New Home Sales Climb after Four Months of Decline

New Home Sales Climb:

Sales of new homes rose in September after four straight monthly declines.

The Commerce Department said Wednesday that sales of new homes rose 5.7 percent last month to a seasonally adjusted annual rate of 313,000 homes.  A big reason for the gain was that the median sales price fell 3.1 percent to $204,400.  This is a great indicator that builders have identified that there is good demand in the first time home buyer segment. The number of new homes on the market was also unchanged at 163,000, a record low.

Home builders started projects in September at the fastest pace in 17 months, a hopeful sign for the economy. But most of the gain was driven by a surge in volatile apartment construction, a sign that many are choosing to rent rather than own a home.

Single-family home construction, which represents nearly 70 percent of homes built, rose slightly.  March through August is typically the peak buying season, so an increase like this after the busy season is encouraging for the overall housing market.
What Happened to Rates Last Week:

Mortgage backed securities (MBS) gained +5 basis points from last Friday to the prior Friday which moved mortgage rates sideways. We were trading better (lower rates) in the beginning of the week but reversed course and MBS moved lower (higher rates) after the parameters of the Greek/European debt bailout were released.

While it is certainly not a perfect plan, it did remove some uncertainty in the market place.  This uncertainty was helping to keep mortgage rates lower because investors parked their funds in bonds until they found out what the actual plan for Europe was.  Now that they know the plan, they have sold out of their positions in bonds and as a result rates have been pressured higher.
It is important to note that since the lowest rates on record (09/22/11) mortgage backed securities have dropped -281 basis points which have pushed mortgage rates higher.  You are not going to see those great rates again.  Rates will still be very attractive for awhile but they are trending upward.

Can Lipstick Avert A Crisis?

Weekly Update:  October 28, 2011

We are running in place.  U.S. growth for the 3^rd quarter came in at 2.5%.  That is just enough to accommodate the new young adults joining the workforce but not enough to push down unemployment.  Still, it’s better than falling off the treadmill.  The Personal Consumption Index is ‘running in place’ as well with inflation coming in basically flat. 

This, and the weak U.S. economy, continue to hold rates down.

The main factor impacting rates (and the stock market) recently are the ebbs and flows in Europe.  For  the past 2 months, when investors feared a European crisis was at hand, rates dropped into the 3’s.  As the panic went away, rates went back up into the 4’s.  This week fears waned as the European community agreed to allow Greece to pay back only ½ of what they owe.  Sounds like a default to me, but it’s not called that because the banks that hold the debt agreed to the ‘hair cut’.  A pig is still a pig, even with lipstick, but if the lipstick averts a crisis, I’m all for it.  As long as we stay out of the ‘crisis zone’ you won’t see rates drop back into the 3’s.  Let you clients know this so that they don’t keep sitting on the fence waiting for something to happen that might not happen.

This week Freddie Mac’s 30 yr. fixed rate survey remained 4.1% with fees and assuming good credit. 

Starkey Mortgage is an Equal Housing Lender.

The views expressed are those of the author and do not represent Starkey Mortgage

When is Down UP in Real Estate?...

Pending home sales fell for the third consecutive month in September according to data released today by the National Association of Realtors^® (NAR)^.  NAR's Pending Home Sales Index, a forward looking indicator of home sales contracts signed during the month, fell 4.6 percent to 84.5 in September from 88.6 in August and 89.7 in July.  Even with the downturn the index is still 6.4 percent higher than the September 2010 level of 79.4.

TEXAS CRANKING OUT JOBS

COLLEGE STATION (Real Estate Center) – Texas was responsible for 19.4 percent of the total jobs created nationwide from September 2010 to September 2011, according to the Real Estate Center's latest

Monthly Review of the Texas Economy.

Texas gained 248,800 nonfarm jobs during the period, an annual growth rate of 2.4 percent compared with 1.1 percent for the United States.

The state’s private sector added 281,400 jobs, an annual growth rate of 3.3 percent compared with 1.7 percent for the nation’s private sector.

Texas’ seasonally adjusted unemployment rate increased to 8.5 percent in September 2011 from 8.2 in September 2010. The nation’s rate decreased from 9.6 to 9.1 percent.

All industries except the information industry and the state’s government sector had more jobs in September 2011 than in September 2010. The state’s mining and logging industry ranked first in job creation, followed by construction and the professional and business services industry.

All Texas metro areas except Abilene, Wichita Falls and Killeen-Temple-Fort Hood had more jobs in September 2011 than in September 2010. Victoria ranked first in job creation, followed by Corpus Christi, Laredo, Odessa and College Station-Bryan.

The state’s actual unemployment rate in September 2011 was 8.4 percent. Midland had the lowest rate followed by Amarillo, Odessa, College Station-Bryan and Lubbock.

The report was written by Research Economist Dr. Ali Anari and Chief Economist Dr. Mark Dotzour.

RECON -

Real Estate Center Online News

October 25, 2011

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Material herein is published according to the fair-use doctrine of U.S. copyright laws related to non-profit, educational institutions. Items attributed to sources other than the Real Estate Center at Texas A&M University should not be reprinted without permission of the original source.

Detroit Leads All Case-Shiller Cities In Home Price Improvement

The August 2011 Case-Shiller Index was released this week. On a monthly basis, 10 of 20 tracked markets worsened. On an annual basis, valuation degradation was worse.

Only Detroit and Washington, D.C. posted higher home values in August 2011 as compared to August 2010, rising 2.7% and 0.3%, respectively.

However, the index has been moving in the right direction. Since bottoming out in March of this year, the Case-Shiller Index

is up nearly 4 percent.

We have to remember that the Case-Shiller Index is a flawed product; its methodology too narrow to be the final word for housing markets.

The Case-Shiller Index has 3 main flaws.

The first Case-Shiller Index flaw is its relatively small sample size. Although it’s positioned as a national housing index, Case-Shiller data represents just 20 cities nationwide, and they’re not even the 20 most populous U.S. cities. For example, cities like Houston (#4), Philadelphia (#5), San Antonio (#7) and San Jose (#10) are excluded from the Case-Shiller Index findings.

By contrast, Minneapolis (#48) and Tampa (#55) make the list.

A second Case-Shiller Index flaw is the way in which it measures home price changes. The Case-Shiller Index formula ignores all home sales except for "repeat sales" of the same home. New homes don’t count for the Case-Shiller Index. Furthermore, the index ignores condominium and multi-family home sales, too.

In some cities, condos can account for a large percentage of sales.

And the third Case-Shiller Index flaw is that the data is reported on a 2-month lag. Next week marks the start of November, yet we’re still discussing data from August. A lot can change in two months (and it often does). The Case-Shiller Index is far from "real-time".

As a monthly release, the Case-Shiller Index does more to help people with a long-term view of housing, including politicians and economists, than it does for everyday buyers and sellers of property in D/FW who negotiate prices based on current demand and supply.

A real estate agent can tell you which homes have sold in the last 7 days, and at what prices. The Case-Shiller Index cannot.

The Government's Revamped HARP program for Underwater Homeowners

The Federal Home Finance Agency announced big changes to its Home Affordable Refinance Program Monday. More commonly called HARP, the Home Affordable Refinance Program is meant to give “underwater homeowners” opportunity to refinance.
With average, 30-year fixed rate mortgages still hovering near 4.000 percent, there are more than a million homeowners in Rancho Santa Margarita and nationwide who stand to benefit from the program overhaul.
To qualify for the re-released HARP program, you must meet 4 basic criteria :

1. Your existing home loan must be guaranteed by Fannie Mae or Freddie Mac
2. Your home must be a 1- to 4-unit property
3. You must have a perfect mortgage payment history going back 6 months
4. You may not have had more than one 30-day late payment on your mortgage going back 12 months 

Most notable about the new HARP refinance program, though, is that the government is waiving loan-to-value requirements on a HARP loans. Homeowners’ participation in the program  are no longer restricted by their home’s appraised value. In fact, the new HARP doesn’t even require an appraisal, in most instances.
With the new HARP program, underwater mortgages can be refinanced without LTV limit or penalty.
According to the government’s press release, pricing considerations for the new HARP program will be released on or before November 15, 2011; and lenders are expected to be offering the program as of December 1, 2011.
If you think you may be eligible, first confirm that either Fannie Mae or Freddie Mac is backing your loan. Both groups provide a simple, online lookup.

• Fannie Mae loan lookup : http://www.fanniemae.com/loanlookup/
• Freddie Mac loan lookup : https://ww3.freddiemac.com/corporate/

If your loan cannot be located on either of these two sites, your current mortgage is not backed by Fannie Mae or Freddie Mac, and is not HARP-eligible.
The FHFA’s official press release contains an FAQ section. In it, you’ll find minimum qualification standards, as well as information related to condominiums and to mortgage insurance.
The HARP program is meant to help a wide group of homeowners, but each applicant’s situation is unique. For specific HARP questions, be sure to talk with a loan officer.

Foreclosures Drop in DFW

DFW HOME FORECLOSURES DOWN 10 PERCENT FROM 2010
DALLAS (Dallas Morning News) – A recent study by the Dallas Morning News suggests that DFW's housing market woes may have hit bottom.
According to the study, home foreclosures in the first half of this year were down more than 10 percent from the same period last year, and more than 25 percent from the same period in 2008.
Lenders foreclosed on more than 7,800 DFW homes during the first half of this year, reports Addison-based Foreclosure Listing Service. The total value of those properties was almost $779 million.
Foreclosure rates are highest in places such as Celina, Anna, Princeton, Lavon, Little Elm, Lancaster, Glenn Heights, Forest Hill, Blue Mound and Fate.
D'Ann Petersen with the Federal Research Bank of Dallas said foreclosures bear watching and may remain elevated until there's sustained improvement in the housing market.
"The housing market is still wobbly, but it does appear to have reached a bottom," she said.
Source:

RECON

Real Estate Center Online News

October 21, 2011

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