Mortgage Rates Fall to 4.8%, Home Buyers Still Scarce

Post by Ken Grech, a top Simi Valley real estate agent. Search Simi Valley real estate listings. The Wall Street Journal, By Nick Timiraos:

Mortgage rates fell again last week, sending refinancing applications up. But in a sign that the housing market may be stumbling through a stimulus-induced hangover, new-purchase applications also fell again  to a 13-year low.

Average 30-year mortgage rates fell to 4.8% last week from 4.83% the previous week, according to the Mortgage Bankers Association. While rates on 15-year fixed-rate loans rose to 4.25% from 4.19%, the average fees charged to borrowers fell, effectively lowering the rate.

That helped refinance activity increase by 17% from the previous week, the third straight weekly increase. But purchase activity is down 27% over the past four weeks-a sign that the $8,000 tax credit that expired at the end of April simply moved demand forward.

“It’s not clear that we’re going to see much of an increase in purchase applications because anybody that wanted to buy a house probably did last month,” said Jay Brinkmann, the MBA’s chief economist.

For more than a year, low interest rates had been a key pillar of government support that, along with an $8,000 tax credit year, was widely credited with breaking a downward spiral in home prices by boosting demand for housing. The housing industry had braced for rates to rise once the Federal Reserve ended its $1.25 trillion in purchases of mortgage securities at the end of March.

But the European debt crisis has raised new concerns about the health of the global economy, benefiting U.S. consumers. Mortgage rates have fallen over the last two weeks as investors seek safe-haven assets such as U.S. Treasurys, to which rates on long-term mortgages are closely tied, and securities backed by mortgages that are guaranteed by the government.

To read this full report, please visit www.wsj.com. For any home or lending information, please visit www.simiishome.com.

Housing’s New Normal: Wait and See

Post by Ken Grech, a top Simi Valley real estate agent. Search Simi Valley real estate listings. The Wall Street Journal, By Dawn Wotapka:

The housing market-especially for new homes-is having a great Wednesday.

Luxury builder Toll Bros. this morning reported a narrower quarterly loss and said that in May’s first three weeks, per-community deposits have climbed 23%, while traffic is up 11% from a year earlier. Chief Executive Bob Toll says consumers feel more confident in job security and their ability to sell existing homes. “It appears our business has finally emerged from the tunnel and into a bit of daylight,” he says.
“We believe many markets are turning the corner, and housing in general is beginning its recovery.”

Then came news that new-home sales hit a two-year high in April. Inventory also fell, while March’s sales total was revised upward to 439,000 from 411,000. “The April advance confirms a strong sales rebound from their winter time lull,” writes Nomura Global Economics.

It’s exciting news-the beaten-down builder stocks are all in positive territory-given multi-year depression the entire housing market has endured. Hovnanian is up 6%, while Standard Pacific added 4.52%. Toll is up 3.83%.

But proceed with caution. “We don’t expect housing to roar back right away,” Mr. Toll said in the earnings release. “The high rate of unemployment, coupled with volatility in the financial markets, continues to weigh on the nation’s psyche.”

Need it put more bluntly? “For builders (those still standing), market conditions remain brutal,” said Patrick Newport, an economist with IHS Global Insight.

The Journal reports today that home prices remain under pressure, with March marking six straight months of decline. And the tax credit continues putting a shine on data. But the reality is that plenty of buyers rushed to ink deals before the credit of up to $8,000 expired, likely pulling demand forward. Applications for new-purchase mortgages declined again last week to a 13-year low and are down 27% over the past four months, according to the Mortgage Bankers Association. UBS analyst David Goldberg fears the pull forward was greater than previously assumed.

It will be some time before we know what a normal market looks like. “We expect to see continued volatility in this data, with the obvious key question being, ‘How will traffic and sales respond now that the Federal tax credit program is over?’” said Carl Reichardt, an analyst with Wells Fargo.

Wait and see: It’s becoming the new normal in housing.

Tax Credits Boost New Home Sales

Post by Ken Grech, a top Simi Valley real estate agent. Search Simi Valley real estate listings. The Washington Post, By Renae Merle:

New home sales surged last month as home buyers rushed to take advantage of tax credits that have helped lift the housing market, according to government data released Wednesday.

Sales of new single-family homes rose 14.8 percent in April, compared with March, to a seasonally adjusted annual rate of 504,000, according to Commerce Department data. Sales were up 47.8 percent, compared to the same period a year ago. That was a much bigger jump than financial analysts had expected, bringing the sales rate to its highest level in about two years.

Sales rebounded the most in the Midwest, where they rose 31.6 percent. They were up 10.8 percent in the South, which includes the Washington region, and increased 21.7 percent in the West. Sales were flat in the Northeast.

Economists said the report reflects the impact of low mortgage rates and falling home prices, which has made a home purchase cheaper for many potential buyers. The median new home sales price in April fell to $198,400, compared with $219,200 during April 2009.

But the biggest boost, economists said, came from an $8,000 tax credit available to some first-time home buyers and a $6,500 tax credit available to some repeat homeowners who buy a new primary residence. To qualify for the tax credits, a buyer must have entered into a contract by April 30 and complete the transaction by June 30.

The tax credits also helped boost existing home sales, which jumped 7.6 percent in April, according to an industry report released this week. Now that the tax credits have expired, many economists are expecting to see sales activity in both markets begin to slow. The tax credits probably spurred some people planning to buy a house to purchase them earlier, analysts said.

To read this full report, please visit www.washingtonpost.com. For any home or lending information, please visit www.simiishome.com.