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WASHINGTON – May 18, 2010 – Nationwide housing starts rose 5.8 percent to a seasonally adjusted annual rate of 672,000 units in April as the deadline for an important homebuyer tax incentive arrived, according to figures released today by the U.S. Commerce Department.

"While some of the starts activity noted in today's report reflected homes for which buyers had just signed a contract at the tail-end of the tax credit program, the rest was probably tied to builders replenishing their inventories in preparation for the post-tax credit era," says Bob Jones, Chairman of the National Association of Home Builders (NAHB). "That said, builders are maintaining a cautious attitude with regard to new building as the economy and housing markets slowly recover."

On the down side, building permits, an indicator of future building activity, slid 11.5 percent in April to a seasonally adjusted annual rate of 606,000 units. It reflected a 10.7 percent decline on the single-family side and a 14.7 percent decline on the multifamily side.

"The drop-off in building permits in April indicates that builders are working down the inventory of permits pulled in the previous month and taking care not to get ahead of the market," says NAHB Chief Economist David Crowe. "Builders also continue facing difficulty in obtaining project financing, which will limit the pace of a housing recovery."

Single-family housing starts surged 10.2 percent to a seasonally adjusted annual rate of 593,000 units in April, the strongest rate since August 2008. Meanwhile, multifamily starts posted an 18.6 percent decline to a 79,000-unit rate, offsetting a big gain posted by that sector in the previous month.

Three out of four regions posted solid gains in new housing production in April. Combined single- and multifamily starts rose 23.9 percent in the Northeast, 16.7 percent in the Midwest and 7 percent in the South. The West registered a 13.3 percent decline.

Conversely, permit issuance was down in three out of four regions in April. The Northeast posted a 7.4 percent decline, the South registered a 14.3 percent decline and the West posted a 16 percent decline. Permit issuance remained unchanged from the previous month in the Midwest.

© 2010 Florida Realtors^®

Mortgage rates fell to their lowest level of the year this week as yields on U.S. government securities fell, Freddie Mac said Thursday. Fixed mortgage rates tend to follow the yield of 10-year Treasury notes.

Treasury yields sank after Germany's move this week to curtail certain kinds of short-selling spooked investors, who shifted money from risky European debt to safer U.S. securities.

A side effect of the lower Treasury rates was lower mortgage rates.

The average rate on a 30-year fixed rate mortgage dipped to 4.84 percent from 4.93 percent a week earlier, Freddie Mac said. It was the lowest level since mid-December, when rates averaged 4.81 percent.

"The timing is fortuitous," said Greg McBride, a senior financial analyst at Bankrate.com, "because home shoppers who rushed to sign their purchase contracts in late April to capture the tax credit are locking in their mortgage rates now."

New buyers were offered a credit worth up to $8,000, while current owners who bought and moved into another home could get one for up to $6,500. To receive them, buyers had to have a signed offer by April 30 and must close by the end of June.

Economists expected home sales to flag after the credit expired, but lower rates could help offset the falloff.

Pava Leyrer, president of Heritage National Mortgage in Michigan, hasn't seen buyer interest wane yet. "Rates are helping them buy more," she said.

However, strict credit requirements and negative home equity threaten to sideline borrowers hoping to refinance out of unaffordable loans. Refinancing activity isn't as robust as last year, when rates dipped below 5 percent.

"Everyone who could get in already got in," said Marc Demetriou of Residential Home Funding in Bloomingdale, N.J. The remaining borrowers may not be able to refinance under the stricter credit standards or don't have enough home equity to get approved. Mortgage delinquencies hit a record high in the first quarter, according to an industry report this week.

Could rates fall further? Yes, but that would likely be the result of further deterioration in the global economy. "Yeah, mortgage rates would drop further, but you may not have a job to qualify," Bankrate's McBride said.

Among other types of mortgages in Freddie Mac's survey, the average rate on a 15-year fixed-rate mortgage was 4.24 percent this week, down from 4.3 percent. Rates on five-year, adjustable-rate mortgages averaged 3.91 percent, down from 3.95 percent a week earlier. Rates on one-year, adjustable-rate mortgages fell to 4 percent from 4.02 percent.

The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount.

The nationwide fee for loans in Freddie Mac's survey averaged 0.7 of a point for 30-year and 15-year loans, and 0.6 of a point for 5-year and 1-year loans.

Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.

Copyright © 2010 The Associated Press, J.W. Elphinstone, AP real estate writer.

McLEAN, Va. – May 12, 2010 – Home prices are widely expected to fall now that a tax credit for homebuyers has expired.

That's raising concern about a possible double dip in home prices.

National housing prices stopped falling early last year and rose 0.3 percent over the 12 months ended in February, according to a study by real estate analytics firm CoreLogic.

The firm predicts prices will fall this year before starting to rise again in late 2010. Even so, next February's prices are likely to be 4.2 percent lower, it forecasts.

"Home prices will struggle for maybe another year," says Mark Fleming, CoreLogic's chief economist.

A shrunken pool of buyers due to the tax credit's expiration is one reason.

"The tax credit is the big reason home prices have been so buoyant, and sales will drop" with its expiration, says Paul Ashworth of Capital Economics. "You will see a double dip in housing prices."

Another reason is the number of distressed houses – including foreclosures and short sales – that are on the market or that will be in coming months.

Distressed homes, typically sold at discounted prices, accounted for 36 percent of first-quarter sales, the National Association of Realtors reported Tuesday. The first quarter's median single-family home price ($166,100) was roughly flat with a year earlier, despite gains in nearly two-thirds of 152 metro areas that the NAR surveys.

The NAR's survey isn't the first to show evidence of softening prices. The 20-city Standard & Poor's/Case-Shiller home price index has fallen for five-consecutive months through February.

"It is too early to say the housing market is recovering," David Blitzer, chairman of S&P's index committee, said when the Case-Shiller report for February was released last month.

There may be some good news for sellers in areas not hit so hard by foreclosures. When distressed sales are excluded, CoreLogic's home price index shows a 4.9 percent rise in U.S. prices from this February through next February.

While some economists expect home prices to weaken, they don't expect a major drop.

"I wouldn't expect anything like the meltdown we've had over the past couple years," says Jay Feldman, senior economist at Credit Suisse.

Copyright © USA TODAY 2010, a division of Gannett Co. Inc. Stephanie Armour.

WASHINGTON – April 29, 2010 – The homebuyer tax credit expires for anyone without a signed contract tomorrow at midnight; but a survey conducted by Prudential Real Estate and Relocation Services Inc. finds that it might not slow the real estate market to an appreciable extent. The survey of 1,000 Americans between the ages of 25-64 with at least $35,000 in household income was conducted April 15-20, 2010.

More than 90 percent of consumers believe the homebuyer tax credits helped both first-time homebuyers and the U.S. housing market overall. Among consumers actually shopping for homes, 65 percent believe that the end of the tax credits will have little or no effect on their interest in purchasing a home.

While consumers remain unsure about the direction of the housing market, the survey reveals that they are optimistic, and 46 percent expect real estate prices in their area to increase over the next year. Just 12 percent expect price declines. Over the next five years, 79 percent expect real estate prices to increase, with 20 percent expecting prices to increase substantially.

"The survey underscores the key role the federal homebuyer tax credits played in stimulating residential real estate market activity and the U.S. economy," says James Mallozzi, chairman and chief executive officer of Prudential Real Estate and Relocation Services, Inc. "It also shows that most consumers believe the market has hit bottom and are more optimistic about the future."

Survey respondents cite rising mortgage interest rates and unemployment as the most important factors affecting their decision to purchase a home, along with more stringent lending criteria and fewer mortgage-backed securities purchased by the Federal Reserve. The expiration of the tax credits placed lowest on their list of concerns.

Among those who recently purchased a home, 61 percent cited low mortgage interest rates as "very important" to their decisions – an amount greater than either the tax credit or even cheaper prices. The 66 percent expecting interest rates to rise underscores potential headwinds for the market.

"The tax credits clearly helped stimulate the market when consumer confidence was low and housing inventory was high," says Earl Lee, president, Prudential Real Estate and Relocation Services, Inc. "While the tax credit expiration is a concern for many, the bigger issues now are the availability and cost of financing, as well as if they will have a job."

Despite the significant downturn in the real estate market, the perception that owning a home is a good investment remains intact. Among current renters, 75 percent still believe owning their home is a better long-term choice for their needs than renting. The majority of consumers also believe that homeownership is a better investment than individual stocks or bonds (75 percent), mutual funds (72 percent), or savings accounts (74 percent).

"The real estate market is precariously balanced. Consumers are clearly motivated to take advantage of the opportunities the current low interest rates and prices afford," Lee notes. "While the market is picking up in terms of sales and confidence, and the majority still believe that owning a home is a good investment, the outlook for the market remains highly dependent upon the direction of the economy overall."

The Prudential Real Estate Outlook Survey was conducted online. The margin of error is +/- 3 percent. A more detailed breakdown of the data is available, as well as supporting charts and visuals, at www.news.prudential.com.

© 2010 Florida Realtors®