New-Homes Sales Rise 1.5% in March to 417K

U.S. sales of new homes rose in March to a seasonally adjusted annual rate of 417,000. The increase added to evidence of a sustained housing recovery at the start of the spring buying season.

The Commerce Department said Tuesday that sales of new homes increased 1.5 percent. The gain brought the level higher than February’s pace of 411,000, though below January’s 445,000 – the fastest pace since July 2008.

New-home sales are still below the 700,000 pace considered healthy by most economists. But the pace has increased 18.5 percent from 352,000 a year ago.

Most economists see more gains ahead, as housing is likely to remain a consistent driver of economic growth this year.

“With increasing signs of a softer U.S. economy springing up in the spring, we can take comfort in the resilience of the housing recovery,” said Jennifer Lee, senior economist at BMO Capital Markets.

Steady job creation and near-record-low mortgage rates are spurring more Americans to buy houses. The rise in demand is helping to boost sales and prices in most markets. Higher prices tend to make homeowners feel wealthier and encourage more spending.

A limited supply of both new and previously occupied homes has also helped boost prices.

The inventory of new homes for sale increased 2 percent in March to 153,000, the second straight gain. Still, that’s the equivalent of a 4.4-month supply at the current sales pace and historically lean, according to Jim O’Sullivan, chief U.S. economist at High Frequency Economics.

The median price of a new home rose to $247,000 in March. That’s 3 percent higher than a year ago.

The March sales gain came from a 20.6 percent increase in the Northeast and a 19.4 percent rise in the South. Sales fell 20.9 percent in the West, where problems of supply have hampered home buying. Sales were down 12.1 percent in the Midwest.

Sales of previously occupied homes dipped in March from February, according to the National Association of Realtors. Still, sales were 10.3 percent higher than a year earlier.

The Realtors’ group cited the low housing supply as a reason sales fell in March. But in a positive sign, the inventory of previously occupied homes increased for the second straight month. That suggests more sellers are confident that the recovery will continue and they can sell at a good price.

Low inventories have helped drive more construction of new homes.

U.S. homebuilders started work on more than 1 million new houses and apartments in March at a seasonally adjusted annual rate, the first time it had crossed that threshold in nearly five years. That reflected a surge in volatile apartment building.

Single-family home construction fell in March after reaching the fastest in nearly five years.

Still, a low supply of homes for sale is just one of several constraints that could limit sales. Since the housing bubble burst more than six years ago, banks have imposed tighter credit conditions and required larger down payments. That has made it harder for first-time homebuyers to qualify for the super-low mortgage rates that have resulted from the Federal Reserve’s efforts to ease credit.





Copyright © 2013 The Associated Press, Martin Crutsinger, AP economics writer. All rights reserved.

Florida’s Housing Market on Upswing in March

In March, Florida’s housing market reported increased closed sales, more pending sales, higher median prices and a reduced inventory of homes for sale, according to the latest housing data released by Florida Realtors®.

“Florida’s housing market continues to demonstrate its recovery – March marks the 15th consecutive month that the statewide median sales prices for both single-family homes and for townhouse-condo properties rose year-over-year, according to Florida Realtors’ data,” said 2013 Florida Realtors President Dean Asher, broker-owner with Don Asher & Associates Inc. in Orlando. “The median price is up more than 15 percent for both single-family homes and for townhouse-condos.

“Meanwhile, buyer demand is increasing, but supply continues to be constrained in many areas. In March, the median days on market (the midpoint of the number of days it took for a property to sell that month) was 57 days for single-family homes and 61 days for townhouses and condos. That means 50 percent of homes on the market in Florida sell in two months or less.”

Statewide closed sales of existing single-family homes totaled 19,631 in March, up 9 percent compared to the year-ago figure, according to data from Florida Realtors Industry Data and Analysis department in partnership with local Realtor boards/associations. Closed sales typically occur 30 to 90 days after sales contracts are written.

Meanwhile, pending sales – contracts that are signed but not yet completed or closed – for existing single-family homes last month rose 23.4 percent over the previous March. The statewide median sales price for single-family existing homes last month was $160,000, up 15.2 percent from the previous year.

According to the National Association of Realtors® (NAR), the national median sales price for existing single-family homes in February 2013 was $173,800, up 11.3 percent from the previous year. In California, the statewide median sales price for single-family existing homes in February was $333,880; in Massachusetts, it was $278,000; in Maryland, it was $224,048; and in New York, it was $220,000.

The median is the midpoint; half the homes sold for more, half for less. Housing industry analysts note that sales of foreclosures and other distressed properties downwardly distort the median price because they generally sell at a discount relative to traditional homes.

Looking at Florida’s year-to-year comparison for sales of townhouse-condos, a total of 9,957 units sold statewide last month, up 1.1 percent compared to March 2012. Meanwhile, pending sales for townhouse-condos last month increased 10.6 percent compared to the year-ago figure. The statewide median for townhouse-condo properties was $120,000, up 15.9 percent over the previous year. NAR reported that the national median existing condo price in February 2013 was $172,500.

The inventory for single-family homes stood at a 5.3-months’ supply in March; inventory for townhouse-condos was at a 5.8-months’ supply, according to Florida Realtors.

“We continue to be encouraged by the depth and breadth of the housing recovery,” said Florida Realtors Chief Economist Dr. John Tuccillo. “State numbers are up in virtually all important categories and down where they should be down. Even with the difficulty of access to financing for households, we still see the growth in the market continuing for at least the next 18 months.

“Inventory remains an issue, but this is fast becoming a sellers’ market and as sellers realize this, we expect inventories to rise as we approach the last quarter of 2103. Over the long term, we need to correct the imbalance between investors and owner-occupier households that has developed because of financing issues if the market is to prosper for a long time.”

According to Freddie Mac, the interest rate for a 30-year fixed-rate mortgage averaged 3.57 percent in March 2013, down from the 3.95 percent average during the same month a year earlier.

To see the full statewide housing activity report, go to Florida Realtors website and click on the Research page; then look under Latest Housing Data, Statewide Residential Activity and get the March reports. Or go to Florida Realtors Media Center  and download the March 2013 data report PDFs under Market Data.

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© 2013 Florida Realtors®

Fla. Metro Construction Up 15.3% Year-Over-Year

For major-metro regions in Florida – Jacksonville, Miami-Fort Lauderdale-Pompano Beach, Orlando-Kissimmee-Sanford, Tallahassee and Tampa-St. Petersburg-Clearwater – the BidClerk Construction Index (BCI) found a 15.3 percent increase in construction projects that were actively bidding. Private construction activity increased just 0.8 percent, but public construction increased of 25.4 percent compared to the same period last year.

In a quarter-over-quarter analysis for Florida construction projects in the major metro markets actively bidding, first quarter 2013 saw an increase of 35.3 percent compared to a decrease of 13.3 percent reported in  4th quarter 2012. First quarter public and private projects increased 48.4 percent and 17.1 percent, respectively.

In a year-over-year analysis for the Miami region, for example, public and private construction projects increased 4.8 percent compared to one year ago. Quarter-over-quarter, the projects rose 37.3 percent.

In Orlando, combined public and private construction projects that were actively bidding increased 10.8 percent compared to one year earlier. Construction projects quarter-to-quarter increased 12.8 percent.

Combined public and private construction projects in the Tampa-St, Pete area increased 24.2 percent year-to-year, and 46 percent quarter-to-quarter. BCI’s quarter-over-quarter analysis revealed that combined private and public construction projects that were actively bidding in the Tampa-St. Pete region experienced a large increase of 46 percent.

 





© 2013 Florida Realtors®

Lenders Loosen Up on Home Loans

Lenders are warming up to home shoppers lacking big down payments as the housing market improves, new data show.

In the first quarter of this year, 19 percent of conventional loan offers made by lenders on the LendingTree online exchange were for loans with downpayments between 5 percent and 10 percent, LendingTree says.

That was up from 6 percent of offers the same time last year and just 1 percent of offers two years ago, LendingTree says.

Meanwhile, the number of lenders quoting non-Federal Housing Administration loans with 5 percent to 10 percent downpayments on Zillow Mortgage Marketplace is almost double what it was two years ago, Zillow says.

The growth of the availability of low-downpayment loans is notable in that, following the housing bust, those consumers had little choice outside of generally higher-cost loans from the FHA. “For years, it’s been FHA or nothing,” for the low-downpayment borrower, says Guy Cecala, publisher of Inside Mortgage Finance. “This shift is a sign that mortgage origination is loosening up.”

But the industry is still a long way from the easy-lending standards that caused the housing bust. Borrowers now must show a strong credit history and documented income to get loans, Cecala says.

Several factors are driving more low-downpayment loans outside of the FHA, including:

• Higher FHA costs. While the FHA requires just 3.5 percent down, its annual insurance premiums have more than doubled in the past two years. The last increase took hold April 1.

The higher costs are “causing a shift back toward conventional loans,” says Cameron Findlay, chief economist at Discover Home Loans.

Following the latest rate increase, FHA applications for home loans fell by almost 14 percent for the week ended April 5 while applications for conventional loans rose more than 5 percent, the Mortgage Bankers Association says.

• A rebounding private mortgage insurance industry. Lenders generally don’t make loans that they can’t resell to mortgage giants Fannie Mae or Freddie Mac. While Fannie Mae will buy a loan with as little as 3 percent down, and Freddie Mac at 5 percent, loans with less than 20 percent down require borrowers to also get private mortgage insurance.

When the housing market crashed, the private mortgage industry lost billions and such insurance was tough to get. Now, the industry is on the rebound and the cost for insurance for borrowers with higher credit scores has dropped. As such, more home loan borrowers are finding it a better financial move not to put 20 percent down and instead pay for the insurance, says Matt Johnson, loan officer at Sterling Bank in Seattle.

Rising home prices have also helped lenders get more comfortable with low-downpayment loans.

The growth of lower downpayments is also reflected in Fannie Mae’s portfolio. In the first quarter of 2012, downpayments between 3 percent and 10 percent accounted for 15 percent of Fannie’s home purchase loan business. That rose to 18 percent in the third quarter.

The borrowers are still high quality. Last year, home loans acquired by Fannie Mae with less than 20 percent downpayments originated from borrowers with an average FICO score of 755, Fannie Mae says. Scores of 740 or higher are generally needed to get the best pricing on home loans.







Copyright © USA TODAY 2013

Housing Starts Surpass 1 Million in March

U.S. homebuilders broke the 1 million mark in March for the first time since June 2008. The gain signals continued strength for the housing recovery at the start of the spring buying season.

The overall pace of homes started rose 7 percent from February to March to a seasonally adjusted annual rate of 1.04 million, the Commerce Department said Tuesday.

Apartment construction, which tends to fluctuate sharply from month to month, led the surge: It jumped nearly 31 percent to an annual rate of 417,000, the fastest pace since January 2006.

By contrast, single-family home building, which makes up nearly two-thirds of the market, fell 4.8 percent to an annual rate of 619,000. That was down from February’s pace of 650,000, the fastest since May 2008. The government said February’s pace was a sharp 5.2 percent higher than it had previously estimated.

Applications for building permits, a gauge of future construction, declined 3.9 percent to an annual rate of 902,000. It was down from February’s rate of 939,000, which was also nearly a five-year high.

Paul Ashworth, chief U.S. economist at Capital Economics, called the data “obviously good news.” But he noted that the surge was due to a jump in volatile apartment construction and said the pace of building could drop in April.

Steady job growth, near record-low mortgage rates and rising home values have encouraged more people to buy. In response to higher demand and a low supply of available homes for sale, builders have stepped up construction.

March’s pace of homes started was nearly 46 percent higher than in the same month in 2012.

Housing construction fell 5.8 percent in the Northeast but gained in the rest of the country, led by a 10.9 percent rise in the South. It rose 9.6 percent in the Midwest and 2.7 percent in the West.

The National Association of Home Builders/Wells Fargo April survey released Monday showed that builders are concerned that limited land and rising costs for building materials and labor could slow sales in the short term. That led to a third straight monthly drop in confidence.

Still, the builders’ outlook for sales over the next six months climbed to the highest level in more than six years, suggesting that the obstacles could be temporary.

And construction firms have stepped up hiring in recent months. They added 18,000 jobs in March and 169,000 since September, according to the Labor Department.

Though new homes represent only a fraction of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to statistics from the homebuilders.





Copyright © 2013 The Associated Press, Martin Crutsinger, AP economics writer. All rights reserved.

Time for Low Interest Rates to Rise? Some Say Yes

Tried taking out a mortgage lately or refinancing one? Chances are that it took a ton of paperwork. And if your credit score was not perfect, it might not have happened at all.

As of last fall, the average successful applicant for a Fannie Mae-backed mortgage (the typical circumstance) had a FICO credit score nothing short of stellar at 769. That’s on a scale of 300 to 850, with nearly 80 percent of the public having a score below 750, according to Fair Isaac Corp., the rating’s developer.

What’s more, the average applicant denied a mortgage had a quite respectable score of 734. Not long ago, that was the type of score expected from the average person approved for a mortgage.

Add in the millions of people who don’t even apply for mortgages because they know they will be rejected, and the picture comes into focus. Interest rates are at rock bottom, but only available to a select group.

This poses a question: What good are all the government’s efforts to revive the housing market if they help only an elite few? Or, to put a finer point on it: Are Washington’s efforts to boost housing doing more harm than good?

A strong case can be made that the answer is yes. It is taken for granted that low interest rates – engineered by the Federal Reserve’s program of flooding money into credit markets – boost the housing market. But they also have perverse side effects and unintended consequences.

The biggest of these, as it relates to housing, is that artificially low rates make banks reluctant to lend. They don’t want to because they know they can get burned when rates inevitably rise to more natural levels.

Right now, banks can make a handsome profit from a portfolio of mortgages in the range of 3.5 percent to 4 percent. That’s because they can borrow at next to nothing and because inflation is negligible. But suppose rates rise to 5 percent to 6 percent, as most people expect will happen in the not too distant future. The banks would then have to write down the value of their portfolios of existing loans. That would have an adverse effect on their balance sheets, and could force them to raise more capital to maintain appropriate cushions and buffers mandated by law.

To deal with this prospect, banks are doing two things: They are being cautious about how much they lend. And they are lending only to people with great credit, offsetting the risk of loss through rising rates by decreasing their risk of defaults.

Add to this a host of new lending regulations and a desire among prosecutors to show their toughness toward banks to atone for their laxness in prior years, and banks have even more reason to lie low.

The solution is not to trot out some new housing plan every few months, as the Obama administration is wont to do. These sound appealing, but they run into the fundamental reluctance of lenders to lend. Nor is it to return to the lax standards that led to the housing bubble.

Rather, the solution is to let market forces repair lending markets. When the Fed unwinds its easy money policies, interest rates will rise. This will be a drag on the economy. But it’s increasingly clear that easing is necessary to promote robust lending. The sooner the Fed feels safe making that move, the quicker the mortgage hassles will fade away.

What good are government efforts to revive the housing market if they help only a few?

 






Copyright USA TODAY 2013, Nam Y. Huh, AP

Younger Buyers Jumping into Retirement Real Estate

Century Village in Boca Raton, one of the biggest retirement communities in the country, has seen the average age of new buyers drop over a decade – from the mid-70s to the low 60s.

Although residents in the active-adult community must be 55 or older or be married to someone that old, buyers can be any age. As a result, a number of younger investors are snapping up units now as they prepare for retirement, figuring prices are relatively low right now.

In the meantime, they’ll rent the units as they wait for retirement.

“People are looking at this in terms of their long-term future,” says Ben Schachter of Century Village Real Estate Inc. “They’re looking at the market as it increases, as the economy is strengthening, and they want to buy now while it’s the best opportunity to do so.”

 





Source: CNBC.com (03/25/13) Olick, Diana

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