“The recent increase in mortgage rates hasn’t slowed demand, as long as home affordability remains high,” noted Bob Walters, chief economist at Quicken Loans. “We are, however, seeing an increased urgency from potential new home buyers as they move to secure today’s historically low rates.”

New home sales jumped more than 8 percent month-to-month in June, but May’s sales numbers were revised sharply lower, and prices, while up from a year ago, are down 11.5 percent from April. That has some housing skeptics less optimistic about the builders’ prospects.

(Read more: Map: Tracking the US real estate recovery)

“Remember, last month on the ‘strong’ but FAKE new home sales print of 476k, home builders rallied, and every bull took a huge victory lap. Today we learned that was all garbage,” noted California-based analyst Mark Hanson. “Bottom line: May was a huge miss. Prices have tumbled as rates surged. And June is suspect because of the huge lower May revision.”

Article source: http://www.cnbc.com/id/100910336

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.”

(Read More: Compare Mortgage Rates in Your Area)

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

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.”

(Read More: Compare Mortgage Rates in Your Area)

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

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If you’re looking for a home in the Bay Area, you will probably need two things on your side: luck, and a lot of cash.

Those who aren’t willing to compete with up to dozens of other offers on a home are now trying to buy it – hours after it’s listed on the market.

The new trend has been dubbed by realty experts as “flash sales” – any sale that happens within 24 hours.

For example, a home in East Palo Alto on Gates Street was put on the market on March 19. It got nine offers the same day and sold for above asking price within 24 hours.

Glenn Kelman, CEO of online real estate brokerage Redfin which is set up in 19 U.S. markets, said that trend is growing in the Bay Area and calls it “Ground Zero” for an incredibly hot housing market, one that experienced an incredible boom at the start of 2013 in January.

“In the Bay Area in the past six months, we’ve seen 1,000 homes get under contract in less than 24 hours. It used to be a fast sale was three days – now, it’s three hours,” Kelman said.

Ken DeLeon, a realtor, said his latest listing is a 1200 square foot home in Palo Alto that he just put on the market Thursday. “The amazing part is just within 24 hours, we already had a client with a Chinese all-cash buyer offer us more than 300,000 above and we said, ‘No thank you, please wait,’” DeLeon said.

He and other realtors said they’re still catering to those wealthy foreign buyers, mostly from China and Russia; however, with historic-low mortgage interest rates and an inventory that’s also hitting record lows, they said the competitive cash offers are no longer limited to the high-end homes.

“That’s the main trend. It’s spreading out to other neighborhoods that once weren’t so hot,” added Kelman.

The Silicon Valley Association of Realtors compiled data from MLS listings for the South Bay. According to its numbers, for single family homes between February 2012 and February 2013, inventory was slashed by 52 percent in Santa Clara Country and 44 percent in San Mateo County.

Both experienced more than 30 percent in increase of median sale price. Redfin’s numbers show just how competitive it’s gotten in the last couple of months.

A San Francisco home in the Sunset District had 29 offers, a townhouse in Oakland got 15, and one on Dauphine Avenue in Fremont was hit with a stunning 65 offers. That house eventually sold for at least $100,000 more than the half-a-million asking price.

“There are sometimes traffic jams outside open houses,” said Kelman. “Folks get worried they can’t wait for the offer deadline on Sundays, so they make a preemptive strike to try and buy it on the spot.”

He said Redfin and other companies offer “mobile alerts” that let customers know almost immediately after there’s a new listing on the market. He believes that has also contributed to the high competition and quick sales.

Both he and DeLeon agreed on one more thing: the only relief, if it comes, will be when people decide to start selling, and when you’re talking about the Bay Area, there is no way to predict when that will happen, or if prices will go up or down.

“I hate it when people ask me about Bay Area real estate because it defies all the laws of physics,” Kelman lamented. “When you look at Chicago real estate, Atlanta real estate, you know what goes up must come down. It’s going to act like a normal economic market, but in the Bay Area, it seems there’s all sorts of money from the tech economy. There’s all sorts of people who want to move here for the sun. I can’t way when it will ever let up.”

Article source: http://www.nbcbayarea.com/news/local/Real-Estate-Flash-Sales-Prove-Market-Is-Hot--199652731.html

The increased activity mirrors what’s happening nationally, as builders ramp up after a long hibernation that saw home starts plunge to record lows.

A Chronicle analysis of Census Bureau data on housing permits – a strong indicator of future construction as 86 percent become housing starts within one month – shows that this year the core Bay Area counties are on track for more-robust home building.

The home construction market is returning to normal as it recovers from the “boom and bust carnage,” said Robert Denk, senior economist at the National Association of Home Builders.

“We definitely see that we’re on our way up off the bottom,” said Gary Mayo, group president for Northern California and Nevada at Toll Brothers, one of the nation’s largest home builders. “The market is improving across the country, with Northern California among the stronger areas. In the Bay Area, sales started to dramatically improve in January. Our sales in the Bay Area on the same (housing developments) as last year are up 100 percent this year.”

Models not even done

Toll has luxury developments in Brisbane and Sunnyvale – each of which has sold more than a dozen homes without even completing a model house.

“We have a sales trailer out in the middle of the raw land where we’re putting in the site improvements. It shows the strength of the market: People are buying off of the blueprints and our reputation,” he said. Another new site in Pleasanton opened a week ago and has taken six deposits. Existing developments around the bay in Hayward, San Ramon, Dublin and elsewhere are suddenly finding a ready coterie of buyers, he said.

Kenny and Rena Tan will pay about $1 million for a five-bedroom home in Toll’s Brisbane development called the Ridge, which will be ready in about a year. For now, they put down a nonrefundable $9,000 deposit, accounting for about half of the structural options they requested, such as converting the downstairs library to a bedroom, putting in a kitchen island and a adding a sink to the laundry room.

They like the location, near San Francisco and the airport, and picked a site with hill views, he said.

At 52, Tan said they were looking ahead to their senior years.

“We wanted a home we can retire in, with a downstairs bedroom so we don’t have to climb stairs as we get older,” he said.

As a real estate lawyer, he’s very familiar with the market, Tan said.

“I know that the worst is over; especially in San Francisco and the Peninsula there is such a strong demand for homes that it is a very resilient market,” he said. “I waited until now; no way would I have jumped in two years ago.”

What caused the turnaround?

Richard Green, director of the USC Lusk Center for Real Estate, said that a growing population’s demand had caught up with the existing supply, making it time for new homes to be built.

“We went a long time, basically five years, with almost no new construction to speak of,” he said. “In the post-World War II era we’ve never seen anything like this before, so it had to turn around.”

Biggest of all, Denk said: stabilization of the overall housing market. “Nobody will buy a house if they expect it to lose value,” he said. “The bottoming out of house prices is a critical factor enabling the turnaround.”

Low interest rates

Overall economic conditions, with growing consumer confidence and record-low interest rates, is another factor.

“I think people are tired of waiting,” Mayo said. “They’ve been sitting on the sidelines for five years wanting a new home but didn’t feel the dynamics were right. Employment didn’t feel solid. Now (they see) low interest rates, a strengthening economy and (more) equity in their existing homes, so they can sell them.”

Consider this: In both 2005 and 2006, builders pulled permits for about 15,000 new homes a year in the San Francisco metropolitan area (the counties of Alameda, Contra Costa, Marin, San Francisco and San Mateo), a little more than half of them being single-family houses and the rest apartments or condos. In 2009, just 3,550 permits were issued. By 2011 it was up to about 5,800.

Soaring past last year

As of August, builders have already taken out about 5,800 permits this year – as many as in all of last year – putting them on track to exceed last year’s total by 50 percent.

The San Jose metro area (the counties of Santa Clara and San Benito) had an even deeper plunge, going from roughly 6,000 new permits a year to only 1,100 in 2009. This year, it is on track for about 5,800 permits – almost back to its boom-time levels.

Home construction is an economic indicator that packs a hefty wallop. Building a house creates the equivalent of three full-time yearlong jobs, according to the National Association of Home Builders. About half of them are construction – the folks who swing the hammers and install the plumbing and electricity – while the other half are everything from real estate agents, mortgage brokers and lawyers to sellers of concrete, brick, masonry, steel, furniture and other goods.

The United States “was hovering at 1.4 million single-family houses being built a year, and that dropped to 400,000,” Denk said. “With 1 million fewer housing starts, that meant 3 million jobs that weren’t there because we weren’t building at a normal pace.”

From 2007 to 2011, more than 2.1 million construction workers lost their jobs, according to the Bureau of Labor Statistics. Since then, only about a quarter of a million have gone back to work in the industry.

“In a normal year, housing construction is 5 percent of GDP,” Green said. The downturn “shaved 3 percent off the GDP. When we get back to normal – and we’re still not there yet – that’s another 3 percent back of GDP, which I think everyone will welcome.”

Exurbia building

Some people predicted that post-downturn new homes would be leaner than the boom-time McMansions, but that doesn’t seem to be holding true.

“There is more building in exurbia, where land is relatively cheap,” Green said. “Developers make bigger margins on bigger houses, so that’s probably what we’re going to see.”

Patrick Duffy, principal at home-building consultant Metro Intelligence Real Estate Advisors, said he predicts that next year will see builders break ground on 800,000 to 1 million new homes nationwide, following this year’s projected 600,000.

“House building has a big multiplier effect” on the economy, he said. “That’s why we’ve been dragging along. Now housing is starting to pick up; that’s a nice annual bump. It’s really hopeful, but there’s still some economic uncertainty out there. “

Carolyn Said is a San Francisco Chronicle staff writer. E-mail: csaid@sfchronicle.com

Article source: http://www.sfgate.com/realestate/article/Bay-Area-new-home-construction-rebounds-3986773.php

Refinances are surging this year, not just because interest rates are hitting new record lows but because the government is making severely underwater loans eligible for refinance. (Read More: Is Housing Recovering as Much as Everyone Thinks?)

The Home Affordable Refinance Program, which involves loans backed by Fannie Mae and Freddie Mac, used to cap negative equity, but this year that cap was removed, putting thousands more loans into the refi machine. So far more than half a million loans were refinanced through HARP since the beginning of this year.

Politicians and housing advocates claim that all the savings from these record low interest rates and the ensuing refinances is going back into the economy, but that does not appear to be the case. (Read More: Fed Pulls Trigger, to Buy Mortgages in Effort to Lower Rates)

Given the research from Freddie Mac, a quick, non-scientific survey of small lenders and brokers, produced similar findings:

Craig Strent/Apex Home Loans, Maryland: Homeowners, particularly older ones that have already met their financial planning goals, are taking the savings and just putting it back in the loan, meaning they are lowering their rates, but continuing to pay the same amount on the new loan that they were paying on the previous loan. This accelerates their payoff and decreases the interest they pay, though arguably with an opportunity cost given how cheap the money is.

Dan Green/Waterstone Mortgage, Ohio: Not all households are choosing to reduce payments. Many are choosing to reduce term. At today’s rates, the first payment of a 15-year mortgage is comprised of 67 percent principal. To get that point on a 30-year mortgage would take 18 years. More homeowners are asking about amortization schedules, and the benefits of paying extra principal each month. There’s more talk of saving than spending.

Julian Hebron/RPM Mortgage, California: Refi to lower payment, but keep making previous payment to pay loan down faster. Example: If you use our average loan of $550,000 and super-conforming rates of 3.5 percent now vs. 4.5 percent a year ago, a borrower’s payment drops from $2,787 to $2,429 (this factors in the paydown of $550,000 to $541,000 over 12 months). If a borrower keeps making old payment on new loan, thereby paying loan down by an extra $358 per month, they cut 6 years (or 20 percent) off a 30-year term.

(Read More: Is Housing Risen From Ashes?)

Suffice it to say, when it comes to home equity, we have fast become the anti-ATM society, by will or by force (we don’t have a whole lot of home equity anymore).

After trillions of dollars in lost home equity, Americans now appear to want it back so badly that they’re willing to pay it in themselves. They also want less debt for a shorter period of time.

This sounds like responsible, conservative fiscal planning, but it also means that savings from rock-bottom interest rates do not get paid back into the economy the way so many politicians and analysts have suggested.

-By CNBC’s Diana Olick
@Diana_Olick

Questions? Comments?