In their most recent quarterly statements, all of the largest public home builders reported large annual jumps in the average prices of their homes sold. Pulte’s prices jumped 6 percent to $287000, for Lennar it was a seven percent surge to 261,000 and Meritage led the group with a 17 percent annual jump in average sale prices to $323,000.

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“New home prices are advancing faster than existing home prices because demand has increased and, as Kim did admit, the mortgage filter is allowing only higher income or at least higher net worth people through the application net, and they are purchasing higher valued homes. But that is true of existing purchases as well,” argues David Crowe, chief economist for the NAHB.

Crowe also makes the argument that new home prices are dictated by costs and demand. Both, he says are rising.

(Read More: New Housing Fears:Home Prices Are Rising Too Fast)

“Lumber and other building material prices have risen very rapidly recently. Shortages of lots and labor supply are beginning to show up, and I expect as new household formations begin to recover, that shortage will expand to more markets. The way to get more resources back into the housing market is to raise the price paid, i.e., wages and land prices,” says Crowe.

Builder profits, he notes, among the small private builders (who still control 70 percent of the market), have been negligible for several years.

“They will have to raise prices to compensate for their efforts, risks and, at least for a short time, being the only ones left,” adds Crowe

(Read More: Is the Refi ‘Apocalypse’ Really Upon Us?)

Article source: http://www.cnbc.com/id/100439451

(Read More: Is the Refi ‘Apocalypse’ Really Upon Us?)

Analysts at Clear Capital, which runs a four-month moving average price index, note that January’s numbers show, “momentum stalls.” While they blame this on seasonal slowdowns, they point to Florida as a concern.

“Florida metros, namely Miami, Orlando, Tampa, and Jacksonville, were all missing from the top 15 performing market list. Since September 2011, at least one of these markets made the list,” cautions Dr. Alex Villacorta, Director of Research and Analytics at Clear Capital. “While this isn’t confirmation that the recovery is finished in the sunshine state, it’s certainly something to keep an eye on. These markets led the recovery in late 2011, and share some of the hallmarks for recovering markets overall.”

Florida’s housing market has been driven by distressed homes, and investors buying them at a rapid pace.

Other markets that saw the most distress during the housing crash, like Phoenix, Las Vegas, and much of California, have also seen so much investor demand, that prices are up by double digits from a year ago.

(Read More: New Housing Fears: Home Prices Rising Too Fast?)

Article source: http://www.cnbc.com/id/100435276

“There is a huge population that have benefitted from adjustable rate mortgages. When the rates adjusted, they adjusted down. Those homeowners have been riding those low, one-year arms. If they start to hear about rates going up, they may come out of the woodwork to lock into fixed rates,” says Strent.

That may be, but 88 percent of loans outstanding today are fixed, according to the Mortgage Bankers Association. Just 12 percent are adjustable rate. Even if rates do not rise any higher than they are today, which they may not, they would have to fall below last year’s lows to see the high refinance volume of 2012 continue in 2013.

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“The refi apocalypse is upon us,” says Mark Hanson, a mortgage analyst in Northern California. “The thought is that there are a bunch of homeowners on the fence who haven’t refi’d who will all jump in thinking they will miss out. The theory is 100 percent nonsense. The series will simply plunge. That’s because after 16 months of sub 4 percent rates — and every bank loan officer and mortgage broker doing everything they can after a long mortgage banking income drought that ended with Twist — there is nobody left to refi. In fact, the only reason refi applications stayed flat in Q3 and Q4 was because they passed a new law allowing refinances regardless of the LTV [loan to value]…the HARP unlimited LTV refi.”

While the Federal Reserve does not set mortgage rates, a signal that the economic recovery is improving and even the slightest hint that the Fed could end its purchases of mortgage-backed securities, could push rates slightly higher.

“The Fed likely won’t use its statement to markets to finger a specific date on which QE3 will end, but that won’t stop investors from guessing. If the herd believes that QE3 will terminate within the next 6 months, mortgage rates will likely rise. If QE3 is believed to extend into 2014 and beyond, mortgage rates will likely fall,” writes Dan Green of Waterstone Mortgage in his blog.

(Read more: What to Expect from Interest Rates This Year)

While refinances may suffer under even slightly higher rates, more important to the housing recovery is new mortgages to purchase homes. Purchase applications are still running at half the rate they were in 2007, when last the Dow hit a new high. Small moves in mortgage rates do affect purchasing power, but lending standards are a far bigger driver today. New regulations for lenders and a consolidation of lending overall to the mega-banks are certainly slowing, and in some cases stalling, the process for some would-be buyers.

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Article source: http://www.cnbc.com/id/100420382