January 2009.
Saturday, February 20, 2010
How Soon Until U.S. Withdraws Mortgage Market Support?
Uncle Sam is trying to get out of the business of running the U.S. mortgage market. The trick will be withdrawing support without toppling the nation’s fragile housing recovery in the process.
The government rescued the sector last year with a series of unprecedented measures that staved off a catastrophic collapse, including pumping more than $1 trillion into home loans. But Washington now has effective control of the housing market, either owning or guaranteeing an estimated 9 out of 10 new mortgages.
That has critics worried that the government has asserted too much control over a critical segment of the economy while inflating the federal deficit at what some consider an alarming pace. Pressure is building on the Obama administration to scale back a variety of stimulus efforts.
Federal Reserve Chairman Ben S. Bernanke recently outlined a broad strategy for eventually tightening credit. He talked only vaguely about when the central bank might act, sprinkling his remarks with phrases such as ‘in due course’ and ‘at some point.’ “We have spent considerable effort in developing the tools we will need to remove policy accommodation, and we are fully confident that at the appropriate time we will be able to do so effectively,” he said.
For the housing market, the plan to scale back support carries an inherent risk: that it could stall the very housing recovery that the government has worked so feverishly to jump-start. “We understand that stimulus can’t continue forever, but at the same time, trying to get the housing market back on track is key to a broader economic recovery,” said Lawrence Yun, chief economist for the National Association of Realtors. “This policy is having that intended impact. Policymakers should be cautious about how soon to end it.”
The Fed plans to end a $1.25-trillion mortgage-bond-purchase program that has helped keep mortgage interest rates near a record-low 5% next month. The Fed has been buying virtually all the mortgage bonds churned out by mortgage giants Fannie Mae and Freddie Mac, replacing private investors such as pension funds and mutual funds that have shied away since the subprime mortgage crisis. That exit is expected to push up rates, which could weigh on buyers at a time of high unemployment and anemic consumer spending.
The Mortgage Bankers Association, an industry trade group, predicts the end of the Fed mortgage-bond program could push rates up by roughly 0.5 %. For a $500,000 fixed-rate mortgage, that would increase the monthly payment by $155.
Even a moderate rise could push potential buyers out of the market.
Higher rates could force many others to recalculate where to live or what to purchase. “If those rates jump up to 5.5% or 6%, then buyers can’t qualify for what they thought they could qualify for, and they’re not going to be able to buy as much house as they thought they could,” said Frank Drury, a loan originator at Cobalt Financial Corp. in Huntington Beach, Calif.
A popular home buyer’s tax credit is scheduled to lapse at the end of April. It provides tax breaks of up to $8,000 to first-time buyers and up to $6,500 for some homeowners who move up to middle-market homes costing up to $800,000. The credits were originally scheduled to lapse in November 2009, but were extended over concerns that home sales would slow without the incentive.
There is already evidence that could occur. In December 2009, home resales skidded almost 17% after buyers sped up their purchases the month before to make sure they qualified for the subsidy before the expiration of the original deadline.
Even with the elimination of the programs, the government would remain deeply involved in housing and would maintain several key pillars that have propped up the market. Those include expanded Federal Housing Administration programs, as well as enhanced support of Fannie Mae and Freddie Mac.
Still, “it is one of what will ultimately be many steps by the government to start to take back its unprecedented support for the housing and mortgage markets,” said Thomas A. Lawler, founder of research firm Lawler Economic & Housing Consulting. “There will be more.”
Ending the Fed’s near-total control of the market could help spur investors to reenter the market. “My sense is government officials desperately want to get out of this program,” said Keith Gumbinger, vice president at mortgage research firm HSH Associates. “The longer this goes on, the less likely that the private marketplace will jump back in anytime soon.”
Falling rates have lured buyers. In Southern California, for example, sales rose 16.4% in December from the previous month and 12.1% from December 2008, according to MDA DataQuick, a San Diego real estate research firm. The Fed’s purchase of “mortgage-backed securities has helped a great deal, and I hope they keep doing it,” said Laura Zajdman, an agent at ZipRealty in Culver City, Calif.
The combination of many factors, including a slowly improving economy, will probably push rates slowly higher, some experts say. “I really think the odds-on bet is that rates are near their lows and they’re more likely to slowly go up from here,” said Walt Schmidt, a mortgage-bond strategist at investment firm FTN Financial in Chicago.
The government rescued the sector last year with a series of unprecedented measures that staved off a catastrophic collapse, including pumping more than $1 trillion into home loans. But Washington now has effective control of the housing market, either owning or guaranteeing an estimated 9 out of 10 new mortgages.
That has critics worried that the government has asserted too much control over a critical segment of the economy while inflating the federal deficit at what some consider an alarming pace. Pressure is building on the Obama administration to scale back a variety of stimulus efforts.
Federal Reserve Chairman Ben S. Bernanke recently outlined a broad strategy for eventually tightening credit. He talked only vaguely about when the central bank might act, sprinkling his remarks with phrases such as ‘in due course’ and ‘at some point.’ “We have spent considerable effort in developing the tools we will need to remove policy accommodation, and we are fully confident that at the appropriate time we will be able to do so effectively,” he said.
For the housing market, the plan to scale back support carries an inherent risk: that it could stall the very housing recovery that the government has worked so feverishly to jump-start. “We understand that stimulus can’t continue forever, but at the same time, trying to get the housing market back on track is key to a broader economic recovery,” said Lawrence Yun, chief economist for the National Association of Realtors. “This policy is having that intended impact. Policymakers should be cautious about how soon to end it.”
The Fed plans to end a $1.25-trillion mortgage-bond-purchase program that has helped keep mortgage interest rates near a record-low 5% next month. The Fed has been buying virtually all the mortgage bonds churned out by mortgage giants Fannie Mae and Freddie Mac, replacing private investors such as pension funds and mutual funds that have shied away since the subprime mortgage crisis. That exit is expected to push up rates, which could weigh on buyers at a time of high unemployment and anemic consumer spending.
The Mortgage Bankers Association, an industry trade group, predicts the end of the Fed mortgage-bond program could push rates up by roughly 0.5 %. For a $500,000 fixed-rate mortgage, that would increase the monthly payment by $155.
Even a moderate rise could push potential buyers out of the market.
Higher rates could force many others to recalculate where to live or what to purchase. “If those rates jump up to 5.5% or 6%, then buyers can’t qualify for what they thought they could qualify for, and they’re not going to be able to buy as much house as they thought they could,” said Frank Drury, a loan originator at Cobalt Financial Corp. in Huntington Beach, Calif.
A popular home buyer’s tax credit is scheduled to lapse at the end of April. It provides tax breaks of up to $8,000 to first-time buyers and up to $6,500 for some homeowners who move up to middle-market homes costing up to $800,000. The credits were originally scheduled to lapse in November 2009, but were extended over concerns that home sales would slow without the incentive.
There is already evidence that could occur. In December 2009, home resales skidded almost 17% after buyers sped up their purchases the month before to make sure they qualified for the subsidy before the expiration of the original deadline.
Even with the elimination of the programs, the government would remain deeply involved in housing and would maintain several key pillars that have propped up the market. Those include expanded Federal Housing Administration programs, as well as enhanced support of Fannie Mae and Freddie Mac.
Still, “it is one of what will ultimately be many steps by the government to start to take back its unprecedented support for the housing and mortgage markets,” said Thomas A. Lawler, founder of research firm Lawler Economic & Housing Consulting. “There will be more.”
Ending the Fed’s near-total control of the market could help spur investors to reenter the market. “My sense is government officials desperately want to get out of this program,” said Keith Gumbinger, vice president at mortgage research firm HSH Associates. “The longer this goes on, the less likely that the private marketplace will jump back in anytime soon.”
Falling rates have lured buyers. In Southern California, for example, sales rose 16.4% in December from the previous month and 12.1% from December 2008, according to MDA DataQuick, a San Diego real estate research firm. The Fed’s purchase of “mortgage-backed securities has helped a great deal, and I hope they keep doing it,” said Laura Zajdman, an agent at ZipRealty in Culver City, Calif.
The combination of many factors, including a slowly improving economy, will probably push rates slowly higher, some experts say. “I really think the odds-on bet is that rates are near their lows and they’re more likely to slowly go up from here,” said Walt Schmidt, a mortgage-bond strategist at investment firm FTN Financial in Chicago.
Wednesday, February 17, 2010
Housing Starts Rise in January
Nationwide housing production hit its strongest pace in the last six months this January, posting a 2.8 percent gain to a seasonally adjusted annual rate of 591,000 units, according to figures released today by the U.S. Commerce Department.
“Builders are starting to see the positive impacts of home buyer tax credits and other favorable buying conditions in terms of consumer demand, and are cautiously increasing production to meet that demand,” said National Association of Home Builders (NAHB) Chairman Bob Jones, a home builder from Bloomfield Hills, Mich.
“As our latest home builder surveys have indicated, today’s excellent home buying conditions – including the availability of tax credits for first-time and repeat buyers, very favorable mortgage rates and stabilizing home values – are helping drive potential buyers back to the market,” said NAHB Chief Economist David Crowe. However, he said, “A continuing shortfall in available credit for building projects is still producing a drag on new construction and slowing the progress of recovery in housing and the overall economy.”
The overall gain in housing starts was reflected on both the single- and multi-family side this January. While single-family starts posted a 1.5 percent gain to a seasonally adjusted, annual rate of 484,000 units, multifamily starts posted a 9.2 percent gain to 107,000 units.
Meanwhile, overall permit issuance, which can be an indicator of future building activity, fell 4.9 percent to a rate of 621,000 units in January. This was due entirely to a 23 percent decline to 114,000 units on the multifamily side, which offset a big gain in that sector the previous month. Single-family permits held virtually even, with a 0.4 percent gain to 507,000 units.
Combined single- and multifamily housing starts rose in three out of four regions this January. The South and West each registered a third consecutive month of improvement, with 1 percent and 8.9 percent gains, respectively, and the Northeast also posted a 10 percent gain. The Midwest saw a 3.2 percent decline in overall housing starts.
Conversely, permit issuance declined in three out of four regions this January. The West was the only region to post a gain, of 8.5 percent, while declines of 17.8 percent, 20.2 percent and 1.3 percent were registered in the Northeast, Midwest and South, respectively.
“Builders are starting to see the positive impacts of home buyer tax credits and other favorable buying conditions in terms of consumer demand, and are cautiously increasing production to meet that demand,” said National Association of Home Builders (NAHB) Chairman Bob Jones, a home builder from Bloomfield Hills, Mich.
“As our latest home builder surveys have indicated, today’s excellent home buying conditions – including the availability of tax credits for first-time and repeat buyers, very favorable mortgage rates and stabilizing home values – are helping drive potential buyers back to the market,” said NAHB Chief Economist David Crowe. However, he said, “A continuing shortfall in available credit for building projects is still producing a drag on new construction and slowing the progress of recovery in housing and the overall economy.”
The overall gain in housing starts was reflected on both the single- and multi-family side this January. While single-family starts posted a 1.5 percent gain to a seasonally adjusted, annual rate of 484,000 units, multifamily starts posted a 9.2 percent gain to 107,000 units.
Meanwhile, overall permit issuance, which can be an indicator of future building activity, fell 4.9 percent to a rate of 621,000 units in January. This was due entirely to a 23 percent decline to 114,000 units on the multifamily side, which offset a big gain in that sector the previous month. Single-family permits held virtually even, with a 0.4 percent gain to 507,000 units.
Combined single- and multifamily housing starts rose in three out of four regions this January. The South and West each registered a third consecutive month of improvement, with 1 percent and 8.9 percent gains, respectively, and the Northeast also posted a 10 percent gain. The Midwest saw a 3.2 percent decline in overall housing starts.
Conversely, permit issuance declined in three out of four regions this January. The West was the only region to post a gain, of 8.5 percent, while declines of 17.8 percent, 20.2 percent and 1.3 percent were registered in the Northeast, Midwest and South, respectively.
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