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.

(Read More: Soaring Housing Stocks in Perspective)

“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

(Read More: Could Rentals Be the New Red Flags in Real Estate?)

Healthy housing market gains are historically driven by increasing employment and income, not by lack of supply; the latter leads to price bubbles. First-time home buyers, who generally account for 40 percent of the home-buying market or higher are still under-represented at just 30 percent, according to the Realtors. This is due to tighter credit conditions in the mortgage market and now decreasing affordability.

December’s disappointing drop in home sales, month-to-month is a clear warning for the housing recovery going forward. Rising home prices are not the sole measure of a healthy market. Supply and demand need to fall closer in line, and a robust economic recovery should be driving both home sales and prices.

(Read More: One Overlooked Fact About the Housing Recovery)

Article source: http://www.cnbc.com/id/100397644

The median price in the luxury market, however, was $4,440,150, up 7 percent from a year ago, according to Douglas Elliman. The luxury market represents the upper 10 percent of all co-op and condo sales.

“The year-end jump in sales was a function of proactive tax management by property owners. Although it wasn’t clear what form the tax hikes related to housing would take, it was assumed that 2013 would be higher than 2012,” noted Jonathan Miller, CEO of Miller Samuel, which provides the Elliman report data. (Read More: Million Dollar Winter Wonderland Homes.)

Prices in Manhattan are still about 6 to 7 percent off their pre-recession highs, but low supply will likely narrow that gap in 2013. Strong demand from foreign, all-cash buyers is also boosting prices, especially in the condo market. Gains, however, may slip in the current quarter, as so much demand was pulled forward.

Article source: http://www.cnbc.com/id/100351956

After a slew of positive readings on the nation’s housing recovery, sales of newly built homes in October were a big disappointment.

Despite the big public builders reporting big jumps in new orders and builder confidence positively leaping to the highest level since 2006, sales just didn’t compute, and even September’s numbers were revised down.

“The recovery in new home sales is looking a little weaker than we were previously led to believe,” writes Paul Diggle of Capital Economics.

But Diggle points out the positives, specifically that the time between a completion and a new home sale has been falling dramatically, from over 14 months in late 2009 to just over 6 months today. The average historically is five months.

“That drop strikes us as another sign that buyer confidence is improving,” adds Diggle.

But is it improving as much as builder confidence?

“This was a disappointing update,” writes Patrick Newport of HIS Global Insight.

“It indicates that demand for single-family homes is only slowly picking up, not accelerating, as the data previously showed. It also indicated that builders may have jumped the gun a little by accelerating the pace of construction of single-family homes.

(Read More: Cities With the Most Affordable Homes)

A big concern for home builders now is the looming fiscal cliff. The housing recovery depends on the economic recovery and continued improvement in the jobs picture. There is also great concern that the mortgage interest deduction could fall victim to the cliff. That’s why housing lobbyists have upped their budgets this year to $30 million from $27 million in 2011, according to the Center for Responsive Politics. The National Association of Realtors leads by far with a record $25,982,290 spent on lobbying so far.

(Read More: Why the ‘Fiscal Cliff’ Is Kryptonite to Entrepreneurs)

Fears of the fiscal cliff could be impacting potential buyers already. The new home sales monthly number from the U.S. Department of Commerce is based on signed contracts, not closings, so it is a clear gauge of what potential buyers are feeling right now.

(Read More: How ‘Fiscal Cliff’ Could Affect Mortgage Interest Deduction)

“It is making me nervous for sure to have such uncertainty over such a traditional expectation, the mortgage deduction,” says Stephen Paul, of Mid-Atlantic Builders, a Maryland-based company. Paul says he hasn’t seen any cancellations over it yet, but it has come up in conversation plenty.

It is just one more uncertainty that this recovery doesn’t need. All signs are pointing to big gains in the housing market for 2013. Those expectations, however, must be tempered with a dash of perspective yet again. Peter Boockvar of Miller Tabak maps it out well:

“While the housing industry is recovering, new home sales have trended between 360k and 370k for the last 6 months, still 73 percent below the bubblicious peak in July ’05 and not too far above the trough seen in 1982 and still below the bottom seen in the 1991 recession. On one hand, there is plenty of room for continued improvement but on the other, the healing process will take a lot of time and will likely be in fits and starts as recoveries from the aftermath of bubbles typically are.”

SECTOR WATCH: US Home Builders

—Toll Brothers
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—DR Horton
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—Hovnanian Enterprises
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—PulteGroup
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—Ryland Group
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—Lennar Corp
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—Beazer Homes USA
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—Meritage Homes
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—KB Home
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