New-Home Sales Surge Nearly 19%

After a sluggish start to 2014, new-home sales posted a strong rebound in May. Sales of newly built single-family homes soared to the highest rate since May 2008, jumping 18.6 percent last month, according to data released Tuesday by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

“This increase is a welcome sign after a slow start to 2014,” says David Crowe, chief economist of the National Association of Home Builders. “As job creation continues, we can expect further release of pent-up demand and continued gradual growth in the housing recovery.”

Across the country, regions posted big gains in new-home sales, with the Northeast leading the pack. Sales of new-homes jumped 54.5 percent in the Northeast, 34 percent in the West, 14.2 percent in the South, and 1.4 percent in the Midwest.

Inventory levels mostly stayed flat, as builders continue to be cautious about overbuilding. The inventory of new homes for sale held steady at 189,000 units in May, representing a 4.5-month supply at the current sales pace.

Source: National Association of Home Builders

Housing Recovery at a ‘Turning Point’

The housing recovery is at a “turning point,” say economists at Wells Fargo Securities, but it needs more jobs and income growth in order to pick up steam.

High unemployment remains a drag on the housing recovery, severely limiting the upside for housing demand nationwide, according to the latest WFS Housing Chartbook. For the housing recovery to gain more traction, “overall employment conditions need to improve further.”

Wells Fargo economists have lowered their projections for new home sales, estimating 440,000 new home sales this year, which would be up 19 percent from last year. In July, Wells Fargo economists had predicted a 24 percent increase in new home sales.

Source: “Wells Fargo Economists Reduce New Home Sales Forecast,” National Mortgage News (Oct. 3, 2013)

Investors Bet on Widespread “Housing Recovery”

Investors are picking up shares of appliances, building materials, and even pickup trucks in betting on a widening housing recovery, The Wall Street Journal reports. Investors say the increase in residential construction and home renovation represents opportunity.

The recovery is in “the very early innings,” Russell Croft, a portfolio manager at Croft Leominster Inc., told The Wall Street Journal. “[I’m trying] to find the secondary or tertiary stocks that might be influenced by housing.”

Following a run-up in shares of home builder stocks — like Lennar, KB Home, and Toll Brothers — investors are now diversifying, looking at such companies like appliance maker Whirlpool (which has surged more than 170 percent since the end of 2011) and Ford Motor Co. for pickup trucks. Investors are looking for anything housing-related.

Home improvement retailers Lowe’s and Home Depot have each soared by about 60 percent over the last 12 months.

With home prices still below about 28 percent from their 2006 peak, investors are seeing plenty of opportunity ahead for the housing market.

“The housing market is one of the best investible themes out there for 2013 and for 2014 as well,” says analyst Kevin O’Keefe with Brown Advisory. Comments on your market?

Source: “Investors Spread Their Housing Bets,” The Wall Street Journal (May 27, 2013)

“Housing Recovery” tied to Mortgage Debt Levels!

Extending tax relief on debt forgiveness is “a high priority,” HUD Secretary Shaun Donovan said at a Senate Banking Committee hearing Thursday. His remarks come at a time when buyers are being drawn back to the housing market thanks to low mortgage rates and other factors.

Prices are rising because the number of foreclosures is declining and underwater borrowers are getting a break, as banks slash the balances of thousands of mortgages and let home owners sell for less than the value of their loans rather than go into foreclosure. Please comments about this and reflections of your market?

Source: “Housing Recovery Depends on Slashing Mortgage Debt,” CNBC.com (Dec. 6, 2012)

Existing-Home “Sales and Prices Up”

Update to share! Existing-home sales rose in April and remain above a year ago, while home prices continued to rise, according to the National Association of REALTORS®. The improvements in sales and prices were broad based across all regions.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 3.4 percent to a seasonally adjusted annual rate of 4.62 million in April from a downwardly revised 4.47 million in March, and are 10.0 percent higher than the 4.20 million-unit level in April 2011.

Lawrence Yun, NAR chief economist, said the housing recovery is underway. “It is no longer just the investors who are taking advantage of high affordability conditions. A return of normal home buying for occupancy is helping home sales across all price points, and now the recovery appears to be extending to home prices,” he said. “The general downtrend in both listed and shadow inventory has shifted from a buyers’ market to one that is much more balanced, but in some areas it has become a seller’s market.”

More information at: http://realtormag.realtor.org/daily-news/2012/05/22/april-existing-home-sales-prices-up

“Real Estate Recovery” Spring test?

How the real estate market will fare in the spring home-selling season will prove a test for housing demand and show which markets will lead a housing recovery, economists say in a recent article at USA Today. Our spring selling season is March through June and the regional Placerville market is showing an increase for housing demand.

Existing home sales and pending sales are up about 9 percent compared to the same time year ago, according to recent data by the National Association of REALTORS®.

Paul Dales of Capital Economics told USA Today that he expects the spring selling season to “be the best in four or five years” for the real estate industry.

Our housing supply of for-sale homes has dropped the most and is more balanced which should be the potential of prices gaining this year. So, we’re optimistic!

Source: “Spring Home Sales Could be Omen,” USA Today (April 2, 2012)

Courts Add To Foreclosure Delays

The recent suspensions of foreclosures by four major companies that service mortgages compound a problem that had existed for years in states where foreclosures are handled by the courts. 

In the 23 states in which foreclosures must be approved by a judge, the process takes longer than in states where courts are not involved, and some economists say it’s among the factors delaying a housing rebound. 

In Florida, Palm Beach County Senior Judge Roger Colton at ‘rocket docket,’ proceedings where he can dispose of 30 foreclosure cases in one hour. 

One comparison widely cited: In California, where judges don’t handle foreclosures, the housing market appears to have hit bottom a year ago and has been bouncing back. In Florida, where foreclosures go through the court system, prices keep falling, and foreclosure inventory continues to rise.

Bank of America Corp. has announced it would suspend foreclosure sales in all 50 states. That follows the bank’s earlier suspension of tens of thousands of foreclosures in the states that handle foreclosures through the court system, a move also taken by GMAC Home Mortgage, Inc., a unit of Ally Financial Inc., and J.P. Mortgage Chase & Co.’s home-loan unit. 

Richard Cordray, Ohio’s attorney general, said Sunday that as many as 40 state attorneys general across the country intend to open an investigation of lenders and servicers to figure out the scope of the problems with foreclosure documents. 

While it remains unclear how long the foreclosure process will be stalled, economists say any delay is bad for the housing market long-term. “Foreclosures are being delayed with good intentions, to protect consumers, but it’s really just delaying the inevitable,” says John Burns, a real estate consultant in Irvine, Ca. “They’re delaying the eventual housing recovery.” 

A report released last month by RealtyTrac, which tracks foreclosures, found that foreclosures sales amounted to an average of 24% of all home sales during the second quarter of this year, which totaled about 248,000 homes. In Nevada, one of several western states that was hard hit by the housing downturn, foreclosure sales comprised 56% of all sales activity. 

Portion of article by Jason Henry for the Wall Street Journal

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