Housing Market Stumbles
Housing Market Stumbles
Wall Street Journal, July 21, 2010
The housing market, whose collapse pulled the economy into recession in late 2007, is stalling again. In major markets across the country, home sales are deteriorating, inventories of unsold homes are piling up and builders are scaling back construction plans. The expiration of a federal home-buyers tax credit at the end of April is weighing on the market. On Tuesday, the U.S. Census Bureau said single-family housing starts in June fell by 0.7%, to a seasonally adjusted annual rate of 454,000. The U.S. started 1.47 million homes in 2006, before the housing bubble popped.
Anti-Foreclosure Program Still Sputtering
Wall Street Journal, July 21, 2010
The federal government's foreclosure-prevention effort continued to sputter, as the number of homeowners leaving the program exceeded those who received new loan modifications for the second straight month. More than 91,000 homeowners cancelled their government loan modifications in June, while just 38,728 received new modifications, according to data released Tuesday. Almost 530,000 of the nearly 1.3 million government modifications have been cancelled since the program began last March. Dropouts climbed as homeowners missed payments on their modified loans or failed to turn in required paperwork.
Housing Still Built on Sand
Barron’s, July 20, 2010
I’m always surprised that anyone is surprised by certain phenomena. The National Association of Home Builders reported Monday that its measure of its members' confidence fell to 14 in June, the lowest level since April 2009 and well below forecasters' guesses. Why the latter was so was mystifying. The conventional, ex-post explanation was that homebuilders were bummed by the end of the federal government's tax subsidy for certain first-time and other home buyers at the end of April. As if nobody knew that would happen. Builders would have to reduce building houses and condominiums after they wrung all the business they could from those receiving the largesse of up to $8,000 from the taxpayers—that is, you. Surprise? Even the slow learners in Congress realize that this give-away did nothing to stimulate demand — and by extension, boost supply — of newly built structures. The subsidy only affected the timing of purchases, not their total.
Relief Effort Fails Many at Risk of Foreclosure
Associated Press, July 20, 2010
The Obama administration's effort to help those at risk of losing their homes is failing to aid many and could spur a rise in foreclosures that would further depress the housing industry. More foreclosures would force down home prices and that would deter already-ailing homebuilders from starting new projects. As a result, the economic rebound could suffer. Each new home built creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes paid to local and federal authorities, according to the National Association of Home Builders.
Banks Sell More Homes than Builders Do
Housing Intelligence, July 152010
In a quiet week for housing data, we’re reflecting on an interesting statistic that we are able to put together using Housing Intelligence Pro. In looking at the annualized share of all home sales captured by different types of transactions, there are a few interesting turning points that stand out. Back in 2005, your garden variety resale transaction accounted for more than 80% of all home sales. By November of 2006 that had slipped slightly to 78% while New Homes accounted for nearly 20% of all transactions (a peak share). Just over 2 years later in January of 2009, the new home share had slumped to 14%, and starting in that month there were more REO sales in the preceding 12 month period than new homes sold. So for the last year and a half, banks have sold more houses than home builders have. To see the trend, check out our chart below.
TARP Lending Programs Curtailed
Wall Street Journal, July 21, 2010
The Treasury Department, under Congressional orders to shrink and end sooner the much-maligned Troubled Asset Relief Program, plans to curtail two programs originally intended to help consumer and small-business lending. Treasury officials say they plan to end a long-delayed, never-utilized $30 billion program designed to boost small-business lending and cut the amount of money available for a Federal Reserve lending program. The Treasury will also stop creating any new programs to stabilize the financial sector.