Fed says to cut back on its economic stimulus beginning in Jan.

The U.S. economy is healthy enough to begin weaning it off the steady flow of stimulus the Federal Reserve has been supplying since the Great Recession, the central bank said Wednesday.

In a move that few expected, the Fed said it would be cutting its historic $85 billion a month program to boost the economy by about $10 billion per month beginning in January.

"Information received since the Federal Open Market Committee met in October indicates that economic activity is expanding at a moderate pace," the Fed said in a statement released at the end of a two-day meeting to set policy.

The Fed also said the labor market has improved further, household spending and business investment advanced and inflation expectations are stable.

The upbeat tone of the statement boosted stocks. The Dow Jones industrial average jumped 150 points shortly after the news.

"They finally pulled a Band-aid off that they've been tugging at for a long time. The initial reaction is that tightening will be bad for stocks, but upon further reflection investors realize that to some extent tightening represents a view that the economy is stronger and can survive higher rates," Rick Meckler, president of hedge fund Libertyview Capital Management told Reuters.

To cushion the impact on financial markets, the Fed strengthened its commitment to record-low short-term rates. It says it plans to hold its key short-term rate near zero "well past" the time when unemployment falls below 6.5 percent.

In his last new conference as Fed chief, Bernanke said the Fed would trim the stimulus program more at future meetings, depending on economic conditions. Vice chair Janet Yellen is the presumed successor when Bernanke steps down in January.

Bernanke warned, however, that the economy remains in need of the Fed's aid.

"Today's policy actions reflect the committee's assessment that the economy is continuing to make progress but that it also has much farther to travel before conditions can be judged normal," he said. "Notably despite significant fiscal headwinds, the economy has been expanding at a moderate pace and we expect that growth will pick up somewhat in the coming quarters helped by highly accommodative monetary policy and waning fiscal drag."

The Fed's action comes after encouraging reports that show the economy is accelerating.

Hiring has been robust for four straight months. Unemployment is at a five-year low of 7 percent. Factory output is up. Consumers are spending more at retailers. Auto sales haven't been better since the recession ended 4½ years ago.

What's more, the stock market is near all-time highs. Inflation remains below the Fed's target rate. And the House has passed a budget plan that seems likely to avert another government shutdown next year. The Senate is expected to follow suit.

One factor of concern for some members is inflation, which remains historically low. The Fed's optimal rate is 2 percent. For the 12 months ending in October, consumer inflation as measured by the Fed's preferred index is just 0.7 percent, well below its target.

But the Fed sees inflation slowly moving toward its target, according to its most recent economic projections that were released Wednesday. The Fed projects inflation would range between 1.4 percent and 1.6 percent next year and could reach the Fed's target in 2015 at the earliest.

Fed officials still project economic growth of roughly 3 percent next year. But they are slightly more optimistic about unemployment, predicting it could fall as low as 6.3 percent in 2014, down from a low of 6.4 percent forecasted in September.

Nine of the voting members of the FOMC supported the decision to start tapering. Only Boston Fed President Eric Rosengren dissented, noting the elevated unemployment rate and inflation below the 2-percent target.

After nearly eight years, Ben Bernanke is stepping down as Fed chairman early next year. His designated successor, Vice Chair Janet Yellen, faces Senate confirmation this week. Yellen is known to lean dovish in her stance—favoring easy policy like Bernanke—which would likely bode well with markets.

The Associated Press and CNBC's JeeYeon Park contributed to this report.

Soaring new home sales: Not what they seem

It was the sharpest jump in more than three decades, but housing watchers are already poking holes in the new home sales numbers. After delays due to the government shutdown, data for both September and October were released together, in addition to a large downward revision for August. Follow the numbers, and the gains are not quite what the headline seems.

Contracts signed to buy newly built homes jumped 25.4 percent in October month to month, after falling 6.6 percent in September from August. The seasonally adjusted annual rate went from an originally reported 421,000 units in August, which was revised down to 379,000 units, and to 354,000 units in September. The number for September was a 10 percent drop from September of 2012. It then rose to 444,000 units in October. There is a nearly 20 percent margin of error on all these numbers.

"The October 'preliminary' report released this morning, along with the terrible August and September data, is the outlier and will be revised lower next month in line with the new trend lower that began in July," noted housing analyst Mark Hanson.

August sales estimates were revised down by 15 percent on an unadjusted basis and September sales dropped from there.

"Both the September and October new home sales data were released together and averaged 399,000 annualized versus the estimate of 424,000 and compares with the average year-to-date of 422,000," said Peter Boockvar, chief market analyst of economic advisory firm The Lindsey Group. "The weakness seen in July through September was clearly in response to the rise in rates and the almost 25-basis-point decrease in mortgage rates in October seemed to have brought out buyers that were previously on the fence."

Builders say it wasn't just the falling rates, but the end of the government shutdown.

"I think it built up some pent up demand," said Alan Laing, CEO of Pennsylvania-based Orleans Homes. "We saw immediately after the resolution, traffic and sales got better in the second half of October."

The short drop in mortgage rates may not, in fact, have had as much of an impact on sales as some think. Lower prices may have. The median price of a new home sold in October was $245,200, a drop of 1 percent from a year ago. While that may not seem like a lot, it is the lowest monthly median since November of 2012. Prices have been going up dramatically on an annual basis for both the builders and for existing home sales.

The mortgage rate card can actually be played both ways. Steven Alloy, president of Virginia-based Stanley Martin Homes, said rising rates will drive more home sales, not less.

"If you are somebody considering buying a house, one of your great fears is that rates go up, so if they start to move, people will start to believe that they will keep moving, and as soon as they believe they are going keep moving they are going to come out in droves," he said.

Mortgage rates have jumped dramatically in just the last week on positive economic data. The average rate on the 30-year fixed conforming loan hit 4.51 percent last week, according to the Mortgage Bankers Association, but are already higher today. Should the monthly jobs report released on Friday be better than expected, interest rates will surge ever higher.

—By CNBC's Diana Olick.

Housing market showing more signs of fraying at the edges

Signed contracts to buy existing homes fell for the fifth straight month in October, as the government shutdown added to an overall slowdown in the U.S. housing market. So-called pending home sales eased 0.6 percent from an upwardly revised September reading and are down 1.6 percent from October 2012, according to the National Association of Realtors.

This is the lowest sales pace since December 2012. Pending home sales are an indicator of closed sales in November and December.

"The government shutdown in the first half of last month sidelined some potential buyers. In a survey, 17 percent of Realtors reported delays in October, mostly from waiting for IRS income verification for mortgage approval," said Lawrence Yun, chief economist for the Realtors in a release.

Regionally, gains in pending home sales in the Northeast and Midwest were stronger, while the South and West saw deeper declines. Sales rose 2.8 percent month-to-month in the Northeast and 1.2 percent in the Midwest. Sales slipped 0.8 percent in the South from September and in the West the decline was steepest, with 4.1 percent fewer buyers signing contracts.

"We could rebound a bit from this level, but still face the headwinds of limited inventory and falling affordability conditions. Job creation and a slight dialing down from current stringent mortgage underwriting standards going into 2014 can help offset the headwind factors," Yun said.

While the Realtors' survey, which draws its data from regional multiple listing services, showed a big drop in the usually investor-heavy West, another report saw investors returning to the market in October after stepping back earlier in the year. After surging to 23 percent of the market in February, investors made up just 16.6 percent of home buyers in August, according to Campbell/Inside Mortgage Finance. Over the past two months, however, that share has climbed back to 17.4 percent.

"The two-month rise in investor activity is significant given that it occurred at the same time the proportion of distressed properties in the housing market has continued to fall," the report said.

—By CNBC's Diana Olick

Sales of bank-owned homes decline in California as markets get closer to normal

Sales of bank-owned homes constituted a majority of California home sales as recently as four years ago, but now represent a small fraction of sales in the state, according to data that Realtors are pointing to as evidence of continued recovery in the real estate market.

“In the beginning of 2009, 60 percent of the closings in our state were REOs (repossessed homes),” California Association of Realtors chief economist Leslie Appleton-Young said in a Tuesday conference call. “Now it’s around 5 percent of total sales.”

Appleton-Young on Tuesday presented the Realtors’ forecast for the coming year during a conference call. Appleton-Young delivered her remarks on the same day that the Realtors group opened its California Realtor Expo at the Long Beach Convention Center.

In terms of pricing, the trade group is predicting the median price of a single-family home in California will rise to $432,800 in 2014. That figure would signify a 6 percent rise over the projected 2013 median of $408,600.

A median price of $408,600 would be 28 percent higher than last year’s prices, but a modest rate of appreciation combined with a diminishing proportion of bank-owned and other distressed homes among California real estate deals can be interpreted as one sign the state’s housing market is returning to a “normal” situation.

Concerning distressed properties — foreclosures and short sales — one analyst said a combination of factors including homeowners and banks finding alternatives to foreclosure, the policy impact of the state’s new Homeowners Bill of Rights and the fact that many foreclosures have already been processed has resulted in a downward trend in foreclosure activity.

The trend includes the Los Angeles and Southern California markets, said Daren Blomquist, spokesman for the Irvine-based RealtyTrac, a company that lists foreclosed properties and collects real estate data. Blomquist said foreclosure filings in Los Angeles and San Bernardino counties have fallen for the past 21 and 15 months respectively.

The Homeowners Bill of Rights is a package of laws that state Attorney General Kamala Harris and Democratic lawmakers pushed for last year. The laws include several provisions to prevent or delay foreclosures, including a ban on “dual tracking” activities in which banks work on a homeowner’s loan modification request while simultaneously processing a foreclosure.

He also said banks became more willing to let homeowners pursue short sales — deals in which houses were sold for less than the outstanding mortgage debt.

Blomquist said the laws resulted in a sharp decrease in foreclosure activity from December to January, but he predicted that many foreclosures would be merely delayed — not prevented — by the new laws.

Home prices have appreciated rapidly this year. In August, California prices rose to $441,330, which was about 28 percent higher than prices from 12 months prior, according to the California Association of Realtors. The figure also signified the highest price recorded since December 2007.

Realtors are projecting the rate of appreciation to cool off next year. Scott Underwood, a Long Beach-based broker, said upward movement in mortgage rates has calmed recent conditions in which a house may get a rush of offers as soon as it goes on the market. That makes it easier for parties on either side of the deal to assess a fair price.

“Now, all of a sudden, there’s less of a frenzy and it’s easier to work in (and) conceptualize for buyers and sellers,” he said.

The California Realtor Expo in Long Beach is a three-day convention for the real estate industry. Scheduled events for attendees include educational sessions on California demographics, property management, marketing and how to use data while interacting with clients.

Single family home prices rise, but at less feverish pace

U.S. single-family home prices rose in July, albeit at a slightly slower pace, a closely watched survey showed on Tuesday.

Even so, the year-on-year gain was the strongest in more than seven years.

The S&P/Case Shiller composite index of 20 metropolitan areas rose 0.6 percent on a seasonally adjusted basis, compared to economists' forecasts for a 0.8 percent gain. Prices rose 0.9 percent in June.

On a non-adjusted basis, prices rose 1.8 percent.

Compared to a year earlier, prices were up 12.4 percent, matching economists' expectations and marking the strongest rise since February 2006. Prices were up 12.1 percent in the year to June.

The report suggested the housing sector continues to recover despite a recent rise in mortgage costs. Economists have pointed to a stronger housing market as a bright spot in the U.S. economic rebound.

Prices in all 20 cities rose on a non-seasonally adjusted yearly basis, led by a 27.5 percent surge in Las Vegas and followed closely by a 24.8 percent gain in San Francisco.

Robert Shiller, one of the index's namesakes, said that Las Vegas figure gave him pause.

"I'm starting to worry about a bubble. In some cities it's looking bubbly now," Shiller told CNBC's "Squawk on the Street" Tuesday

"The really dramatic cities tend to be cities that had bubbles in the recent past - California, Phoenix, Vegas - It's regional somewhat. The northeast is relatively mild."

Shiller also cautioned the rally in prices could run out of steam soon.

"It might be slowing down, because the thing that's driving this doesn't seem to be excitement about a new era," he said. "It's a mixed picture and I don't know where home prices are going to go. This might be the beginning of a slowdown. It could be the beginning of a bubble."

Home resales jump to 6-1/2 year high as housing recovery rolls on

U.S. home resales hit a 6-1/2 year high in August as buyers flocked back to the market to lock in cheap borrowing costs amid rising mortgage rates, a signal of continued strength in the housing market recovery.

The National Association of Realtors said on Thursday existing home sales increased 1.7 percent to an annual rate of 5.48 million units last month, the highest level since February 2007 when property values began to decline after the sector's boom and bust.

Economists polled by Reuters had expected home resales to rise to a 5.25 million-unit rate. The housing recovery has helped shore up the economy by bolstering household finances and supporting consumer spending.

Lawrence Yun, NAR chief economist, said the housing market may be experiencing a temporary peak as would-be buyers sitting on the fence are pushed to close deals ahead of likely price and borrowing cost increases.

"Rising mortgage interest rates pushed more buyers to close deals, but monthly sales are likely to be uneven in the months ahead from several market frictions," he said, pointing to tight inventory limiting choices in many real estate pockets.

Mortgage rates have risen in recent months after hitting a low of 3.35 percent in May, according to data from Freddie Mac. The rate for a 30-year fixed rate loan was at 4.5 percent as of Sept. 19, hovering near a two-year high.

The Federal Reserve cited tighter financial conditions as one reason for its decision this week not to taper its stimulus program aimed at supporting growth, a surprise to investors and economists who had expected it to scale back bond-buying. Slower asset purchases would have pushed mortgage rates even higher.

Last month, the inventory of unsold homes on the market increased slightly and represented 4.9 months' supply at August's sales pace, the NAR said.

"There's an ongoing housing shortage," Yun said, adding: "I don't anticipate this housing shortage to go away."

The months' supply remained below the 6.0 months that is normally considered as a healthy balance between supply and demand. The U.S. housing market had been impacted by tight supplies in some parts of the country.

The median home sales price in August rose 14.7 percent from a year ago to $212,100.

Distressed properties, foreclosures and short sales, which typically occur at deep discounts, accounted for about 12 percent of overall sales last month, the lowest since NAR began tracking the data in 2008.

Investors bought 17 percent of homes in August, with first-time buyers accounting for 28 percent of the transactions.

Rising home values and mortgage interest rates have started to price some first-time buyers out of the housing market and affect affordability.

To Figure Out Where Real Estate Is Headed, Start Driving

Metrostudy, a real estate consulting firm based in Houston, analyzes the health of the residential market in metropolitan areas across the U.S. and issued prescient warnings about the coming housing bust as early as 2004. One of its main analytical tools is what makes Metrostudy interesting: drive-bys.

Employees drive through newly built—or still being built—home developments and start observing. Are there toys on a house’s lawn? Good sign: A family has moved in. Families mean stability. Is there a garden hose attached to the side of the house? Another good sign. The house is not only occupied, it has an owner who cares about his or her property. A welcome mat is always, well, welcome.

A bad sign: no curtains in the windows. That means the house could be unoccupied—and unsold. Two others that trigger alarms are a high number of empty lots and newly completed but clearly empty houses, both indicators a developer may have badly overestimated demand and could soon be choking on inventory.

Analyzing all this data streaming in from Boston to Miami is Brad Hunter, chief economist of Metrostudy. He was one of the first to observe signs of life in the residential market in 2009, saying home sales would show staying power even after the end of President Obama’s tax break on residential sales.

Now, Hunter is forecasting double-digit increases in new home prices for the rest of the year; the latest number released on July 30 shows a jump of 12 percent. “People are buying homes to live in them,” says Hunter. That wasn’t always the case at the height of the frenzy last decade, when speculators financed by ultracheap mortgages and zero down payments bought newly built, unoccupied homes—and sometimes empty lots—to flip to the next buyer.

Hunter sees the speculative excess gone from the market—well, mostly gone. Developers are buying lots again in desirable central locations, driving up prices. The once-hot exurbs still have unsold homes and empty lots aplenty, but developers are shunning them for now.

Next year, says Hunter, will be different: He predicts new home prices will grow only 6 percent in 2014 as interest rates keep rising. “Mortgage rates could pose a challenge to affordability,” he says.

By Christopher Power
Power is the Global Economics editor at Bloomberg Businessweek.

Home prices rise most since 2006, pace cools: S&P/Case-Shiller

U.S. single-family home prices rose in May, though the pace of gains cooled compared to the month before, a closely watched survey showed on Tuesday.

The S&P/Case Shiller composite index of 20 metropolitan areas gained 1 percent on a seasonally adjusted basis, shy of economists' forecast for a 1.5 percent increase. That marked a slower pace from April's 1.7 percent rise.

On a non-adjusted basis, prices rose 2.4 percent.

Case-Shiller Index shows best gains in 7 years Robert Shiller, co-founder of the Case-Shiller Index, breaks down the latest numbers on housing and which cities are "bubbling up."

Compared to last May, prices also fell short of expectations, rising 12.2 percent from a year earlier. Still, it was the biggest annual gain since March 2006, matching a record set in April.

The report was unlikely to alter economists' views that the housing sector continues to recover, making it a bright spot for the economy.

"The cities that bubbled in the past are bubbling again," Robert Shiller, economist and co-founder of the S&P/Case-Shiller Home Price Index, told "Squawk on the Street" Tuesday.

"To me, it seems to be at least partly psychological. They've seen it before and they're ready for it again … It seems like California has historically been the most bubbly state in the country and it continues."

Shiller said that the new factor emerging in the numbers is the effect of institutional investors on home prices. "They've learned about momentum and they're saying 'hey, this is it.' The housing market is showing a lot of upward momentum. And you know, I think they're probably right, at least for the short term."

"For a flipper who can get out in about a year, it seems to be a fairly safe bet," he added.

All 20 cities rose on a yearly basis, led by a 24.5 percent surge in San Francisco.

New home sales surge to five-year high despite higher rates

Sales of new U.S. single-family homes vaulted to a five-year high in June, showing little signs of slowing in the face of higher mortgage rates.

The Commerce Department said on Wednesday sales increased 8.3 percent to a seasonally adjusted annual rate of 497,000 units, the highest level since May 2008.

Sales increased 1.3 percent in May.

Economists polled by Reuters had expected new home sales to rise to a 482,000-unit rate last month.

Compared with June last year, sales were up 38.1 percent, the largest increase since January 1992.

The third straight month of gains in new home sales, which are measured when contracts are signed, suggested the housing market was gaining more muscle and should allay concerns that higher mortgage rates could slow down momentum.

Mortgage rates have spiked in anticipation of the U.S. Federal Reserve starting to taper its generous monetary stimulus later this year. Rates still remain low and Fed Chairman Ben Bernanke last week expressed optimism the housing market recovery would continue.

Last month, the inventory of new homes on the market increased 1.3 percent to 161,000, the highest since August 2011, as builders continue to ramp up production to meet the growing demand.

Still, supply remains tight, putting upward pressure on prices. The median new home price increased 7.4 percent from a year ago.

At June's sales pace it would take 3.9 months to clear the houses on the market, down from 4.2 months in May. A supply of 6.0 months is normally considered as a healthy balance between supply and demand.

Sales last month rose in three regions, but fell in the Midwest.

US Home Prices Jump in April, Setting Record

U.S. home prices took a major leap in April, setting a monthly record for gains.

From March to April, home prices gained 2.6 percent and 2.5 percent for the top 10 and top 20 markets respectively, according to the latest S&P/Case-Shiller Home Price Indices. Average prices rose 11.6 percent and 12.1 percent in April from a year ago.

"The recovery is definitely broad based," said David Blitzer of S&P Dow Jones in the report. "The two composites showed the largest year-over-year gains in seven years."

Atlanta, Las Vegas, Phoenix and San Francisco posted year-over-year gains of more than 20 percent in April, with San Francisco leading the way at 23.9 percent. Phoenix posted 12 consecutive months of double-digit growth, as investors there continue to compete for what few distressed properties are for sale. Inventories did rise in Phoenix in May slightly, but demand is still outstripping supply, and pushing prices higher.




Concerns about rising mortgage rates, which spiked in to the mid-4 percent range in just the past week, have dampened expectations for home price gains this summer. Analysts also worry that prices are rising too fast, far faster than income growth, and will soon price too many potential buyers out of the housing market.

"Today's Case-Shiller numbers may reflect where the housing market has been in some of the frothier metros, but they are not indicative of where it's headed," said Zillow's chief economist, Stan Humphries. "The housing market worm has turned over the past few weeks—inventory levels are beginning to show signs of easing, and mortgage interest rates are creeping up. Going forward, both of these factors will help mitigate extreme price spikes caused by very strong housing demand and very low housing supply."

This latest report only tracks prices on a three-month moving average through the end of April, well before mortgage rates began their climb. Still, Blitzer contends that rising rates will not slow price gains.rates in the past, often by shifting from fixed rate to adjustable rate loans. In the housing boom, bust and recovery, banks' credit quality standards were more important than the level of mortgage rates.The most recent Fed Senior Loan Officer Opinion Survey shows that some banks are easing credit restrictions. Given this, the recovery should continue," he said.

As of the end of April, average home prices across the nation were back to levels of early 2004. Prices are still down between 26 and 27 percent from their peaks in the summer of 2006.

Boom Is Back: US Home Prices Jump Most in Seven Years

U.S. single-family home prices rose in March, racking up their best annual gain in nearly seven years as the housing recovery continues to provide a source of strength for the economy, a closely watched survey showed on Tuesday.

The S&P/Case-Shiller composite index of 20 metropolitan areas gained 1.1 percent in March on a seasonally adjusted basis, topping economists' forecasts for 1 percent.

Prices in the 20 cities jumped 10.9 percent year over year, beating expectations for 10.2 percent and the biggest increase since April 2006.

All 20 cities covered by the index saw yearly gains for the third month in a row. Average prices in March were back at their late-2003 levels.

For the first quarter of this year, the seasonally adjusted national index rose 3.9 percent, stronger than the 2.4 percent gain that was seen in the final quarter of last year.

S&P/Case-Shiller Home Price Indices show strong gains for February 2013

Data through February 2013, released today by S&P Dow Jones Indices for its
S&P/Case-Shiller1 Home Price Indices, the leading measure of U.S. home prices, showed average home prices increased 8.6% and 9.3% for the 10- and 20-City Composites in the 12 months ending in February 2013. The 10- and 20-City Composites rose 0.4% and 0.3% from January to February.

All 20 cities covered by the indices posted year-over-year increases for at least two consecutive months. In 16 of the 20 cities annual growth rates rose from the last month; Detroit, Miami, Minneapolis and Phoenix saw slight annual deceleration ranging from -0.1 to -0.4 percentage points. Phoenix continued to stand out with an impressive year-over-year return of +23.0% while Atlanta and Dallas had the highest annual growth rates in the history of these indices since 1992 and 2001, respectively.

“Home prices continue to show solid increases across all 20 cities,” says David M. Blitzer, Chairman of the
Index Committee at S&P Dow Jones Indices. “The 10- and 20-City Composites recorded their highest annual growth rates since May 2006; seasonally adjusted monthly data show all 20 cities saw higher prices for two months in a row – the last time that happened was in early 2005.

“Phoenix, San Francisco, Las Vegas and Atlanta were the four cities with the highest year-over-year price
increases. Atlanta recovered from a wave of foreclosures in 2012 while the other three were among the hardest hit in the housing collapse. At the other end of the rankings, three older cities – New York, Boston and Chicago – saw the smallest year-over-year price improvements.

“Despite some recent mixed economic reports for March, housing continues to be one of the brighter spots in the economy. The 2013 first quarter GDP report shows that residential investment accelerated from the 2012 fourth quarter and made a positive contribution to growth. One open question is the mix of single family and apartments; housing starts data show a larger than usual share is apartments.”

2012 Builders Top 100 Ranking - West Region

Region: West
Type of home: All types
Status: Public and Private
What they build: All for sale products
Note: (p) indicates a public company.
N/A indicates information not available
* Declined to share revenue numbers
† Home building revenue only
‡ Estimated revenue
				(in millions)
2012 Rank	2011 Rank	Company	Total Closings	Total Revenue
1	1	D.R. Horton (p)	19,954	$4,722
2	2	PulteGroup (p)	16,505	$4,820
3	3	Lennar Corp. (p)	13,802	$4,105
5	5	KB Home (p)	6,282	$1,560
6	7	Hovnanian Enterprises (p)	5,356	$1,806
7	8	The Ryland Group (p)	4,809	$1,308
8	9	Beazer Homes USA (p)	4,428	$1,006
9	10	Meritage Homes Corp. (p)	4,238	$1,194
10	6	Habitat for Humanity International	3,766	$1,500
11	11	M.D.C. Holdings (p)	3,740	$1,203
12	13	Standard Pacific Corp. (p)	3,329	$1,275
13	12	Toll Brothers (p)	3,286	$1,883
14	14	Taylor Morrison	2,933	$1,400
18	18	Weyerhaeuser Real Estate Co. (p)	2,314	$1,070
19	21	Shea Homes	1,921	$814
26	29	Woodside Homes	1,300	$329
33	39	William Lyon Homes	950	$373
40	42	Polygon Northwest Co.	832	$232
42	40	Hayden Homes	785	N/A
49	46	NeighborWorks America	608	N/A
50	106	Saint Aubyn Homes	605	$147
53	80	CBH Homes	548	$85
55	74	Brookfield Residential Properties (p)	533	$1,340
56	54	Corky McMillin Cos.	529	$122
56	47	Discovery Builders/A.D. Seeno Construction	529	$269
67	N/A	Harmony Homes	466	$106
98	N/A	Edge Homes	335	$70

Housing starts at highest level since 2008

Groundbreaking to build homes rose in February and new permits for construction climbed to the highest level since 2008, a sign the nation's housing market recovery is gathering steam.

The Commerce Department said on Tuesday that starts at building sites for homes rose 0.8 percent last month to a 917,000-unit annual rate. That was in line with analysts' expectations of a 915,000-unit rate.

Starts for single-family units, which comprised about two thirds of the total, edged up 0.5 percent to their highest level since June 2008.

Permits for future home construction rose to a 946,000-unit rate, also the quickest since June 2008.

The housing market has regained some footing after a historic collapse that helped push the economy into a deep recession.

Home building added to national economic growth last year for the first time since 2005 and Tuesday's data reinforces the view that it will provide stronger support this year. That could help counter the drag expected from tighter fiscal policy as Washington works to shrink the federal budget deficit.

"Home building continues to recover and add to the recovery," said Gus Faucher, an economist at PNC Financial Services in Pittsburgh. "The rise in permits suggest we will have a solid spring."

The housing data was just the latest to suggest the economy has built a fair bit of momentum in the first quarter. Nevertheless, the Federal Reserve at a meeting on Tuesday and Wednesday is expected to push forward with plans to buy $85 billion in bonds per month until its sees a substantial improvement in the labor market outlook.

Data for U.S. housing starts can be volatile and is sometimes subject to large revisions. The government revised upward its estimate for January housing starts to a 910,000-unit rate.

The housing market remains a shadow of its former self, with starts at less than half of their pre-recession peak and near levels seen in the early 1990s.

The recovery also has been bumpy. In March, homebuilder sentiment slipped to the lowest level in five months as supply chain concerns and rising costs dented enthusiasm, according to data released on Monday.

Stock index futures were little changed following the data amid caution ahead of a crucial vote in Cyprus that could lead the country into default. Investors are waiting to see if the nation's troubles would have a wider impact in the euro zone.

Inventory of existing homes at 13-year low

U.S. home resales edged higher in January and left the supply of homes at its lowest level in 13 years, a sign that steam is gathering in the U.S. housing market.

The National Association of Realtors said on Thursday that existing-home sales rose 0.4 percent last month to a seasonally adjusted annual rate of 4.92 million units.

That was the second highest rate of sales since November 2009, when a federal tax credit for home buyers was due to expire.

Analysts polled by Reuters had forecast a 4.9 million-unit rate.

The U.S. housing market tanked on the eve of the 2007-09 recession and has yet to fully recover, but steady job creation helped the housing sector last year, when it added to economic growth for the first time since 2005.

The nation's inventory of existing homes for sale, which is not seasonally adjusted, fell 4.9 percent from December to 1.74 million, the lowest level since December 1999.

Many Americans are holding back from putting their homes on the market because they owe more on their mortgages than their homes are worth. A sharp drop in inventories over the last year has given developers more incentive to build homes. Home building is expected to boost the economy more in 2013 than it did last year.

Inventories were down 25.3 percent from January 2012.

At the current pace of sales, inventories would be exhausted in 4.2 months, the lowest rate since April 2005.

The low inventories are also helping pushing prices higher.

Nationwide, the median price for a home resale was $173,600 in January, up 12.3 percent from a year earlier.

Home Builders Won't Drop Prices

A report this week from Barclay's downgrading the stocks of several of the nation's largest public home builders drew quick contest from the National Association of Home Builders, but not for the main premise. The Barclay's report centered largely on, "stretched" stock valuations, but it also cited a secondary concern about new home prices.

"New home prices have dramatically outpaced existing home prices, and the reason for that is because you have a very constructed mortgage market today. The only people who can buy are people who are very well off, so that's created a positive mix shift," noted Barclay's analyst Stephen Kim in an interview on CNBC's "Street Signs."

"But if everybody's hopes and dreams about housing come true, which is what's driving the valuations on the stocks, guess what's going to happen? You're going to get a lower mix of buyers into the market which is going to bring new home prices down even as existing home prices are going up."

Right now the divide between new and existing home prices is wider than ever. The average price of an existing home in December was $231,400, according to the National Association of Realtor's, while the U.S. Commerce Department reported the average price of a newly built home stood at 304,000.

In their most recent quarterly statements, all of the largest public home builders reported large annual jumps in the average prices of their homes sold. Pulte's prices jumped 6 percent to $287000, for Lennar it was a seven percent surge to 261,000 and Meritage led the group with a 17 percent annual jump in average sale prices to $323,000.

"New home prices are advancing faster than existing home prices because demand has increased and, as Kim did admit, the mortgage filter is allowing only higher income or at least higher net worth people through the application net, and they are purchasing higher valued homes. But that is true of existing purchases as well," argues David Crowe, chief economist for the NAHB.

Crowe also makes the argument that new home prices are dictated by costs and demand. Both, he says are rising.

"Lumber and other building material prices have risen very rapidly recently. Shortages of lots and labor supply are beginning to show up, and I expect as new household formations begin to recover, that shortage will expand to more markets. The way to get more resources back into the housing market is to raise the price paid, i.e., wages and land prices," says Crowe.

Builder profits, he notes, among the small private builders (who still control 70 percent of the market), have been negligible for several years.

"They will have to raise prices to compensate for their efforts, risks and, at least for a short time, being the only ones left," adds Crowe

Courtesy of CNBC's Diana Olick

Housing Prices Climb; Market 'Clearly Recovering'

U.S. single-family home prices rose in November, building on a string of gains that points to a housing market that is on the mend, data from a closely watched survey showed on Tuesday.

The S&P/Case Shiller composite index of 20 metropolitan areas gained 0.6 percent in November on a seasonally adjusted basis, in line with economists' forecasts.

Prices on a non-adjusted basis slipped 0.1 percent. The non-adjusted numbers showed prices fell in about half of the cities covered by the survey, with the winter months typically a weak period for housing, the survey said.

S&P/Case-Shiller: US Home Prices Extend Gains 

The latest S&P/Case-Shiller report shows U.S. home prices continued to rise through November of last year, with David Blitzer, S&P 500 Index Committee Chairman.

"Housing is clearly recovering", David Blitzer, chairman of the index committee at S&P Dow Jones Indexes, said in a statement.

"There's a lot of momentum," he added during an interview on CNBC's "Squawk on the Street." "It shows up in all the housing statistics, not just the prices. As far as I can see it's going to continue well into the new year."

Prices in the 20 cities rose 5.5 percent year over year.

It was the 10th month in a row that prices have increased, the longest string of gains since before the market started to turn down in 2006.

The housing market became a bright spot for the economy last year as prices rose and inventory tightened. The sector is expected to contribute to economic growth in 2013.

Coutersy of CNBC