Jun
24
NEW YORK (Reuters) – U.S. mortgage applications climbed last week from a seven-month low, the Mortgage Bankers Association said on Wednesday, adding to emerging signs that the three-year housing market collapse may be abating.
Demand for home loans rose after four straight weekly declines, as U.S. mortgage rates dipped and more borrowers applied to buy houses as well as refinance.
The trade group’s seasonally adjusted mortgage applications index, which includes both purchase and refinance loans, rose 6.6 percent to 548.2 in the week ended June 19. This modest rise is from the lowest level since late November.
“In terms of home sales and building activity, we’ve probably reached a bottom,” Keith Hembre, chief economist at First American Funds in Minneapolis, Minnesota said on Tuesday. “But it’s highly unlikely there will be a sharp recovery from here.”
Existing home sales rose in May for the first back-to-back gain since September 2005, the National Association of Realtors said on Tuesday.
The average 30-year loan rate dipped 0.06 point to 5.44 percent last week, nearly a full percentage point less than a year earlier.
A rate spike from a record low 4.61 percent in March to 5.57 percent in early June, however, has crushed a burgeoning refinance boom.
With rates starting to ease again, some borrowers may be rushing to lock in now rather than chance a renewed surge in borrowing costs.
The Mortgage Bankers Association said its refinancing index rose 5.9 percent from a seven-month low to 2,116.3 last week. Demand for refinancing was at least triple this level in March when mortgage rates hit their record lows, the group said.
On Monday, the MBA slashed its forecast by more than 25 percent for total mortgage loan origination in 2009, mostly due to fewer refinancings and a slow start to the federal Home Affordable Refinance Program.
A plodding upturn in home purchases has been dominated by first-time buyers taking advantage of a federal tax credit and distressed prices on foreclosures.
The mortgage purchase index increased 7.3 percent to 280.3, the highest since early April, the MBA said.
“I’ve seen for the last several months a flattening of the market, which candidly is close to euphoria if you’re a new home builder given how bad it has been,” Richard Dugas, chief executive of No. 2 U.S. home builder Pulte Homes (PHM.N), said this week at the Reuters Global Real Estate Summit in New York.
Mortgage rates are still “incredibly good” despite rising from historic lows, he noted.
The greater deterrents are the longest recession since the Great Depression and the highest unemployment rate in more than 26 years, most economists agree.
Jun
24
New Home Sales Fall Unexpectedly
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Sales ticked down 0.6% last month, down 32.8% from last year.
NEW YORK (CNNMoney,com) — Sales of newly constructed homes fell unexpectedly in May and were down almost a third from last-year’s levels, a government report said Wednesday.
New home sales ticked down 0.6% last month to a seasonally-adjusted annual rate of 342,000, the Commerce Department reported. That was from a revised reading of 344,000 in April.
Analysts expected the rate of new home sales to rise to 360,000, according to a consensus estimate of economists compiled by Briefing.com.
New home sales were 32.8% below the same month a year ago, when the estimate stood at a 509,000 annual rate.
This is a big difference from existing homes sales. On Tuesday, the National Association of Realtors reported that sales of those properties rose 2.4% in May, as prices fell nearly 17% from a year ago.
“Newly constructed homes simply cannot compete with the values found in the existing home market,” said Bob Walters, chief economist at Quicken Loans.
In recent months, plunging mortgage rates had attracted buyers into the market. But in the past few weeks they have rebounded slightly to near 5.76% for a 30-year fixed mortgage. They have been pulled up by higher bond yields.
But even with the recent increase, mortgage rates still remain much lower than last year, when the average 30-year fixed mortgage rate was 6.62%.
Median and average prices: In a sign that single-family home sales may have already hit bottom, the median sales price continued to increase.
The median sales price of new homes rose to $221,600 in May, up more than 4% from a revised $212,600 in April — and up more than 3% from the median price of $229,300 in May 2008.
The average sales price in May was $274,300,up more than 5% from a revised $260,800 in April.
Supply: The seasonally-adjusted estimate of new houses for sale at the end of May was 292,000, a 10.2-month supply at the current sales rate.
“As we get deeper into the summer and ever-closer to the start of the next school year, we will see some positive moves in the new home market,” said Walters
Jun
24
The government wants lenders to sell off repossessed homes quickly and it’s lowering buying costs to get the deals done.
NEW YORK (CNNMoney.com) — Home prices are at their most affordable in many years, which has opened up homeownership to many who had been locked out during the housing boom. And now, the federal government — and many states – are launching plans to hook up buyers of repossessed properties with very attractive terms.
The feds made nearly $6 billion available for the Neighborhood Stabilization Program, which intends to combat blight by reducing the number of foreclosed homes on the market.
The money, which has only started to flow during the past few weeks despite much of it being authorized last summer, will go to state and local housing authorities and non-profit organizations involved in providing housing for middle- and low-income families.
“The NSP was designed to help deal with all the properties in foreclosure around the nation,” said Antonio Reilly, executive director of the Wisconsin Housing and Economic Development Authority (WHEDA), which will administrate the program in several counties in the state.
The bulk of the NSP funds will come from the $3.92 billion that was approved as part of the Housing and Economic Recovery Act of 2008 passed in August.
By regulation, these funds must be spent in communities with the highest incidences of foreclosures and subprime loans. They’ll go to helping households earning no more than 120% of the median income of the local area, with 25% of the money going to families earning less than half the median.
Different plans
Much of the $121 million of the NSP funds allocated for Arizona will be used to purchase and rehabilitate foreclosed homes. The agencies involved will then sell the properties at discounts from their market values to middle- and low-income buyers.
In Wisconsin, WHEDA will use the money to subsidize mortgage loans for people buying foreclosures. They can either use it to buy down interest rates, for downpayments or to pay closing costs. Reilly said there could also be grants to homebuyers to make needed repairs.
In the Charleston, S.C., area, the Lowcountry Housing Trust, a non-profit organization, has $7.4 million to acquire and redevelop about 70 properties with 10 for quick resale. The others will be used for rentals.
In Las Vegas, the Department of Neighborhood Services will split the initial NSP funds three ways. About half of the $14 million it receives will go to a homebuyer assistance plan that will provide downpayment and closing costs assistance, and pay for some repairs. All told, a buyer may receive as much as $50,000 in assistance, according to its director, Stephen Harsin, though he expects the average to be about $30,000.
There will also be a lease-to-own program. And there’ll be a program in which the department will buy and rehab housing, mostly single-family homes and condos, to rent out to low-income families. All told, about 300 homes will be put back on the market in Las Vegas.
In some hard-hit towns, such as Cleveland and Detroit, where many of the vacant foreclosed houses have already be so damaged by vandalism and nearby home values are extremely low, authorities want to use the money to demolish derelict houses. The lots will go into a land bank for later development when neighborhoods recover.
Little movement yet
Nationwide, the program has gotten off to a slow start and money is only now beginning to be spent.
Part of the lack of speed is conforming to all the rules and regulations governing the use of funds, according to Las Vegas’ program manager Tim Whitright. Following federal guidelines, like filing RSPs (request for proposals), which draw ideas from community groups and other interested parties, have “slowed down the time line,” he said.
He said it’s now taking staff approximately four to five months to get the systems in place to implement the plan. Now, the first phase is ready to be launched.
One issue that slowed the implementation process for the Lowcountry Housing Trust were environmental regulations, according to Tammie Hoy, its executive director Before the group could use the NSP funds to buy up and rehab properties, it had to have studies performed outlining any environmental impact the deals might have.
It has completed that phase and now expects to begin buying properties by July 30.
More funds coming
Even before the first round of spending has filtered down to help many families buy homes, a second round of NSP funding is is poised to enter the pipeline. This money was approved as part of the Recovery and Reinvestment Act of 2009 (stimulus plan) that was signed into law in February.
It provides $1.93 billion to be allocated on a competitive basis. Potential grantees will be non-profits like community development organization certified by the U.S. Treasury Department.
They’ll be judged on, among other things, their abilities to execute projects, how well they can leverage the money and how well the plans they offer can work to stabilize neighborhoods.
A third allocation, called NSP-TA, of $50 million provides cash to pay for technical assistance in running programs funded by the first two rounds of cash.
Correction: In an earlier version of this story, it was stated that in the Charleston area some of the Neighborhood Stabilization Program money would be spent for a lease-to-own program but, in fact, none of the first round of NSP funding will go for that purpose.
Jun
23
Existing home sales rose 2.4 percent in May; prices plunge 16.8 percent
WASHINGTON (AP) — Sales of previously occupied homes rose modestly from April to May, the third monthly increase this year, but signs of a housing recovery are fragile at best.
The National Association of Realtors said Tuesday that home sales rose 2.4 percent last month to a seasonally adjusted annual rate of 4.77 million, from a downwardly revised pace of 4.66 million in April.
About one out of every three homes sold was a foreclosure or distressed sale. That helped drag down the median price to $173,000 — 16.8 percent below a year ago.
Falling prices coupled with new rules for property appraisers have caused many transactions to fall apart or be delayed.
“We have just been flooded with e-mails, telephone calls on the appraisal problems,” said Lawrence Yun, the Realtors’ chief economist.
Jun
17
U.S. mortgage applications fell for a fourth consecutive week, with overall demand plunging to its lowest level in nearly seven months, data from an industry group showed on Wednesday.
WASHINGTON, D.C. (June 17, 2009) — The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending June 12, 2009. The Market Composite Index, a measure of mortgage loan application volume, was 514.4, a decrease of 15.8 percent on a seasonally adjusted basis from 611.0 one week earlier. On an unadjusted basis, the Index decreased 15.8 percent compared with the previous week and increased 0.3 percent compared with the same week one year earlier.The Refinance Index decreased 23.3 percent to 1998.1 from 2605.7 the previous week and the seasonally adjusted Purchase Index decreased 3.5 percent to 261.2 from 270.7 one week earlier.
The four week moving average for the seasonally adjusted Market Index is down 13.5 percent. The four week moving average is up 0.7 percent for the seasonally adjusted Purchase Index, while this average is down 19.6 percent for the Refinance Index.
The refinance share of mortgage activity decreased to 54.1 percent of total applications from 59.4 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 4.3 percent from 3.4 percent of total applications from the previous week.
The average contract interest rate for 30-year fixed-rate mortgages decreased to 5.50 percent from 5.57 percent, with points decreasing to 0.89 from 1.09 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 4.99 percent from 5.10 percent, with points decreasing to 0.99 from 1.04 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for one-year ARMs decreased to 6.54 percent from 6.75 percent, with points decreasing to 0.09 from 0.10 (including the origination fee) for 80 percent LTV loans.
**SPECIAL NOTES**
The survey covers over 50 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100.
Jun
16
WASHINGTON – Construction of new homes jumped in May by the largest amount in three months, an encouraging sign that the nation’s deep housing recession was beginning to bottom out.
The Commerce Department said Tuesday that construction of new homes and apartments jumped 17.2 percent last month to a seasonally adjusted annual rate of 532,000 units. That was better than the 500,000-unit pace that economists had expected and came after construction fell in April to a record low of 454,000 units.
In another encouraging sign, applications for building permits, seen as a good indicator of future activity, rose 4 percent in May to an annual rate of 518,000 units.
The better-than-expected rebound in construction was the latest sign that the prolonged slump in housing is coming to an end, which would be good news for the broader economy.
The current recession — the longest since the Great Depression — was triggered by a collapse in the housing market that led to soaring loan losses and a banking system crisis. A healthy home market is needed to support an economic recovery.
President Barack Obama is scheduled to unveil on Wednesday the administration’s plan to overhaul financial regulation in an effort to crack down on the lending abuses that triggered the most severe upheaval in the nation’s financial system in seven decades.
Even with the encouraging news, analysts don’t expect a quick rebound in housing, since the economy is still shedding jobs and home prices are falling in many places, making people hesitant to commit to buying a new home.
Many economists say home construction likely will stop falling in the current quarter but any sustained rebound isn’t expected to take hold until next spring. That’s partly due to the huge overhang of unsold homes and a record wave of mortgage foreclosures dumping more unsold homes on the market.
With foreclosures and other distressed properties for sale at deep discounts, builders often can’t compete. Rather than launching new developments, they are waiting for signs of a broader recovery. Many economists believe that home prices will keep falling until next spring and that sales won’t start to show significant gains until the summer of 2010.
The 17.2 percent rise in housing construction for May still left activity 45.2 percent below where it was a year ago.
The jump reflected a 7.5 percent rise in construction of single-family homes, the third consecutive increase in this critical segment of the market.
Construction of multifamily units rose 61.7 percent in May to an annual rate of 131,000 units. This volatile part of the market plunged 49.4 percent in April.
Construction rose nationwide led by a 28.6 percent surge in the West. Construction rose 6.8 percent in the South and 11.1 percent in the Midwest. The Northeast had the smallest gain of 2 percent in May.
The National Association of Home Builders said Monday its housing market index slipped by one point in June, reflecting many builders’ uncertainty about when their business prospects might improve. The Washington-based trade association said the index fell to 15. It was the first decline since January, when the index dropped to a record low of 8.
That report was “proof that the rise in U.S. mortgage rates lately is dampening activity,” Jennifer Lee, an economist with BMO Capital Markets, wrote in a research note.
Earlier this month, major builders Toll Brothers Inc. and Hovnanian Enterprises Inc. reported smaller quarterly losses, rosier sales trends and more prospective buyers visiting model homes. Industry executives, however, say the recession and fear of job losses are keeping many would-be homebuyers on the fence.
Jun
10
Housing Inventory Drops Again in May
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The supply of homes available for sale in 28 major metropolitan areas at the end of May was down 3.9% from a month earlier, according to figures compiled by ZipRealty Inc., a real-estate brokerage firm based in Emeryville, Calif. The ZipRealty data cover all single-family homes, condominiums and town houses listed on local multiple-listing services in metro areas where the firm operates.
On a national basis over the past 25 years, inventories typically have shown little change in May from April levels, according to Zelman & Associates, a research firm.
Compared with the year-earlier month, the May inventory in the 28 metro areas was down 24%. The National Association of Realtors says about four million homes were listed for sale nationwide at the end of April. That was down about 11% from a year earlier.
[Toll Brothers]The exact level of supply remains unclear because the figures from the Realtors and Zip do not include all of the foreclosed homes that banks are preparing to sell. According to some industry estimates, as many as half of those homes are not included on multiple-listing services at any given time. Some foreclosed homes are not listed because they are being offered as rentals; others are awaiting repairs or are subject to litigation or other delays.
Despite those uncertainties, Thomas Lawler, a housing economist in Leesburg, Va., says the recent decline in inventories and the slow pace of home construction “indicate that home prices in many parts of the country could be nearing a bottom.” Integrated Asset Services LLC, Denver, reported Tuesday that its national house price index in April was unchanged from a month earlier and down 13% from April 2008. A recent uptick in mortgage interest rates is likely to deter some potential buyers.
The Zip data do not include New York City. But Miller Samuel Inc., an appraisal firm, reports there were 9,551 cooperative apartments and condominiums on the market in Manhattan at the end of May. That was down 8% from a month earlier but up 9% from May 2008.
Jun
9
U.S. Commercial Mortgage Defaults May Rise to 17-Year High
June 9 (Bloomberg) — The default rate on commercial mortgages held by U.S. banks may rise to the highest in 17 years in the fourth quarter as debt for refinancing remains scarce and the recession drags down rents.
The rate is likely to reach 4.1 percent by year-end, Real Estate Econometrics LLC, a New York-based property research firm, said in a report today.
“The dramatic decline in real economic activity and labor markets since last September has undercut property fundamentals,” wrote Sam Chandan, chief economist of Real Estate Econometrics. The decline puts an increasing number of loans “at risk,” he said.
The projection implies defaults on about $44.3 billion of commercial mortgages, based on the $1.08 trillion of such loans held by U.S. banks in the first quarter, according to Chandan and Bloomberg calculations. Commercial defaults already are at a 15-year high after climbing to 2.3 percent in the first quarter, or $3 billion, from 1.6 percent at the end of 2008, according to the firm’s analysis of Federal Deposit Insurance Corp. data.
A default occurs when a loan is 90 or more days past due. A loan is considered delinquent when it’s 30 to 89 days late.
The projection for this year would match the 4.1 percent rate seen in 1993 and be the highest since defaults reached 4.6 percent in 1992 during the savings and loan crisis, when the U.S. created the Resolution Trust Corp. to deal with bad loans, according to Real Estate Econometrics.
The first-quarter rate was the highest since 1994, when 2.7 percent of commercial mortgages defaulted, the company said.
2010-11 Projections
Default rates likely will increase next year and in 2011 as five-year loans made in 2005 and later start to come due, Real Estate Econometrics said. Those mortgages were based on overly optimistic forecasts of income growth and inflated property values.
The company projects the default rate on commercial mortgages will reach 5.2 percent by the end of 2010 and peak at 5.3 percent in 2011 before starting to decline.
“Mortgages originated in 2006 and 2007 are experiencing the most significant shortfalls in current cash flow relative to current debt-service obligations,” the report said.
Commercial mortgages are defined in the report as loans on non-farm, non-residential buildings such as offices, retail centers and warehouses. They exclude apartment complexes.
The report makes a separate forecast for apartment buildings of five dwelling units or more. Multifamily defaults will rise to 4.5 percent by the end of this year from 2.5 percent in the first quarter, according to Real Estate Econometrics.
Multifamily defaults will peak at 5.5 percent in 2010, the firm estimated.
Jun
5
NEW YORK (Reuters) – Nearly one in four U.S. homes for sale on June 1 had their prices sliced at least once since landing on the market, data compiled by real estate website Trulia.com showed on Friday.
A total of 23.6 percent of houses have seen their price cut. The average reduction was 10.6 percent of the original price, or $43,650 of a median house price, Trulia.com said in a report exclusively obtained by Reuters prior to its scheduled release.
These lowered prices, however, are not necessarily a negative.
“Price reductions may turn out to be this year’s most effective stimulus package,” Pete Flint, Trulia co-founder and CEO, said in an interview with Reuters.
“There are many neighborhoods across the country that are running the equivalent of a blue light special on housing,” he said.
“These deals are doing what they are intended to do — encourage purchasers and move inventory,” he said.
Nationwide, in dollar terms, $27.4 billion has been reduced for all homes for sale on the market on June 1, Trulia said.
Of the luxury homes, categorized by those costing $2 million or more, 24 percent have seen a price reduction, with an average reduction of 14.3 percent off the original asking price. For homes costing $2 million or less, 23.6 percent have been reduced in price, but the average price drop was only 9.7 percent off the original, the data showed.
“A lot of wealth has been wiped out in the financial markets in the past 12 to 18 months and owners of luxury homes have seen their pool of potential buyers shrink,” Flint said.
Flint said his advice to luxury home owners is to sell only if necessary.
“The stock market is on the rise again and if this trend continues, the pool of buyers will increase over time,” he said.
Of single-family homes for sale, 26.2 percent have seen at least one price reduction and the average reduction was 10.0 percent. Among condos for sale, 27 percent have been reduced in price at least once and average reduction is 10.6 percent, the data showed.
“You need to know how your home stacks up to others on the market in your area and you need to understand why you are selling and how quickly you are looking to move the property,” he said.
On June 1, Detroit, Las Vegas and Miami registered the biggest reductions in price, with average homeowner price drops of 23 percent, 16 percent and 15 percent, respectively, the data showed.
Jun
3
U.S. MBA Mortgage Applications Index Fell 16 Percent Last Week
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June 3 (Bloomberg) — Mortgage applications in the U.S. dropped last week as the biggest jump in mortgage rates in seven months pushed down refinancing.
The Mortgage Bankers Association’s index of applications to purchase a home or refinance a loan fell 16 percent to 658.7 in the week ended May 29, from 786 the week before. The group’s refinancing gauge plunged 24 percent, while the purchase measure increased 4.3 percent.
An improving economic outlook in recent weeks has pushed up borrowing costs and caused homeowners to shy away from refinancing. At the same time, prices are still declining and borrowing costs are below year-earlier levels, making housing more affordable to some prospective buyers and helping to stabilize the market.
“This increase in rates would hit refinancing given they seem to be quite responsive to mortgage rates,” Abiel Reinhart, an economist at JPMorgan Chase & Co. in New York, said before the report. “Home sales look to be relatively stable. They’ve already reached a trough earlier in the year, but they haven’t picked up just yet.”
The mortgage bankers’ refinancing gauge decreased to 2,953.6, the lowest level since February, from 3,890.4 the previous week. The purchase index rose to 267.7, a two-month high, from 256.6.
The share of applicants seeking to refinance loans fell to 62.4 percent of total applications from 69.3 percent.
Rates Jump
The average rate on a 30-year fixed-rate loan rose to 5.25 percent, the highest level since January, from 4.81 percent the prior week. The increase was the biggest since October.
The rate reached 4.61 percent in late March, the lowest level since the mortgage bankers group began records in 1990.
At the current 30-year rate, monthly borrowing costs for each $100,000 of a loan would be about $552. That is about $59 less than the same week a year earlier, when the rate was 6.17 percent.
The average rate on a 15-year fixed mortgage rose to 4.80 percent from 4.44 percent the prior week. The rate on a one-year adjustable mortgage increased to 6.61 percent from 6.55 percent.
The Washington-based Mortgage Bankers Association’s loan survey, compiled every week, covers about half of all U.S. retail residential mortgage originations.
A report from the National Association of Realtors yesterday showed the number of Americans signing contracts to buy previously owned homes climbed 6.7 percent in April, the biggest gain in more than seven years.
Signed Contracts
The Realtors group said gains in pending sales have been larger than actual home resales in recent months because distressed properties are taking longer to close since they require lender approval. Also, some of the pending contracts fall through before a transaction is completed, chief economist Lawrence Yun said yesterday.
“Business could be a whole lot better,” James Gillespie, chief executive officer of Coldwell Banker Real Estate LLC said in an interview yesterday. While first-time buyers are taking advantage of foreclosure-driven price decreases, the market for those trying to sell one home and buy a bigger property is still weak, he said.
Coldwell Banker is lobbying Congress for a $15,000 tax credit for all homebuyers, rather than the $8,000 credit provided to first-time purchasers by the Obama administration’s stimulus plan.