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

Housing recovery is leaving behind first-time buyers

Current homeowners are finally moving up, and distressed sales are making up less of the overall market—all signs of much-needed improvement in housing.

Current homeowners accounted for 54 percent of October’s non-distressed market, up from 50 percent in June, according to a new survey by Campbell/Inside Mortgage Finance.

This as the share of non-distressed sales surged to 64.7 percent, up from 55.7 percent as recently as February.

Unfortunately, first-time home buyers are seeing just the opposite, largely left out of this surge in sales and prices. Their share of the market, usually up in the 40 percent range historically, fell to 34.7 percent in October, the lowest in the Campbell/IMF survey’s three-year history.

The National Association of Realtors put their share even lower, at 31 percent.

Either way, they are the only group of buyers that have not seen their share of non-distressed home purchases rise over the past five months. The mortgage of choice for these buyers, FHA-insured loans, are increasingly tough to obtain.

“Financing of first-time homebuyers with low down payments threatens to become a significant problem in the U.S. housing market,” wrote Thomas Popik, research director for Campbell Surveys. “Fifty percent of first-time homebuyers use FHA financing, but FHA insurance premiums are increasing and underwriting is becoming more strict. Private mortgage insurance has started to fill the gap, but the long-term status of private mortgage insurance is in question pending the publication of the Qualified Residential Mortgage regulation resulting from Dodd-Frank.”

Real estate agents answering this latest survey also noted that the recent hike in FHA mortgage insurance premiums is hitting first-time buyers harder because some sellers are refusing to accept offers that include FHA financing. Adding insult to injury, the FHA, after reporting a major shortfall in its insurance reserve funds, announced it would raise premiums yet again, another 10 basis points early next year.

Lower priced, distressed properties, like foreclosures and short sales, would seem like the best answer for first time buyers, but hungry, all-cash investors are proving to be too much competition. Investors purchased one fifth of all homes that sold in October, up from 18 percent the previous month, and all-cash buyers (largely investors) made up 29 percent of all sales, according to the Realtors.

This is why, despite increasing household formation, rental occupancies continue to fall and rents to rise. Would-be first time home buyers are either choosing or are forced to rent.

US Home Prices Climb for Seventh Straight Month

U.S. single-family home prices rose in August, the latest sign that the housing market is on the mend, a closely watched survey showed on Tuesday.

The S&P/Case Shiller composite index of 20 metropolitan areas gained 0.5 percent on a seasonally adjusted basis, in line with economists' forecasts.

It was the seventh straight month of increases, extending the longest continuous string of gains since prices were boosted by the homebuyer tax credit in 2009 and 2010.

The sustained good news in home prices "makes us optimistic for continued recovery in the housing market," David Blitzer, chairman of the index committee at S&P Dow Jones Indices, said in a statement.

"Even as we end the seasonally strong home buying period, the statistics are positive," said Blitzer.

On a non-seasonally adjusted basis, prices fared better, gaining 0.9 percent.

Prices in the 20 cities climbed 2 percent year-over-year, topping expectations for a 1.9 percent increase.

Robert Gray, managing partner of real estate private equity firm TerraCap Management, said the residential recovery bodes well for the commercial sector: "We think the commercial real estate market, including hotels, office complexes and some retail properties, will now start to recover. Those who missed the boat on the residential recovery would be wise to look into commercial real estate."

S&P 500 futures edged up following the data, but the stock market will be closed for a second day in a row in the wake of a powerful storm that hit the east coast.

Compared to a year ago, prices in Phoenix surged 18.8 percent, the fourth month in a row the hard-hit city has seen double-digit yearly gains, the report said.

Prices in Las Vegas — also one of the more distressed areas in the years since the end of the housing boom - were up 0.9 percent compared to a year ago, the first annual increase since January 2007.

Of the 20 cities in the index, three saw a yearly decline in prices, with Atlanta faring the worst, down 6.1 percent.

Building a Recovery: Home Starts, Permits Both Surge

Groundbreaking on new U.S. homes surged in September to its fastest pace in more than four years, a sign the housing sector's budding recovery is gaining traction.

The Commerce Department said on Wednesday housing starts increased 15 percent last month to a seasonally adjusted annual rate of 872,000 units. That was the quickest pace since July 2008, though data on housing starts is volatile and subject to substantial revisions.

August's starts were revised to show a 758,000-unit pace instead of the previously reported 750,000.

Economists polled by Reuters had forecast residential construction rising to a 770,000-unit rate. 

The housing starts rate is now about 40 percent of its peak in January 2006. The housing market, the Achilles heel of the recovery from the 2007-09 recessions, is slowly healing.

September groundbreaking for single-family homes, the largest segment of the market, rose 11 percent to a 603,000-unit pace - the highest level since August 2008. Starts for multi-family homes climbed 25.1 percent.

Building permits grew by 11.6 percent to a 894,000-unit pace in September. August's permits were unrevised at 801,000 units.

Economists had expected permits to rise to a 810,000-unit pace last month

By: Reuters

Home sales jump to highest since May 2010

Home resales rose at the fastest pace in two years last month and housing prices climbed in hopeful signs that the housing market recovery is gaining traction.

The National Association of Realtors said on Wednesday that existing home sales increased 7.8 percent last month to an annual rate of 4.82 million units last month. That was the fastest annual rate since May 2010 and well above analysts' expectations of a 4.55 million-unit rate.

Nationwide, the median price for a home resale rose to $187,400 in August, up 9.5 percent from a year earlier as fewer people sold their homes under distressed conditions. The nation's inventory of homes - those for sale on the market - rose 2.9 percent during the month to 2.47 million.

"The housing market recovery is becoming much more convincing," said NAR chief economist Lawrence Yun.

The price increase is measured against August 2011, and since then distressed sales have fallen to 22 percent of total sales from 31 percent. Distressed sales also fell in August of this year compared to the prior month.

While the broader U.S. economy appears to be losing steam, housing has gained traction and has become a relative bright spot.

Still, the recovery is from a depressed level. Sales of previously occupied homes remain below the more than 5.5 million that economists consider consistent with a healthy market. And the number of first-time homebuyers, who are critical to a housing rebound, slipped to 31 percent from 34 percent.

Yun said favorable buying conditions get the credit.

Housing starts rise less than expected “The housing market is steadily recovering with consistent increases in both home sales and median prices.  More buyers are taking advantage of excellent housing affordability conditions,” he said.  “Inventories in many parts of the country are broadly balanced, favoring neither sellers nor buyers.  However, the West and Florida markets are experiencing inventory shortages, which are placing pressure on prices.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 3.60 percent in August from a record low 3.55 percent in July; the rate was 4.27 percent in August 2011.

“The strengthening housing market is occurring even with difficult mortgage qualifying conditions, which is testament to the sizable stored-up housing demand that accumulated in the past five years,” Yun added.

Regionally, existing-home sales in the Northeast rose 8.6 percent to an annual pace of 630,000 in August and are also 8.6 percent above August 2011.  The median price in the Northeast was $245,200, up 0.6 percent from a year ago.

Existing-home sales in the Midwest increased 7.7 percent in August to a level of 1.12 million and are 17.9 percent higher than a year ago.  The median price in the Midwest was $152,400, up 7.8 percent from August 2011.

In the South, existing-home sales rose 7.3 percent to an annual pace of 1.90 million in August and are 11.1 percent above August 2011.  The median price in the region was $160,100, up 6.5 percent from a year ago.

Existing-home sales in the West increased 8.3 percent to an annual level of 1.17 million in August but are unchanged from a year ago.  With ongoing inventory shortages, the median price in the West was $242,000, which is 16.3 percent higher than August 2011.

The Associated Press and Reuters contributed to this report.