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Deep Freeze: Home Sales Barely Budge in Spring

Thu, 28 Mar 2013 19:26:11 +0000

“Only new home construction can genuinely help relieve the inventory shortage, and housing starts need to rise at least 50 percent from current levels,” said Lawrence Yun, chief economist for the National Association of Realtors in a release. “Most local home builders are small businesses and simply don’t have access to capital on Wall Street. Clearer regulatory rules, applied to construction loans for smaller community banks and credit unions, could bring many small-sized builders back into the market.”

Sales of newly built homes fell nearly five percent in February, according to the U.S. Department of Commerce. Inventories did rise, but only slightly, as the nation’s home builders struggle with labor and land shortages, as well as higher costs for materials.

(Read More: Finally: Supply of Homes for Sale Begins to Rise)

Pending home sales fell 2.5 percent month-to-month in the Northeast, rose 0.4 percent in the Midwest, fell 0.3 percent in the South and rose 0.1 percent in the West, according to the Realtors.

“The volume of home sales appears to be leveling off with the constrained inventory conditions, and the leveling of the index means little change is likely in the pace of sales over the next couple months,” Yun added.

(Read More: Map: Tracking the USReal Estate Recovery)

A better sign for March, after two weeks of declines, mortgage applications to purchase a home jumped 7 percent during the past week, according to the Mortgage Bankers Association. This as interest rates fell slightly, due to concerns over the banking crisis in Cyprus.

“The rebound in mortgage applications is a small piece of a brighter housing outlook,” says Bob Walters, chief economist for Quicken Loans. “Interest rates are still at record lows despite their upward trend, and consumers are taking advantage of record home affordability. Look for more buyers to enter the market this spring and a more robust housing recovery to occur.”

Article source: http://www.cnbc.com/id/100596583

Deep Freeze: Home Sales to Barely Budge in Spring

Thu, 28 Mar 2013 01:02:20 +0000

(Read More: Finally: Supply of Homes for Sale Begins to Rise)

Pending home sales fell 2.5 percent month-to-month in the Northeast, rose 0.4 percent in the Midwest, fell 0.3 percent in the South and rose 0.1 percent in the West, according to the Realtors.

(Read More: Map: Tracking the USReal Estate Recovery)

Article source: http://www.cnbc.com/id/100596583

US Home Builders Begin to See Credit Thaw

Fri, 17 Aug 2012 01:55:54 +0000

The U.S. home building industry is finally coming off its lowest volumes ever, albeit in fits and slow starts.

New single family home starts fell 6.5 percent in July from the previous month but are still up 17 percent from a year ago. Building permits, considered a more dependable future indicator, rose 4.5 percent month-to-month and are up 23 percent from a year ago. (Related: Housing Starts Drop, Permits Jump; Jobless Claims Rise.)

Much of the demand is coming from potential buyers who have been shut out of the lower-priced, distressed market by avid, all-cash investors. The big public builders, almost across the board, reported huge jumps in new orders in the first half of this year. Smaller builders are still hampered by lack of credit to build and therefore meet the demand. Construction loans nearly ground to a halt after the latest housing crash.

Just last month PNC Bank
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] announced it was getting out of the construction loan business for home builders entirely. PNC had acquired the business when it bought Raleigh’s RBC bank, which was apparently already winding down the unit.

“Builders do still rank this as one of the confounding issues that limits their ability to respond to the budding demand,” said National Association of Home Builders chief economist David Crowe. “It is especially important for builders to be able to build enough spec homes to respond to immediate demand, since trade-up buyers in particular are waiting until their home is sold before signing a contract, and then they need a home very soon.”

That may be about to change. This week Wells Fargo
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] announced it is forming a homebuilder banking group to serve clients on the east coast, Texas and the Midwest. The team will offer “a comprehensive suite of financial solutions,” according to a release, including project and corporate financing facilities, and a referral network to treasury management, insurance, mortgage and capital markets products. (Related: Homebuilders Most Confident in More Than 5 Years.)

“It’s not as if we were all in then, all out now, all in again,” said Wells Fargo’s head of Homebuilder Banking, Bird Anderson, in an interview.

“It is more of a sense of the opportunities within an improving market that we can be more entrepreneurial in looking for new business opportunities,” Bird added, citing increased demand in the homebuilding sector in many markets.

Texas homebuilder Bruno Pasquinelli of CB Jeni Homes is still relying on private capital, hoping to deliver 400 homes per year, but he says he is beginning to see a credit thaw.

“My understanding is that several banks in our market wanted to get more volume out the door,” Pasquinelli said. “Simple economics — they need to take market share or they will only grow at the rate that housing is growing.”

The view, however, is not so bright further east in Columbia, South Carolina, where homebuilder Wade McGuinn says financing is still scarce. (Related: Home Price Bottom or Bubble?)

“The biggest issue in recovering markets is that lot inventory has equalized, and the banks, because of the Feds, won’t lend money for land development. This will make all recovering markets ripe for the picking by publicly held companies who are not in need of bank financing,” McGuinn said. “This ultimately could be the death nail in the coffin of the small and family builders, who although they have money and credit, won’t be able to compete.”

Like the rest of the nation’s housing market, improvement will come slowly and locally, with some areas seeing improved demand and improved access to credit, while others will be slower to rise from the ashes.

“It feels like there’s a little bit more credit supply out there, but not a lot of credit supply out there,” Wells Fargo’s Bird admitted.

For now, that will have to be enough.

—By CNBC’s Diana Olick
—CNBC Realty Check producer Stephanie Dhue contributed to this report.

Questions? Comments? And follow me on Twitter @Diana_Olick

Article source: http://www.cnbc.com/id/48690097?__source=RSS*blog*&par=RSS