Home Resales Climb Higher

"Sales of previously owned homes in the U.S. rose last month to the highest level in nearly two years, and the inventory of unsold homes contracted to a level considered healthy by economists, positive signs for the housing market.

Existing-home sales increased 4.3% in January from a month earlier to a seasonally adjusted annual rate of 4.57 million, the National Association of Realtors said Wednesday. It was the third increase in the past four months and the highest level of sales since May 2010, when the housing market was lifted by federal tax credits. Compared with January a year ago, sales rose 0.7%.


Economists were generally encouraged by the report, which comes amid other signs that the housing market may have bottomed and is starting to heal. "We're slowly improving for the right reasons: more jobs, more credit availability and affordability of homes," said Stuart Hoffman, chief economist with PNC Financial Services Group.

Guy Berger, U.S. economist with RBS Capital Markets, wrote that some of the recent growth in home sales may have been the result of the mild winter. "But for the most part, it seems that the housing sector may have turned the corner," he wrote.

Some economists, however, said January's report wasn't as encouraging as it appeared because the size of the gain was due to a large downward revision in December's data. The revised reading for December was 4.38 million compared with an earlier estimate of 4.61 million.


"The number of sales in January was actually a touch lower than we had thought they were in December," wrote Paul Diggle, property economist at Capital Economics. Nevertheless, he said, "it's still the case that existing home sales are recovering, albeit only gradually."

Last month's median sales price was $154,700, down 2% from $157,900 a year earlier. The inventory of previously owned homes listed for sale fell to 2.31 million at the end of January, the lowest level since March 2005. That represented a 6.1-month supply at the current sales pace, a level economists consider healthy.

The Realtors' report said home sales rose last month from a month earlier in all four U.S. regions. Sales were up 8.8% in the West, 3.5% in the South, 3.4% in the Northeast and 1.0% in the Midwest.

The housing market has been one of the weakest parts of the U.S. economy, but there are signs it is starting to recover after a price collapse that began 5½ years ago. In 2011, about 4.26 million homes were sold, up 1.7% from 4.19 million in 2010." [Read more]

30-year mortgage rate stays at record 3.87 percent

"The average rate on the 30-year fixed mortgage held steady at a record low for a third straight week, offering more incentive to those looking to buy a home or refinance.

Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year home loan was unchanged at 3.87 percent. That's the lowest level since long-term mortgages began in the 1950s.

The average on the 15-year fixed mortgage was also unchanged at 3.16 percent. That's up from a record low of 3.14 percent reached two weeks ago.

The low rates have done little to boost the struggling housing market. Rates have been below 5 percent for all but two weeks in the past year. Yet few people can qualify for the rates and many of those who can have already done so.

And prospective buyers don't want to put money into a home that they fear could fall in price over the next few years.

Sales of previously occupied homes were dismal last year. New-home sales in 2011 were the worst on records going back half a century.

Builders are hopeful that the low rates could boost sales this year. But so far, they have had a minimal impact.

Frank Nothaft, Freddie Mac's chief economist, said mixed readings on consumer confidence underscore the fragile condition of the housing market.

Surveys of small business owner and homebuilder confidence rose in January and February, respectively. But the University of Michigan's consumer sentiment fell in February, breaking a five-month upward trend.

To calculate the average rates, Freddie Mac surveys lenders across the country Monday through Wednesday of each week." [Read more]

Home buying: Most affordable in decades

"Buying a home is now more affordable than it has been in the last twenty years.

Thanks to continued declines in home prices and rock-bottom mortgage rates, the National Association of Home Builders/Wells Fargo Housing Opportunity Index hit a record level of affordability.


According to the index, 75.9% of all new and existing homes sold during the three months ended Dec. 31 could have been comfortably purchased by families earning the national median income of $64,200.

That was the highest percentage recorded in the 20-year history of the index, and a sharp increase from just three months earlier when 72.9% of all homes sold were considered affordable.

Unfortunately, being able to afford a home and actually being able to buy one are two different matters entirely. According to Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla., potential home buyers are still finding it difficult to land mortgages." [Read more]

Homebuilders See Increasing Interest From Buyers

 

"U.S. homebuilders are gradually growing more optimistic about the depressed housing market and believe homes sales could pick up sharply when the spring buying season begins.

The National Association of Home Builders/Wells Fargo said Wednesday that its builder sentiment index rose for a fifth straight month in February to 29, up from 25 in January. The index has climbed 15 points since September and is now at its highest level since May 2007.

Builders have generally become more hopeful during that stretch about current sales, sales six months out and foot traffic, the report shows.

Even with the brighter outlook, the industry has a long way to go. Any reading below 50 indicates negative sentiment about the housing market. The index hasn't reached 50 since April 2006, the peak of the housing boom.

A key reason homebuilders are more optimistic is they are seeing more people express interest in buying a home. And rising interest has occurred alongside other improvements that suggest the troubled housing market could pick up after four weak years." [Read more]

It's Harder Buying a Bank Owned Home Than a Regular Home

"With so many bank-owned homes on the market, some home buyers are wondering about the differences between buying bank owned vs. a regular home.

And why wouldn't a buyer be tempted to buy a bank-owned home? The prices are attractive; plus, buyers are constantly hearing that banks are desperate to give away those homes. One of the problems with this unfounded premise is banks aren't desperate to dump inventory, not on the open market, anyway. To presume that banks will do anything to get rid of a home is magical thinking. Moreover, buyers who aren't careful or don't know what they are doing can find themselves in over their heads." [Read more]

Single Family Home Buyers May Return

"Tuesday morning at the MBA CREF12 Conferencesaw predictions from two of the association’s research and economic gurus, including one in which the late spring and early summer sees a surge in single family home buyers. The two—chief economist and SVP, Research and Education Jay Brinkmann and VP, Commercial/Multifamily Research Jamie Woodwell—also touched on their overall predictions for the commercial and multifamily markets.

During this, the Second General Session, Brinkmann said that when fourth quarter 2011 numbers came in, “a lot of people were somewhat surprised and disappointed by how low they appeared,” but that the numbers were “right on top of” their forecast. “We weren’t expecting the growth in fourth quarter that some others were expecting.” Behind the slowdown, Brinkmann said, was a large buildup of inventory.

“We really expect to see that going into 2012 we’re going to have subpar growth for most of the year, increasing somewhat toward the end as certain tax provisions have their effect,” he said. “We don’t expect consumers to be back.” The unknowns, he said, driving the forecast were largely international. He hit on two major regions that he told the crowd would work their way out toward the latter part of the spring and early part of the summer: Europe and Iran.

“It’s not clear that the improvements that were seen in the job market will continue to the same degree that we’ve seen them over the last few months,” Brinkmann added. “It was good news, but not great news.”

A bright spot, however, emerged when Brinkmann turned to single-family owner occupied properties. “There are some signs that this spring buying session might be a little bit better than what we are forecasting,” he said. “There are some things out there that we see that make us think that this might be the time that people start coming back into the market in bigger numbers to buy owner-occupied homes than we were expecting.” [Read more]