Dan Greenhaus, chief economic strategist at Miller Tabak & Co., says the only way to fix the imbalances in the housing market is to allow time to pass. He believes the market will begin to recover by the middle of next year.
Foreclosure activity rose in 75 percent of the nation’s top metro areas during the first half of the year compared to 2009. RealtyTrac’s Midyear 2010 Metropolitan Foreclosure Market Report shows 154 of the 206 metropolitan areas with a population of 200,000 or more posting year-over-year increases. James J. Saccacio, chief executive officer of RealtyTrac, said that, though there are signs that foreclosures have peaked in some of the hardest-hit markets, the fragile stability in the market is threatened by persistently high unemployment. Rick Sharga, also of Realty Trac, feels that there won’t be any real price appreciation until 2013. More here, here, and here.
According to The Mortgage Bankers Association’s Weekly Applications Survey, demand for purchase loans was up 2.0 percent last week. But despite the highest Purchase Index in a month, the Refinance Index fell 5.9 percent, bringing the measure of total application volume down 4.4 percent. Refinance activity fell due to mortgage rates rising from the record lows recorded the week before. The average contract interest rate for 30-year fixed-rate mortgages increased to 4.69 percent from 4.59 percent. More here and here.
According to Standard & Poor’s Case-Shiller Home Price Indices, prices rose 1.3 percent in May from April and 4.6 percent from 2009. But despite the improvement, David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s, warned that a broader look at price levels over the past year shows no sign of sustained recovery. Blitzer said that, since the lows of April 2009, the housing market has stabilized at a lower level and has been relatively flat for the past seven months. More here, here, and here.
Following a record low in May, new home sales surged 23.6 percent in June, according to estimates from the U.S. Census Bureau and the Department of Housing and Urban Development. The better than expected recovery is misleading, however. Year-over-year numbers were down 16.7 percent and the sales pace was the second slowest since the Commerce Department began tracking the data in 1963. The median sales price of new houses sold in June was $213,400; the average sales price was $242,900. Also, the estimate of new houses on the market at the end of June was 210,000, a 7.6 month supply at the current sales rate. That was down from 9.6 months in May. More here, here, and here.
Drew Kessler, managing director of Rand Mortgage, believes interest rates won’t fall much further than they have already and feels prices will stabilize through the end of the year.
Sales of existing homes fell less than economists expected in June, according to a report from The National Association of Realtors. Sales were down 5.1 percent but, despite the downturn, up 9.8 percent from the year before. Lawrence Yun, NAR’s chief economist, said the market is undergoing understandable swings and sales will only return to a healthy level once jobs are created at a sufficient pace. The NAR also reports total housing inventory was up 2.5 percent to 3.99 million homes for sale at the end of June, which represents an 8.9-month supply. More here, here, and here.
According to The Mortgage Bankers Association’s Weekly Applications Survey, the average contract interest rate for 30-year fixed-rate mortgages fell to 4.59 percent last week from 4.69 percent the week before. The 0.10 percent drop brought rates to their lowest level since the survey began in 1990 and spurred the first increase in demand in five weeks. The Refinance Index was up 8.6 percent and the seasonally adjusted Purchased Index increased 3.4 percent. Michael Frantantoni, MBA’s vice president of research and economics, said refinance activity is up nearly 30 percent over the past four weeks. More here and here.
Housing starts fell 5.0 percent in June, hitting their lowest level since October 2009. But though the Department of Commerce’s residential-construction statistics show the second-straight month of declines in privately owned housing starts, they also show a 2.1 percent rise in building permits. The unexpected jump in permits suggests a boost for building activity in July. Michael Gaspen, an economist at Barclays Capital, said the market is trying to find a bottom following the expiration of the tax credit but he still expects housing starts to slowly rebound in the second half of the year. More here, here, and here.
Without federal tax credits to boost demand, builder confidence dropped to its lowest level since March 2009. The National Association of Home Builders/Wells Fargo Housing Market Index fell two points to 14 in the month of July. The monthly survey gauges builders’ perception of the market for newly built, single-family homes. A number below 50 indicates more builders see conditions as poor than good. David Crowe, NAHB’s chief economist, said the lower number reflects the underlying market conditions, including hesitant buyers, tight credit, and the number of foreclosed and distressed properties priced below the cost of construction. More here, here, and here.