All three components of the index rose in July. Current sales conditions rose five points to 60—the highest level since early 2006. The component gauging sales expectations in the next six months gained seven points to 67, and the component gauging traffic of prospective buyers rose five points to 45—marking the strongest readings for each since late 2005.

“Builders are seeing more motivated buyers coming through their doors as the inventory of existing homes for sale continues to tighten,” noted NAHB Chief Economist David Crowe. “Meanwhile, as the infrastructure that supplies home building returns, some previously skyrocketing building material costs have begun to soften.”Sales of newly built homes rose just over 2 percent from May to June. Single family housing starts were flat. But permits, considered a more reliable indicator, gained 1.3 percent month-to-month.

Article source: http://www.cnbc.com/id/100889688

“An extension of the tax break is positive for home values by reducing the number of foreclosures and helping more troubled borrowers stay in their homes,” wrote Jaret Seiberg of Guggenheim Partners. “That means less supply on the market.”

Under a law signed in 2007, debt relief on loan modifications, short sales, and foreclosures were no longer taxable; that break expired at the end of 2012. The fear was that if the tax break was not extended, home owners would not agree to short sales (when the home is sold for less than the value of the mortgage) because they would then face a tax bill. They would also not agree to principal reduction loan modifications, which have proven to be far more successful than other modifications that leave the principal balance as is.

Under the $25 billion mortgage servicing settlement, borrowers have received $6.3 billion in mortgage principal relief through September, according to the settlement’s monitor, Joseph A. Smith, Jr. The average loan balance reduction, $150,000. Banks completed 13,351 principal reduction loan modifications in November alone, according to Amherst Securities Group, a 62 percent jump from September.

Short sales also surged toward the end of the year, thanks to streamlined procedures and a more aggressive stance by the big banks, again in part due to the mortgage servicing settlement. More than 98 thousand short sales were completed in the third quarter of 2012, according to RealtyTrac.

Article source: http://www.cnbc.com/id/100349018

“The prospect of being taxed on potentially tens or hundreds of thousands of dollars in additional income may motivate more distressed homeowners to forgo a short sale and allow the home to be foreclosed,” said RealtyTrac’s Daren Blomquist in a release. “Additionally, if the mortgage interest deduction is eliminated due to the fiscal cliff quagmire, it would give many underwater and otherwise distressed homeowners one less reason to hang on to their homes.”

Banks completed 13,351 principal reduction loan modifications in November alone, according to a monthly report from Amherst Securities Group. That’s a 62 percent jump from September. Much of it is thanks to the $25 billion mortgage servicing settlement signed by the nation’s five largest banks early this year over so-called “robo-signing” foreclosure practices.

Banks have already given borrowers $6.3 billion in mortgage principal relief under the settlement, according to a report from its monitor, Joseph A. Smith, released last month. Bank of America recently ramped-up its relief, reporting 30,000 customers were approved or had completed first-lien modifications through September 30 providing $4.75 billion in principal reduction. Borrowers received an average $150,000 slash in loan balances.

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

Article source: http://www.cnbc.com/id/100285754

“We’ve had very good housing affordability conditions for quite some time, but we’re seeing more impact now from steady job creation and rising consumer confidence about home buying now that home prices have clearly turned positive,” wrote Lawrence Yun, chief economist for the NAR in a release. (Read More: Could Housing Be the Antidote to the ‘Fiscal Cliff’?)

Pending home sales are now at the highest level since March of 2007 and have risen, on a year-over-year basis, for 18 consecutive months. The activity, however, varies from region to region, and the Realtors say the Northeast, which saw a 0.1 percent drop in sales month-to-month- did see some impact from Hurricane Sandy.

Signed contracts also declined in the West, 1.1 percent in October month-to-month and are up just 0.9 percent from a year ago. The West is suffering from a lack of supply, as investors have been scouring the landscape for a decreasing inventory of distressed properties. (Read More: Yes, Housing Starts Surge, but Rentals Are the Drivers) 

Pending home sales surged in the Midwest, up 15.6 percent month-to-month and up 20 percent from a year ago. They were also higher in the south by 5.5 percent sequentially and by 17.4 percent from a year ago.

Realtors continue to warn that while this housing recovery seems to be gaining steam, changes to the mortgage interest deduction, as well as other potential hits to the economy from the so-called “fiscal cliff,” could derail the momentum. (Read More: Housing Still Precarious in Obama’s Second Term)

SECTOR WATCH: Construction General Building Materials

• The Home Depot
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• Lowe’s Companies
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• The Sherwin-Williams Company
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• E. I. du Pont de Nemours and Company
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• Apogee Enterprises
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