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8 ways housing is back on track

Although prices are still stuck in the basement, new reports show housing moving off the critical care list.

By MSN Money Partner May 24, 2012 9:52AM

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.

Image: Home under construction (© Corbis)

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." 

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:

20Comments
May 24, 2012 6:44PM
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Housing is on hold.  This article stinks of Obama zombie spin.  Who wants to buy a home when the mortgage deduction is going away?
May 24, 2012 7:10PM
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This article should be renamed 8 lies that the housing market is back on track...and wall street is rigged as hell!
May 24, 2012 7:04PM
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Already, their full of ****, and I haven't even begun reading yet.

 

"8 Signs" that housing is back on track,

 

or

 

"8 ways" that housing is back on track.

May 24, 2012 8:49PM
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lies lies lies, the market is still going down. check zillow.com

May 25, 2012 7:08AM
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I work in the housing market aaaaand....What a load of Crap!
May 25, 2012 7:26AM
May 25, 2012 10:13AM
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Good for Housing.
Now what about the Homeowners? Last I checked, I'm still stuck in a house that I can't turn a profit on selling, AND I can't refinance for a lower rate because I lost all the equity in it when the market collapsed. And here I was thinking I was being responsible by buying a home I could afford and paying my mortgate on time every month.

May 24, 2012 11:17PM
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This last winter was pretty mild, so it may have enabled building projects to be started earlier than they otherwise would have been.  The winter before, however, was that nightmare winter that saw much of the Eastern United States suffering one major blizzard and snowstorm after another.  So it's questionable to be comparing spring 2012 to spring 2011.

After this article's three, short warning sentences, it's non-stop pumping of the supposedly good news -- the good news of the moment, which could easily be transient:

     "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..."

The media seem to love to cherry pick the statistics that fit the biased "news" they want to lure people into believing.  And, of course, after months of being lousy, a statistic may turn positive for a month or two, only to revert back to being lousy.  One or two good months don't make a trend, especially if the good months are the result of a comparison that is a questionable one to make.

Where will the housing market be two or three months from now?
May 24, 2012 6:50PM
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Does anywhere keep stats on who is buying?  Income, age, etc...  The median sale prices I read seem to show "upper middle class" and "upper class" type buyers. 
May 26, 2012 11:20PM
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Did anyone bother to read the first four sentences of the article?  It reads:

"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..." 


And then there is the video segment, during which the hostess repeatedly warns the public that the numbers are skewed and can't be trusted to be legit!  Did anyone bother to actually watch the segment?

Yet the goal of the article seems to be to announce that the worst is over and that a pivotal turning point has finally been reached, which is contradictory to the article's own opening paragraph and the repeated warnings of the hostess during the video!

I've seen stories like this before over the last several years -- proclaiming the price slide to finally be over.  The reality is the housing market is like the stock market: Tough to predict.  Who truly knows where housing prices will be in the coming months and years?
May 24, 2012 7:05PM
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What, schichzer is a bad word, now?
May 25, 2012 10:32AM
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This is government propaganda, the housing market is not even recovering in one way, much less eight...
May 25, 2012 10:32AM
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The poor girl - I can understand mindgames from other­ countries - but from a UK official , that is mindless.­ Why can't we support people in the UK rather than­ trying to find fault all the time. The girl is­ dedicated to her sport - Give her some credit and­ support her. I suppose the official is making excuses­ in advance as it seems the country does and the press.­ If I was Jessica I would have been in the funny farm­ with all the pressure she has had to endure . GOOD LUCK­ JESSICA
May 24, 2012 11:07PM
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I do check Zillow.com and it depends where you live.  In my area, sales and prices are going up.  Sorry but it's true.  Let the thumbs down fiesta begin.  I know the truth stinks when you're a Republican.
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