Sales of existing homes bounce back to their highest level since July 2007, boosted by first-time homebuyers. Prices continue to fall.

By Hibah Yousuf, CNNMoney.com contributing writer

NEW YORK (CNNMoney.com) — Sales of existing homes rebounded sharply in September to their highest level in two years, getting a strong boost from first-time homebuyers, according to a report released Friday.

Sales of previously-owned homes jumped 9.4% in September after falling for the first time in four months in August, said the National Association of Realtors. Year over year, sales of existing homes were up 9.2% in September.

“Much of the momentum is from people responding to the first-time buyer tax credit, which is freeing many sellers to make a trade and buy another home,” said Lawrence Yun, NAR chief economist.

Early information from a NAR report to be released next month suggests first-time homebuyers accounted for more than 45% of home sales in the past year.

September home sales hit an annualized rate of 5.57 million properties, up from 5.10 million units in August. A consensus estimate compiled by Briefing.com had forecast sales of 5.35 million units.

Prices still falling. Yun said the market is still underperforming as home values continue to decline.

The median price of homes sold in September was $174,900, falling 8.5% from a year earlier. The drop in prices has been led by an influx of distressed properties, which accounted for 29% of sales in September and include foreclosures and short sales.

“We’re getting early indication of price stabilization but we need a steady supply of qualified buyers to meaningfully bring inventories down and return us to a period of normal, steady price growth and to fully remove consumer fears, which would then revive the broader economy,” Yun said.

With more than 75 million home-owning families having more wealth tied to their homes than the rising stock market, Yun said economic growth without a recovery in their homes’ value “will be one of the weakest in U.S. history.”

The $8,000 tax credit that has helped first-time home buyers take advantage of the most affordable conditions since 1970, but the looming expiration date of the incentive could hold buyers back from entering the market, said NAR president and real estate broker Charles McMillan.

“Our read is that housing overshot on the downside because homes are selling for less than replacement construction costs in much of the country, and the home price-to-income ratio has fallen below the historical average,” McMillan said.

In order for prices to return to normal, Yun says that total housing inventory would need to drop at the 7.5% pace seen in September, which represents a 7.8-month supply, the lowest in almost three years.

To help boost home prices and sales, lawmakers are considering extending the tax credit and expanding it to all but the wealthiest homebuyers.

While keeping the credit would help lift housing prices, senior economist at PNC Robert Dye says it would only be a temporary effect until the program stopped, as was seen with Cash for Clunkers.

“First-time homebuyers don’t represent the bulk of the market and there is strength well beyond them,” said Dye. “If economic indicators such as consumer confidence show improving trends, then experienced homebuyers will stay in the market and take advantage of [the low] prices” even without the credit.

Where the homes are selling. Regionally, the strongest market was the West, where sales climbed 13% to an annualized rate of 1.3 million. That was 5.7% higher than last year’s rate. The median price of homes sold during the month was $219,000, down 15% from last year.

In the Midwest, sales were up by 9.6% to a pace of 1.25 million, which was 7.8% higher year-over year. Prices there have dipped 1% since 2008 to a median of $147,600.

Sales in the South were up 9% from August and 10.8% from last September to a rate of 2.6 million. Prices have dropped 7.6% to $153,500 in the past 12 months.

The Northeast reported a modest rise, with existing sales up 4.4% from August to a rate of 950,000. That was 11.8% from a year ago. The median price there was $234,700, down 7.6% from last year.

Originally posted on money.cnn.com.

The 15-year FRM this week averaged 4.46 percent with an average 0.6 point, down from last week when it averaged 4.47 percent. A year ago at this time, the 15-year FRM averaged 5.77 percent. This is the lowest the 15-year FRM has been since Freddie Mac started tracking it in 1991.

The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.51 percent this week, with an average 0.5 point, unchanged from last week when it averaged 4.51 percent. A year ago, the 5-year ARM averaged 6.02 percent.

The one-year Treasury-indexed ARM averaged 4.52 percent this week with an average 0.6 point, down from last week when it averaged 4.58 percent. At this time last year, the 1-year ARM averaged 5.03 percent.

“Mortgage rates held relatively steady at three-month lows this week,” said Frank Nothaft, Freddie Mac vice president and chief economist. Correspondingly, the Mortgage Bankers Association reported that mortgage applications jumped 12.8 percent over the week of September 18th to the strongest pace since late May, boosted by refinancing activity.”

“In its September 23rd policy statement, the Federal Reserve (Fed) indicated that it plans to keep its benchmark interest rate exceptionally low for an extended period. This will likely benefit consumers who opt for ARMs, because they are typically tied to shorter-term interest rates. The Fed also noted that activity in the economy and housing market has picked up and financial markets have improved.”

Published: September 25, 2009

And are major lenders doing their part, helping modify loans and restructure homeowners’ debts, or are they dragging their feet?

At a House Financial Services Committee hearing, chairman Barney Frank, a Massachusetts Democrat, didn’t hold back: Not only are the administration’s results “disappointing,” he said, but major lenders are performing so poorly that Frank plans to push legislation allowing bankruptcy court judges to slash consumers’ mortgage debts and payments - the so-called “cram down” approach that lenders hotly oppose.

On the other hand, Obama administration representatives at the hearing said lenders and servicers are picking up the pace of loan modifications, and that a new program to facilitate short sales will be rolled out shortly.

FHA Commissioner David Stevens said that since the start of the White House’s “home affordable” efforts, lenders and servicers have offered 571,000 loan modifications to delinquent home owners, and that 360,000 borrowers are now in three-month trial modifications involving sharply lowered payments.

If those owners successfully complete their trials by paying on time, their loans will be permanently modified at the reduced payment levels.

Stevens predicted that the administration’s goal of having more than half a million modifications completed or underway by November 1st will be achieved.

He also said the government is starting a “second look” program, whereby auditors double-check cases where modifications were turned down by loan servicers in error. The program will reopen borderline cases and possibly lead to additional modifications.

Stevens didn’t provide much detail about the upcoming short-sale and deed-in-lieu effort, but did use the word “incentives.” That was interpreted by industry analysts as suggesting the government could provide financial incentives to lenders - especially those holding second liens on properties - to encourage them to speed short sales rather than stalling them.

Second lien holders often demand significant payoffs as the price of agreeing to short sales, even when the property is deeply underwater and the value of their collateral has been totally wiped out.

The Obama administration’s plan almost certainly will offer payments or set minimum compensation levels for such lenders. Details of the program are expected within a week or two, and could be good news for realty brokers seeking to list and close short sales, and for borrowers who urgently need to bail out of houses that have lost much of their value.

Published: September 14, 2009; by Kenneth R. Harney

The total value of detached homes sold  during July was $165 million, 2.9% lower than during July 2008. Monthly  dollar sales volume during 2009 has been down 20% from the same month of  2008. During July, 94 townhouses and condominiums sold for a total of  $14.5 million. Condo sales were up 36% from July 2008. The value grew 27%.

Pending sales during July, 875, though down  from the 933 sales that were pending during June, were the second highest  this year and up slightly over July 2008.

Homes continue to sell more quickly around  the metro. During July, the average home that sold was on the market for  75 days, the shortest sales period of 2009.

The $8,000 tax credit is only for  first-time home buyers. The law-the  American Recovery and Reinvestment Act of 2009-defines “first-time home  buyer” as someone who has not owned a principal residence during the  three-year period before the purchase.

The tax credit is refundable. It could mean  cash for you. If you pay less than $8,000 in federal income taxes, the  government will write you a check for the difference.

Home buyers who file as single or  head-of-household taxpayers can claim the full $8,000 credit if their  modified adjusted gross income is less than $75,000. For married couples filing a joint  return, the income limit doubles to $150,000.

The tax credit especially appeals to people  seeking more affordable homes. Inventories are low in this range. Homes  are selling quicker and for higher prices. It’s a sellers market for more  affordable homes. If “more affordable” describes your home and you are  considering selling, it is a good time to move up, to get that extra  bedroom..

For higher priced homes, however, it’s a  buyers market. Inventories remain high for these homes. Plenty of choice exists and you can still  get a good deal.

For first time buyers, the New Mexico  Mortgage Finance Authority created the Tax Credit Loan Program to help  with the down payment and closing costs. A first-time homebuyer can borrow  8% of the sales price or $6,500, whichever is less, and use the tax refund  to repay the loan.

Give me a call. We will explain the tax  credit program and find your new home.

The Greater Albuquerque Association of Realtors has reported jumps in pending sales month after month for the year and now closed sales are starting to outperform a year before. For June 2009, pending sales were up 9 percent for both year-over-year and month-to-month (from May to June 2009).

The inventory has been dropping for months and was down more than 11 percent in June compared to a year ago. Pricing has still been soft when looking over year-to-year numbers, however, in the last 8 months, the decline has stopped, and median prices of single-family homes has lingered around the $180,000 level.

Job growth is still a struggle for New Mexico as a whole, according to the latest data from the Bureau of Labor Statistics; but the numbers have begun to ease as unemployment dropped to 6.8 percent in June in Albuquerque, way below the national level of 9.5 percent.

August 7, 2009; by M. Anthony Carr

Historically low interest rates and a federal tax credit for first-time homeowners also helped push home sales to their highest level since November, the Commerce Department reported Monday.

While home prices are still falling around the country, sales have now risen for three months in a row. Construction of new homes is at the busiest level since last fall. And home resales rose in June for the third straight month.

“The worst of the housing recession,” said David Resler, chief economist at Nomura Securities, “is now behind us.” And as with the overall economy, the “recovery” is likely to be slow and arduous, he said.

Put in perspective, the improvement in sales is modest. The pace of sales for new homes in June was still 72 percent below the peak of four summers ago, and there is still an enormous inventory of homes lingering on the market.

“There’s been signs of improvement, but we’re a long ways off from being back to a normal market,” said Corey Barton, president of CBH Homes in Meridian, Idaho. Sales were up there in June, but Barton stressed: “It wasn’t our biggest jump in eight years.”

But there were clear signs the housing market is showing more than life than it has at any point since the recession began. Keystone Custom Homes of Lancaster, Pa., which was founded in 1992, had its best June ever. July is looking good, and president Larry Wisdom expects an even stronger August.

“We doubled our sales in May, and then in June it took off,” he said.

New home sales for June clocked in at a seasonally adjusted annual rate of 384,000, blowing past the expectations of economists surveyed by Thomson Reuters, who were looking for 360,000.

The figure is up 11 percent from May, and May’s number of 346,000 was higher than previously thought. The increase is the largest since December 2000, when investors scarred by the tech-stock bubble were looking for more stable places to put their money.

Sales were strongest in the Midwest, where they jumped 43 percent from May’s total. Sales climbed 29 percent in the Northeast and 23 percent in the West. They declined slightly in the South.

The median sales price was $206,200, down from $234,300 a year and $219,000 from May. Economists expect home prices to continue falling until the competition from low-priced foreclosures ebbs sometime next year.

To drum up sales, CBH Homes has had to slash prices by up to 10 percent from last year’s levels. The new homes CBH builds have to compete with the glut of foreclosures, which are drawing many first-time homebuyers.

In addition to lower prices, buyers are rushing to take advantage of a federal tax credit that covers 10 percent of the home price or up to $8,000 for first-time buyers. Home sales must be completed by the end of November for buyers to take advantage.

“There’s definitely more first-time homebuyers in the market than what we’ve seen in the last several years,” Barton said.

Fallout from the housing crisis played a central role in the U.S. recession, now the longest since World War II. Mortgages went bad, homebuilders pulled back and fired thousands of workers, foreclosures spiked and lenders were shuttered by the dozen.

Although the real estate market appears to be starting a recovery, that doesn’t mean it will instantly become a powerful economic engine. Construction is weak because builders still have too many unsold homes sitting vacant.

At the current sales pace, there are enough new homes for sale to last nearly nine months. That’s slightly less time than in May but still much longer than the six-month mark that indicates a balanced market.

Falling prices mean homebuilding companies won’t be making much money anytime soon, but their stocks soared nonetheless on the impressive June sales. Beazer Homes USA gained 13 percent, and shares of Centex and Hovnanian Enterprises rose 9 percent.

By ALAN ZIBEL and ALEX VEIGA, AP Real Estate Writers Alan Zibel And Alex Veiga, Ap Real Estate Writers – Mon Jul 27, 5:45 pm ET

Read the full 2009 2nd Quarter Sales Report

In its latest monthly survey, Standard & Poor’s Case-Shiller index found prices up in a number of key markets: Dallas prices gained 1.7 percent, Denver 1.5 percent and other cities — Washington DC, Seattle, San Francisco, Atlanta, Boston and Cleveland — registered smaller increases.

Nationally, the Case-Shiller index came in slightly negative for the month overall, as did the Federal Housing Finance Agency’s home purchase price index.

But even the most bearish researchers now agree: Prices are bottoming out, even in some of the hardest-hit areas.

Home sales are also up in many local markets, sometimes dramatically so. Take metropolitan Phoenix. According to the latest MDA DataQuick survey, sales in the Phoenix market grew at their fastest pace in two years during May.

Resales of detached houses were up by 56 percent over year ago levels, and condo sales were up by 30 percent.

Even prices in the Phoenix area, a market still weighed down by a high percentage of distressed sales and foreclosures, gained by 3.5 percent in May over April levels.

That’s an important turnaround, but the sobering fact is that even with that gain, prices in Phoenix are still down 38 percent compared with the same period in 2008.

Other important developments this week pointing to improvements in the housing sector:

- Mortgage rates continue to drop, and are now approaching the lows we saw a few months back. According to the Mortgage Bankers Association, average 30 year fixed rates hit 5.3 percent last week-the third straight weekly decline. Fifteen year fixed rates already have pushed below the 5 percent mark - and averaged just 4.8 percent last week.

- Consumer sentiment, as measured by the University of Michigan’s survey, was up slightly again, with more consumers indicating confidence in making “big ticket” purchases, which of course include houses.

Now none of this is to suggest that real estate is in great shape and happy days are here again.

That’s not the case — not with hundreds of thousands of workers losing their jobs every month and the national unemployment rate projected to approach 10 percent. And not with lenders continuing to impose tough credit and underwriting standards on all home purchase mortgage applications.

But after so many months of negative news, we think it’s important to acknowledge the positive signs popping up on home sales, pricing and interest rates - even if we still have a long way to go to full recovery.

Posted on Jul 07th, 2009

by Kenneth R. Harney

Seth Wheeler, a senior adviser to Treasury Secretary Timothy Geithner, says the government is “unlikely to implement another moratorium.”

But Wheeler said the government plans to put in place some programs that encourage lenders to try some alternatives to foreclosure.

Source: Chicago Tribune, Don Lee (07/06/2009)