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US home sales jump to highest since May 2010

US sales of previously occupied homes jumped in August to the highest level in more than two years, adding momentum to the housing recovery.

Sales rose 7.8 percent to a seasonally adjusted annual rate of 4.82 million, the National Association of Realtors said. That’s the most since May 2010, when sales were fueled by a federal home-buying tax credit.

The figures were reported the same day the government said US homebuilders broke ground on more new homes in August compared to July.

Still, the recovery is from a depressed level. Sales of previously occupied homes remain below the more than 5.5 million that economists consider consistent with a healthy market.

And the number of first-time homebuyers, who are critical to a housing rebound, slipped to 31 percent from 34 percent.

More Americans appear to be taking advantage of near-record low mortgage rates and prices that are, on average, much lower than they were six years ago.

Sales might be higher if more homes were available, the Realtors’ group said. The limited supply is helping to lift prices. There were 2.47 million homes available for sale in August. It would take just over six months to exhaust that supply at the current sales pace. That’s the typical pace in a healthy market.

The broader economy may also benefit from recent and more sustainable gains in home prices. When that happens, Americans typically feel wealthier and spend more. Consumer spending drives 70 percent of the economic growth.

Wednesday’s positive reports follow other signs that there is a sustained recovery in housing under way. Home prices are rising steadily nationwide. Sales of new homes are also picking up. And home builders are more confident and are breaking ground on more new homes.

The National Association of Home Builders/Wells Fargo builder sentiment index, released Tuesday, rose to the highest level in more than six years in September. Customer traffic and sales are at their highest levels since 2006, the peak of the housing bubble.

Even with the gains in home sales, the market remains weak. Many would-be buyers are having difficulty qualifying for loans or can’t afford the larger down payments being required by banks.

The Federal Reserve last week moved to push mortgage rates even lower. Fed Chairman Ben Bernanke said the bank would purchase $40 billion of mortgage-backed securities each month until the job market improves “substantially.” That could push down longer-term interest rates and spur more borrowing and spending.

The Fed also hopes that lower mortgage rates will accelerate the housing market recovery and boost home prices. That, in turn, could make people feel wealthier and more willing to spend, which would bolster economic growth.

US home sales jump to highest since May 2010  

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Home prices rise in most major US cities

By CHRISTOPHER S. RUGABER

Home prices rose in March from February in most major U.S. cities for the first time in seven months. The increase is the latest evidence of a slow recovery taking shape in the housing market.

The Standard & Poor’s/Case-Shiller home price index shows that prices rose in 12 of the 20 cities it tracks.

Three of the weakest markets showed signs of improvement. Prices rose in Tampa and Miami. They were unchanged in Las Vegas.

The biggest month-to-month increases occurred in Phoenix, Seattle and Dallas. Prices dropped the most in Detroit, Chicago and Atlanta.

Rising prices in most cities add to other encouraging signs of a housing rebound. Sales are up, mortgage rates are at historic lows, builders are more confident and the economy is adding jobs.

Still, even though 12 of 20 cities showed gains, the weaker cities weighed on Case-Shiller’s overall price index in March. The index edged down to its lowest level since the housing bubble burst.

At the same time, price declines have slowed, and a majority of markets are rising.

“This is relatively good news,” said David Blitzer, chairman of S&P’s index committee. “We just need to see it happen in more of the cities and for many months in a row.”

In part, the increases reflect the start of the spring selling season. The month-to-month prices aren’t adjusted for seasonal factors.

The S&P/Case-Shiller monthly index covers roughly half of U.S. homes. It measures prices compared with those in January 2000 and creates a three-month moving average. The March figures are the latest available.

Over the past 12 months, prices have dropped nationally. But the declines have slowed. The 20-city index was 2.6 percent lower in March than in the same month last year. That’s better than the 3.5 percent year-over-year drop in February. And it’s the smallest annual drop since December 2010

Other measures of home prices have also improved. But the S&P/Case-Shiller index uses a three-month moving average that could take longer to signal greater improvement.

“It might be the last of the closely followed home price figures to reflect a turning point,” said Jonathan Basile, an economist at Credit Suisse.

In April, sales of both previously occupied homes and new homes rose near two-year highs. Builders are gaining more confidence in the market. They’re breaking ground on more homes and requesting more permits to build single-family homes later this year.

Long-term mortgage rates have never been lower. The average rate on the 30-year fixed mortgage fell to 3.78 percent last week, the lowest since long-term rates began in the 1950s.

The pace of home sales remains well below healthy levels. Economists say it could be years before the market is fully healed.

Many people are having difficulty qualifying for loans. Or they can’t afford larger down payments required by banks. Some would-be buyers are holding off because they fear prices could keep falling.

A better job market has made more people at least open to buying. Employers have added 1 million jobs in the past five months, though the gains slowed in April and March. The unemployment has dropped a full percentage point since August, from 9.1 percent to 8.1 percent in April.

Economists estimate that employers will have added 160,000 jobs this month. The government will issue the May jobs report on Friday.

Home prices rise in most major US cities

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Purchases of New Houses in U.S. Decrease for Second Month

By Timothy R. Homan

Purchases of new homes in the U.S. unexpectedly fell in February for a second month, a sign the recovery in the housing market may be uneven.

Sales dropped 1.6 percent to a 313,000 annual pace, the slowest since October, from a 318,000 rate in January that was weaker than previously reported, figures from the Commerce Department showed today in Washington. The median estimate of 78 economists surveyed by Bloomberg News called for 325,000.

Sales of new homes are struggling to gain momentum amid increasing competition from foreclosures, which are hurting all property values. Nonetheless, a pickup in hiring, growing incomes and mortgage rates near a record low are making all houses more affordable, which may help underpin the market.

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“There are signs of life in the market in certain regions, but we’re not seeing a broad-based recovery,” said Michelle Meyer, a senior U.S. economist at Bank of America Corp. in New York, who forecast a 310,000 sales pace. “Builders are still competing with existing inventories. The spring selling season should show some modest improvement, but it will be limited.”

Stocks dropped after the report. The Standard & Poor’s 500 Index fell 0.4 percent to 1,387.71 at 10:13 a.m. in New York.

Economists’ estimates ranged from 310,000 to 350,000. The rate for January was previously reported at 321,000.

Taking Longer

The recent slowdown in demand has pushed up the amount of time it takes to sell a new house. There were 150,000 new houses on the market at the end of February, matching the prior month’s record low. The supply of homes at the current sales rate climbed to 5.8 months’ worth from 5.7 months in January.

Purchases, tabulated when contracts are signed, fell in two of the four U.S. regions, led by a 7.2 percent drop in the South. Sales fell 2.4 percent in the Midwest and rose 14 percent in the Northeast and 8 percent in the West.

The regional breakdown affected prices as demand fell in the South and Midwest where homes are less expensive and rose in the Northeast and West where they are costlier.

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The median sales price increased 6.2 percent in February from the same month last year to $233,700, today’s report showed.

New-home sales have lost their ability to forecast the broader market as demand shifts to previously owned houses. Purchases of existing homes are calculated when a deal closes about a month or two later. New properties made up almost 7 percent of the market last year, down from a high of 15 percent during the last decade’s housing boom.

Existing Homes

Existing-home purchases eased to a 4.59 million annual rate last month from a 4.63 million pace in January, the National Association of Realtors reported this week. Even with the decline, January and February sales marked the strongest start to a year since 2007.

Home foreclosures remain a concern for builders. Filings fell 8 percent in February, the smallest year-over-year decrease since October 2010, as lenders began working through a backlog of seized properties, RealtyTrac Inc. said last week.

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“February’s numbers point to a gradually rising foreclosure tide,” Brandon Moore, RealtyTrac’s chief executive officer, said in the statement. “That should result in more states posting annual increases in the coming months.”

To hold down borrowing costs like mortgage rates, Federal Reserve policy makers last week said they will continue to swap $400 billion in short-term securities with long-term debt to lengthen the average maturity of the central bank’s holdings, a move dubbed Operation Twist.

More Affordable

The NAR’s affordability index climbed to a record high in January, underpinning demand. That may be why builders are gaining confidence.

Builders this year have broken ground on homes at the fastest pace since October-November 2008, according to Commerce Department figures released this week. Permits for construction climbed to the highest level since 2008, the same report showed.

The National Association of Home Builders/Wells Fargo index of builder confidence in March held at the highest level since June 2007. Sales expectations climbed for a sixth month, according to the March 19 report.

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Ryland Group Inc. (RYL), which builds homes with an average price of $255,000 in 13 states, said it has a positive outlook for 2012.

“We finished the year on a strong note, entered the year optimistic and still feel fairly optimistic today,” Larry Nicholson, president and chief executive officer at the Westlake Village, California-based company, said March 6 at an investor conference. “The good thing about the traffic we are seeing is it’s new traffic. We feel a lot better than we did a year ago. Hopefully, we can keep this trend up.”

Purchases of New Houses in U.S. Decrease for Second Month

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Existing homes sales dip in February

U.S. home sales are gradually coming back. A mild winter and a stronger job market have helped boost sales ahead of the crucial spring buying season.

The past two months made up the best winter for sales of previously occupied homes in five years, when the housing crisis began. And the sales pace in January was the highest since May 2010, the last month that buyers could qualify for a federal home-buying tax credit.

February sales dipped only slightly to a seasonally adjusted 4.59 million, the National Association of Realtors said Wednesday. That’s 13% higher than the sales pace last July and just below the revised 4.63 million in January.

Ian Shepherdson, chief U.S. economist at High Frequency Economics, said the lower February’s numbers “should not detract from the key point, which is that sales are trending upward.”

The pace remains far below the 6 million that economists equate with healthy markets. And the number of first-time buyers, who are critical to a housing recovery, continues to lag normal levels, while foreclosures remain high.

Still, Chris Jones, economist at TD Economics, said the “economic environment is ripe for home sales to keep gaining pace.”

The median sales prices of homes rose for the first time in four months in February, to $156,600. And the supply of homes on the market increased more than 4% in February to 2.43 million, which could signal that more homeowners became confident in the housing market.

Mortgage Applications

There have been other signs of improvement in the depressed housing market.

Homebuilders have grown more confident in the past six months after seeing more people express interest in buying a home. In February, they requested the most permits to build homes since October 2008.

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Mortgage rates are near record lows. And the supply of homes fell in January to its lowest level in seven years.

A lower supply helps push up prices, which lures more sellers onto the market and generally improves the quality of homes for sale. Rising prices also boost sales because buyers want to invest in homes that are appreciating in value.

A key reason for the brighter housing outlook is the job market has strengthened. From December through February, employers added an average of 245,000 jobs a month. The unemployment rate has fallen to 8.3%, the lowest in three years.

Still, economists caution that the damage from the housing bust is deep and the industry is years away from fully recovering.

Sales among first-time buyers, who are critical to a housing recovery, fell slightly last month to 32% of all purchases. That’s down from 33% in January. In healthy markets, first-time buyers make up at least 40%.

And homes at risk of foreclosure made up 34% of sales, down only slightly from 35% in January. In more stable markets, foreclosures make up less than 10% of sales.

For the past few years, the market has been saturated for years with foreclosures. That has put downward pressure on prices and driven away buyers.

Many can’t qualify for loans or meet higher down-payment requirements. Even those with excellent credit and stable jobs are holding off because they fear that home prices will keep falling.

Sales are measured when buyers close on homes. Some deals have been scuttled before the closing after banks declined mortgage applications, home inspectors found problems, appraisals showed a home was worth less than the bid, or a buyer lost a job.

One-third of Realtors say they’ve had at least one contract scuttled in each of the past five months. That’s up from just 18% in September.

Sales were mixed across the country. They rose on a seasonal basis 1% in the Midwest and 0.6% in the South. They dropped 3.2% in the West and 3.3% in the Northeast.

Existing homes sales dip in February

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Mortgage Rate Outlook Little-Changed on Holiday-Shortened Friday

BY MATTHEW GRAHAM

Today’s update is more of a reminder than an amazing source of new information and analysis.  While Mortgage Rates are possibly slightly weaker than Wednesday, that isn’t universally the case.  Furthermore, Best-Execution rates arent’ affected.  The weakness, if any, should be seen in microscopically higher closing costs.  Even then, not all lenders are open today, meaning some are unable to process new lock requests, and some of the ones who are taking locks haven’t updated pricing.

Bond markets and Mortgage-Backed-Securities stop trading early today (2pm Eastern), but many market participants are simply absent today, and those that worked today are either already gone or soon will be.  Guidance below is unchanged from Wednesday.

Today’s BEST-EXECUTION Rates

  • 30YR FIXED –   4.0%, Some 4.125%, Very few 3.875%’s
  • FHA/VA – 3.75%, more balanced with 3.875% today
  • 15 YEAR FIXED –  3.375%-3.5%
  • 5 YEAR ARMS –  low 3% range, huge variations from lender to lender.

Guidance: In a fundamental sense, we’re well aware of the fact that European drama continues to help domestic bond markets.  Technically, we’re impressed that mortgage rates have been this flat for this long.  The “batting cage” metaphor or the chart below it if you prefer, continue to be the best guidance we can offer in this uncertain environment.  With the ongoing sideways movement of Best-Execution around 4%, the chances increase that the next move will carry a bit of momentum with it (as if the current calm is akin to “storing energy”).  If it goes in a mortgage rate-friendly direction, there’s limited benefit (an eighth to a quarter of a point of improvement) versus the damage that could result from it going the other way.  Fortunately, neither of those eventualities appear to be happening at the moment, so it’s hard to go wrong.  We’ll let you know the day that changes.

Ongoing Batting Cage Metaphor: (this can be applied to any endeavor where you’re trying to “go out on a high note”).   Rate offerings from lenders over the past month have been like a temperamental pitching machine in a batting cage-generally getting the ball across the plate, but with no really juicy pitches.  But recently, we’ve seen some more consistently good pitches (best-ex around 4.0% instead of 4.25%).  Sure… you’ve seen better, but not by much (3.875% and RARELY 3.75%).  How many more will you count on before calling it a day? Personally, I’d like to end my batting cage session with a nice hit.  The more “pitches” you wait for with rates already at a 4.0%, the greater the risk that the next pitch will be a curve-ball.  To drop the metaphor, although rates this low CAN go slightly lower, the improvements are fairly minimal compared to how much higher they could go.  Still, if you’re not in any particular need to refinance and are operating on a longer-term perspective, we continue to feel good about that “wall” at a 4.25% best-execution level as a good stop-loss point for inclined floaters.  Ask us to explain more about that if it doesn’t make sense.

Another way of looking at the lock/float spectrum based on the lowest MBS coupon actively trading and being produced in the secondary mortgage market:

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