Mortgage market update from Chris Nooney at Prime Lending:
INFO THAT HITS US WHERE WE LIVE…Getting ready for a recovery could be the theme of last week’s housing reports. Pending Home Sales, after hitting a 19-month high in November, dipped a bit for December, yet came in 5.6% above where they were a year ago. The National Association of Realtors chief economist observed, “Even with a modest decline, the preceding two months of contract activity are the highest in the past four years outside of the homebuyer tax credit period.”

Thursday saw December New Home Sales drop 2.2%, to a lower-than-expected 307,000 annual rate. Yet sales remain in the narrow range they’ve occupied since May 2010. And the best news was that new home inventories dropped to 157,000, the lowest level on record, since 1963. Unsold new homes under construction and unsold completed new homes are at or near record lows. Experts say this is what’s needed to get ready for a sustained housing recovery. Finally, the FHFA price index for homes bought with conforming mortgages was UP 1% in November.

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Mortgage market update from Chris Nooney and Prime Lending:

INFO THAT HITS US WHERE WE LIVE…Well, we can all make our way with a bit of a smile on our faces, courtesy of the latest Housing Starts numbers. At first blush, the December report seemed disappointing, down 4% for the month. But starts overall are UP 24.9% from a year ago and December’s drop was all from multi-family starts, very volatile month-to-month. Single-family starts were UP 4.4% for the month and UP 11.6% for the year. No wonder the National Association of Home Builders confidence index went to 25, its highest reading since 2007.

For those who still couldn’t put on a happy face, Friday’s data should have done the trick. Existing Home Sales were UP 5% in December, their third consecutive gain, to their highest level since January 2011. The inventory of existing homes is down 21% from last year and the months’ supply dropped to 6.2, the lowest level since April 2006. For all of 2011, sales of single-family homes, townhomes, condos and co-ops rose 1.7%, to 4.26 million units.

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Mortgage market update from Chris Nooney at Prime Lending:

INFO THAT HITS US WHERE WE LIVE…The latest opportunity in real estate came December 28, when the Federal Housing Administration extended the waiver of its “anti-flipping” rule through the end of 2012. This lets homebuyers, who need FHA-insured financing, purchase homes that were bought by the seller in the last 90 days. And it gives investors looking to rehab and flip properties an expanded market, including first-time homebuyers and others without large down payments, who need FHA-backed loans.

The Mortgage Bankers Association (MBA) reported that during 2011, near-record-low mortgage rates drove more homeowners to seek refinancing, moving that MBA index up more than 60%. But demand for purchase loans fell versus 2010, although that year’s activity was boosted by the homebuyer tax credit incentives.

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Mortgage market update from Chris Nooney at Prime Lending:

INFO THAT HITS US WHERE WE LIVE…It’s good to show your best face to the world as the new year begins (see Business Tip of the Week, below) and that just got easier to do. Last week’s Pending Home Sales index from the National Association of Realtors (NAR) went UP 7.3% in November, hitting its highest level since April 2010! And that earlier reading was artificially boosted, as buyers rushed to beat the deadline for last year’s home buyer tax credit.

The NAR’s chief economist commented, “Housing affordability conditions are at a record high and there is pent-up demand from buyers who’ve been on the sidelines…. The sustained rise in contract activity suggests that closed existing-home sales…should continue to improve in the months ahead.” The S&P Case-Shiller index for October showed minor price drops in 19 of the 20 surveyed metro areas, but the index was UP 1.9% from its post-crisis low in March 2011.

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Mortgage market update from Chris Nooney at Prime Lending:

INFO THAT HITS US WHERE WE LIVE…Wisely, the National Association of Realtors (NAR) did not follow the diminutive Emperor’s advice last week, admitting they uncovered some mistakes in the statistical model used to estimate national Existing Home Sales the past few years. They therefore had to revise those sales down 14%, to a 4.42 million annual rate in November. Nevertheless, Existing Home sales were UP 4% for the month and UP 12% versus a year ago. And the inventory is down 18% versus last year, now at a 7 months’ supply!

In line with that, Housing Starts were UP 9.3% for November and UP 24.3% versus a year ago, while Building Permits were UP 5.7% for the month. November New Home Sales came in Friday UP 1.6%, with the supply dropping to 6 months, its lowest level since early 2006! The numbers of unsold new homes under construction and unsold completed new homes are also at or near record lows. The FHFA price index for homes financed by conforming mortgages was down just 0.2% in October and is down only 2.8% versus a year ago.

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Mortgage market update from Chris Nooney at Prime Lending:

INFO THAT HITS US WHERE WE LIVE…The housing recovery may be proceeding slowly, but things are definitely not at a standstill. Earlier this year, an industry rent vs. buy index found it is more affordable to buy than rent a two-bedroom home in 72% of America’s 50 biggest cities. In fact, renting was less expensive than buying only in New York, Kansas City, San Francisco and Seattle. And in 10 of the cities where renting was relatively affordable versus ownership, people felt buying may still be a financially sound long-term decision.

A recent consumer study showed people are getting the message. With home prices now at such affordable levels, 62% of those surveyed said buying in today’s market is a good investment over the next 10 years. The most popular advice people would give to anyone thinking of purchasing a home is to avoid buying more house than they can afford. Good advice indeed.

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Mortgage market update from Chris Nooney at Prime Lending:
INFO THAT HITS US WHERE WE LIVE…Enough people were motivated to buy new homes in October to push monthly sales up 1.3% to a 307,000 annual rate. Even better, the motivation was strong enough to send the median price to $212,300, UP 4% over a year ago. Going forward, what should motivate everyone is that the supply of new homes fell to 6.3 months. Nonetheless, new home sales need to get to an annual rate around 950,000 and some observers say that will take another few years.

Housing market pessimists had to be really disappointed by October’s Pending Home Sales. This measure of signed contracts for existing home sales that have not yet closed was UP 10.4% for the month and is 9.2% higher than it was a year ago. This bodes well for existing home sales a few months out. Additional home price data went in opposite directions. The Case-Shiller home price index in the 20 largest metros was down 0.6% in September, but the FHFA index registered a 0.9% price increase for homes financed with conforming mortgages.

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The latest mortgage market update from Chris Nooney at Prime Lending:

INFO THAT HITS US WHERE WE LIVE…The patient approach advocated by the 1st Marquess of Halifax is proving to be the right tactic for mastering today’s housing market. Last week, October Existing Home Sales inched up to an annual rate just under 5 million units. And although things appear to be improving only slowly, existing home sales are actually UP 13.5% from a year ago.

Even better, the months’ supply of existing homes fell to 8.0 and inventory is now down 13.8% versus a year ago. The naysayers jumped on the fact that the median price was also down. But a large portion of October sales came from distressed properties whose prices are heavily discounted. Although some see this as a negative, it’s what’s needed for inventories to be worked down and for the housing market to recover.

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