8 ways housing is back on track

This post comes from Marilyn Lewis of MSN Money.

Good news keeps rolling in on the housing front. Caveat: Improvement is relative. Prices still are stuck in the basement. Millions more foreclosures will hit the market in coming years. But with feet firmly on the ground, there's no reason not to enjoy the spate of recent reports showing housing finally moving off the critical care list.

Up

Up is good for these five indicators: (Post continues below video.)

Homebuilding seems to be emerging from its four-year downward spiral as the number of homes under construction creeps slowly up. Fresh Census data (.pdf file)  for April show:

• Permits. Permits for new single-family homes in April reached an annual rate of 715,000. More permits were issued in March (769,000), but April's number still is 23.7% more than in April 2011.
• New construction. Ground was broken on nearly 30% more homes in April (717,000 annual rate) than in April 2011 (and 2% more than in March this year). YCharts.com puts the improvement in perspective with a graphic showing new housing starts since the crash began in 2007.
• Homes completed. The number of finished homes is rising, too. Privately owned homes finished (651,000 annual rate) were up 10% over March and 20% over the same time last year.
• Homebuilder confidence. New surveys show homebuilders more optimistic about their prospects than at any time in the last five years. Analysts follow builders' sentiment carefully, because their ground-level knowledge of their local markets is thought to predict housing health. Writes USA Today:

  The National Association of Home Builders/Wells Fargo builder sentiment index rose to 29 in May. That's the highest reading since May 2007 and up from a downwardly revised reading of 24 in April.

NAHB leader Barry Rutenberg says, "Builders in many markets are reporting that buyer traffic and sales have picked back up after a pause this April."

That's good news, but it still needs to be a lot better. Homebuilder sentiment lower than 50 is considered negative. The last time homebuilders felt positively about their market was in April 2006.

Sales of existing homes. The number of transactions is growing. The National Association of Realtors reports that sales of existing homes rose 3.4% in April over March. They were also 10% higher than last year at the same time. NAR chief economist Lawrence Yun says:

It is no longer just the investors who are taking advantage of high affordability conditions. A return of normal homebuying for occupancy is helping home sales across all price points, and now the recovery appears to be extending to home prices.

Down

Down, on the other hand, is a good direction for these three indicators:

Investors. Fewer homes sales are "all-cash," reports Inman News. Investors are the pioneers in a bad market. As homeowners move in, investors retreat. Fewer investors and more homeowners is another sign of a more stable market.

Delinquent mortgages. Mortgage delinquencies have hit a four-year low, says CNNMoney.

Writes Bloomberg:

The U.S. mortgage delinquency rate fell in the first quarter to 7.4%, the lowest level in more than three years, the Mortgage Bankers Association said yesterday. The rate peaked at 10.1% in the first quarter of 2010 and was last lower in the third quarter of 2008, at 6.99%.

Foreclosures. In April, foreclosure filings dropped almost 16% from the year before -- nearly 70% below the worst point, in March of 2009, reports Diana Olick at CNBC's Realty Check.

Bloomberg says: "It was the lowest tally since July 2007, before the onset of the biggest housing crash in seven decades, the Irvine, Calif.-based data seller (RealtyTrac) said today in a report." 

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Sales of foreclosed homes fell, too. There are a couple reasons for the drop, one bad, the other good.

• Bad: Homeowner bailouts. The decrease is due in large part to the government and banks helping defaulting homeowners stay in their homes. Olick quotes Foreclosure Radar CEO Sean O'Toole, who thinks those programs only postpone the day of reckoning for the homeowners and drag out the housing recovery. Olick reports, "Bank of America alone has suspended 200,000 foreclosure actions, as it offers principal reduction modifications to comply with its $11 billion share of the settlement."
• Good: Short sales. Banks have started diverting a lot more defaulting homeowners into short sales instead of foreclosures. Underwater homeowners are allowed to sell homes for less than they owe. Short sales mean smaller losses for banks, says CNNMoney. Bank of America, for example, is offering struggling homeowners as much as $30,000 to do a short sale and avoid foreclosure.

More from MSN Money:

• Banks accused of foreclosure bias
• Calculator: How much house can you afford?
• Hot home deals on short sales
• Calculator: Should I refinance?
• Should you buy a foreclosure?
• Should you rent or buy?