New-Home Sales Post Biggest Gains in Months

Check out this great post from Realtor Magazine.
 
New-home sales for single-family homes rose 1.3 percent in October, marking the best pace for new-home sales activity since this May, the U.S. Commerce Department reports.
Following the sector’s worst year for new-home activity on record last year, several recent reports are suggesting a pick-up in new construction.
"Builders have been seeing some marginal improvement in sales activity over the past few months, particularly in select markets where consumer confidence is higher due to improved economic conditions," Bob Nielsen, chairman of the National Association of Home Builders, said in a statement. "While this trend is encouraging, overall sales activity is still well below normal due to the effects of overly tight credit conditions for builders and buyers, the continued flow of distressed properties on the market, and inaccurate appraisal values on new homes."
Despite the October gain in sales, new-home sales for the month were at an annual rate of 307,000--still less than half the 700,000 in sales that most economists consider healthy for the housing market.

A Regional Look

A break down of sales by region in October:

• Midwest: Rose 22.2 percent
• West: Rose 14.9 percent
• Northeast: Stayed flat 
• South: Declined 9.5 percent

Inventory Drops Drastically

Nationwide, the inventory of new homes for sale stayed at an all-time record low of 162,000 units in October.
"Particularly encouraging is the fact that builders continue to hold down their inventories to match the current sales rate, with the number of new homes for sale now down to a sustainable, 6.3-month supply," NAHB Chief Economist David Crowe said in a statement.
By Melissa Dittmann Tracey, REALTOR® Magazine Daily News

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Housing to gradually improve in 2012, NAR economist says

Gradual improvement in the housing market is expected next year, with existing-home sales edging up 4% to 5% and new home sales getting an even bigger boost off this year's record lows, the chief economist of the nation's largest real estate group said Friday.
"Tight mortgage credit conditions have been holding back homebuyers all year, and consumer confidence has been shaky recently," Lawrence Yun, chief economist of the National Association of Realtors, said. "Nonetheless, there is a sizeable pent-up demand based on population growth, employment levels and a doubling-up phenomenon that can’t continue indefinitely."
Yun, who made his comments during the annual NAR conference for real estate agents under way in Anaheim, Calif., projected gross domestic product growth of 1.8% for 2011, rising to 2.2% in 2012 with the unemployment rate declining to 8.7% by the second half of 2012.
Mortgage interest rates, he predicted, would gradually rise from record 2011 lows to 4.5% by the middle of 2012.
"Very favorable affordability conditions will dominate next year as well, which will probably be the second best year on record dating back to 1970. Our hope is that credit restrictions will ease and allow more homebuyers to take advantage of current opportunities."
Existing-home sales are forecast to edge up about 1% this year. Based on NAR’s current projection model, existing-home sales would total 4.96 million in 2011. NAR is revising downward existing-home sales totals in recent years although it expects little change to previously reported comparisons based on percentage change.
New-home sales for 2011 are projected at 302,000 this year, a record low, with expectations that they will rise about 23% to 372,000 in 2012.
Housing starts are forecast to rise about 8% to 630,000 from 583,000 in 2011.
With falling inventory, the median home price should rise in 2012, he said.  "Home prices have yet to show a definitive stabilization pattern in most areas. Still, given an over-correction in prices, there likely will be moderate appreciation in 2012," Yun said.
Richard Peach, senior vice president at the Federal Reserve Board of New York, said the economy continues to disappoint. "Among the significant structural impediments are the legacy of the housing boom and bust, and fiscal contrition at the state and local level."
He promoted moving foreclosures by giving incentives to military servicemembers.
"My idea is to allocate certificates to 2.5 million service members who served in Afghanistan and Iraq that could be used as a down payment on a foreclosed home in the Fannie or Freddie portfolio," he said.  This would help to absorb the inventory and stabilize the housing market.

Congress Restores FHA Loan Limits to NAR-Backed Levels

This is great news !!!! 

The U.S. House and Senate yesterday restored FHA loan limits to the level they were at before they were allowed to expire at the end of September. As a result, the limits will rise to 125 percent of the area median home price from 115 percent, up to a  maximum $729,750 from $625,500. NAR estimates that several hundred counties where FHA loan limits fell at the end of September will now rise back up to the previous level.
“The reinstated loan limits will help provide much needed liquidity and stability to communities nationwide as tight credit restrictions continue to prevent some qualified buyers from becoming home owners and the housing market recovery remains fragile,” said NAR President Moe Veissi in a statement released last night.
President Obama is expected to sign the legislation shortly. The restored loan limits are in a broad-based bill that includes funding for a wide variety of federal operations and programs.
The maximum conforming loan limits for secondary mortgage market companies Fannie Mae and Freddie Mac also expired at the end of September, but lawmakers did not include a restoration of those limits in the bill. As a result, conforming loan limits will remain at 115 percent of the area median home price, up to $625,500.
Once President Obama signs the bill, the limits will go into effect.  FHA will release a mortgagee letter to its approved lenders thereafter, containing a list that’s been updated to reflect the new limits. NAR analysts say it will take the agency a short period to update its database and release the mortgagee letter, maybe a couple of weeks.
The funding bill also extends the National Flood Insurance Program (NFIP) until Dec. 16 to allow lawmakers time to consider long-term authorization of that program, which is an NAR priority.