Single-Family Housing Starts Rise 4.4 Percent in December

January 19, 2012 - Nationwide production of new single-family homes rose 4.4 percent to a seasonally adjusted annual rate of 470,000 units in December, according to newly released figures from the U.S. Commerce Department. This marked a third consecutive increase and the fastest pace of single-family housing starts since April of 2010. Meanwhile, the overall number of housing starts for the month declined 4.1 percent to a 657,000-unit rate due to a 20.4 percent dip on the more volatile multifamily side.

“Today’s report adds to the growing evidence that demand for new, single-family homes is finally starting to firm up in an increasing number of markets nationwide,” said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. “This emerging trend is allowing builders to put more crews back to work, and could be even stronger if not for the overly tight credit conditions that prevail for both builders and buyers, as well as the continuing foreclosure crisis and the challenges of obtaining accurate appraisal values on new homes. Policymakers should be doing everything possible to alleviate these problems and nurture the fledgling housing recovery in order to promote job and economic growth.”

“This report is in keeping with our expectations for slow but steady improvement in the single-family market, where production hit its lowest yearly rate in over 50 years in 2011,” said NAHB Chief Economist David Crowe. “Meanwhile, it should be noted that the decline in multifamily starts in December was coming off a dramatic increase from the previous month and simply brought that sector back closer to trend. Apartment production generally continues to gain strength heading into 2012 after posting a more-than 50 percent gain in 2011.” Looking forward, NAHB is forecasting gains of approximately 17 percent in both single- and multifamily housing production in 2012.

Combined single- and multifamily housing starts fell 4.1 percent to a 657,000-unit rate in December due to the multifamily side retreating 20.4 percent from a big gain in the previous month, to a seasonally adjusted annual rate of 187,000 units. However, for the year as a whole, overall housing production was pegged at 606,900 units, which was 3.4 percent better than the overall number of starts in 2010.

Regionally, December housing starts rose 54.8 percent in the Midwest following a big decline in the previous month. The Northeast posted a 41.2 percent decline that offset a big gain in the previous month, while the South and West also posted declines of 3.0 percent and 17.6 percent, respectively.

Permit issuance, which can be an indicator of future building activity, held virtually flat at a 679,000-unit rate in December. Single-family permits rose for a third consecutive month, by 1.8 percent to 444,000 units, while multifamily permits declined 3.7 percent to 235,000 units.

Regionally, permits rose 5.8 percent in the Midwest and held unchanged in the West, but declined 6.5 percent in the Northeast and 0.6 percent in the South in December.

Foreclosures Down in December, but Trend May Not Last

builder baldwin county Even homeowners delinquent on their payments got a bit of a holiday in December as foreclosure activity slowed to the lowest rate seen in 49 months, according to data released today by RealtyTrac. With a total of 205,024 filings reported for the month, activity was down 9% from November and down 20% year-over-year.

The largest drop seen was in default notices, which decreased 19% for the month and were down 23% annually. Scheduled foreclosures auctions were also down on a monthly and yearly basis, dropping 12% and 24%, respectively. And bank repossessions (REOs) were up 10% from November but remained 12% lower on an annual basis.

Part of the slowdown can be attributed to programs put in place by Fannie Mae, Freddie Mac, and several large mortgage lenders that halted evictions during the holidays. However, that doesn’t account for all of the drop-off, says Daren Blomquist, a spokesperson at RealtyTrac. "December is a little bit of a mystery to us because we saw some big decreases in California and Arizona … which both saw pretty dramatic decreases in filings, after we had started to see those numbers ramping up in the last few months," he said on a call with Builder yesterday. "At this point I’m chalking it up to more of a seasonal issue. Our expectation is that December is the calm before another surge of foreclosures early this year."

The month’s low numbers helped bring both 2011’s foreclosure activity and foreclosure rate to the lowest levels seen since 2007. As of year’s end, a total of 2,698,967 filings were reported—including default notices, scheduled auctions, and REOs—a 34% drop from 2010.

"Foreclosures were in full delay mode in 2011, resulting in a dramatic drop in foreclosure activity for the year," said Brandon Moore, RealtyTrac’s CEO, in a press statement. "The lack of clarity regarding many of the documentation and legal issues plaguing the foreclosure industry means that we are continuing to see a highly dysfunctional foreclosure process that is inefficiently dealing with delinquent mortgages—particularly in states with a judicial foreclosure process."

Indeed, the average processing time to complete the foreclosure process was 348 days in the fourth quarter of the year, up from 305 days in the fourth quarter of 2010. In New York, the average foreclosure time by the last quarter of 2011 had reached 1,019 days, longer than any other state.

As for foreclosure rates by state, Nevada ranked highest for the fifth consecutive year, with a rate of more than 6% of homes in the state, or one in 16, receiving at least one filing during 2011. Arizona came in at No. 2 for the third year in a row, with 4.14% of its housing units, one in 14, receiving a filing during the year. California, at a rate of 3.19% of homes or one in every 31 receiving a filing, came in third.

Other states rounding out the top 10 were Georgia (2.71%), Utah (2.32%), Michigan (2.21%), Florida (2.06%), Illinois (1.95%), Colorado (1.78%), and Idaho (1.77%).

Among metro areas with a population of 200,000 or more, Las Vegas posted the nation’s top foreclosure rate last year with one in every 14 Las Vegas homes receiving a filing during 2011. Of the remaining top 20 metros with the highest foreclosure rates, California claimed 10, including Stockton (No. 2), Modesto (No. 3), Vallejo-Fairfield (No. 4), Riverside-San Bernardino (No. 5), Merced (No. 7), Bakersfield (No. 9), Sacramento (No. 10), Fresno (No. 11), Visalia (No. 13), and Ventura (No. 16). Other cities in the top 20 included Phoenix (No. 6); Reno, Nev. (No. 8); Atlanta (No. 12); Prescott, Ariz. (No.14); Cape Coral-Fort Myers, Fla. (No. 15); Freeley, Colo. (No. 17); Detroit (No. 18); Boise, Idaho (No. 19); and Salt Lake City (No. 20).

As for 2012, "it’s going to be continuing what we’ve seen in the second half of 2011," Blomquist says, adding that zigzagging levels will continue and conditions will vary greatly by region. "The pattern we’re seeing is that lenders are pushing batches through at different times based on what they think they have documentation to support, and based on the local market conditions."

RealtyTrac expects to see higher numbers of foreclosures in 2012 than the nation saw last year, although rates aren’t expected to return to 2010 levels. Based on foreclosure starts, Blomquist says, RealtyTrac is estimating one million REOs will be reported this year, up from 800,000 nationwide in 2011. But estimating how many new foreclosures are coming gets tricky, he says. "Some of the big wildcards as to how much earlier stages of foreclosures will increase are the economy and how confident homeowners are feeling, especially underwater homeowners, who might be considering walking away. They’ll be more likely to stick it out if they see more signs of improvement in the economy and the housing market in 2012."

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Average on the 30-year home loan drops to 3.91 % from 3.95 %

WASHINGTON — 2012 looks to be another year of opportunity for the few who can afford to buy or refinance a home.

The average rate on the 30-year fixed mortgage fell to 3.91 percent this week, Freddie Mac said Thursday. That matches the record low reached two weeks ago.

The average on the 15-year fixed mortgage ticked down to 3.23 percent from 3.24 percent. That's up from 3.21 percent two weeks, also a record low.

Mortgage rates are lower because they tend to track the yield on the 10-year Treasury note, which fell below 2 percent this week.

The Employment Situation for December – Cautiously Optimistic

The Bureau of Labor Statistics (BLS) released the Employment Situation report for December today. From the establishment survey, payroll employment increased by 200 thousand, with private payrolls adding 212 thousand and government payrolls declining by 12 thousand. The October and November figures were revised, lowering payroll employment by 8 thousand for the period.

From the household survey, the unemployment rate declined to 8.5 percent. A year-end update to the seasonal adjustment factors resulted in revisions back to January 2007, so the decline to 8.5 percent was from a revised November rate of 8.7 percent. As with the November figures, the decline was tempered by the contribution from departures from the labor force, in contrast to employment growth, but the share was lower than in November. In December 50 thousand people left the labor force, while 176 thousand joined the ranks of the employed.

Why cautiously optimistic? Overall, employment growth was broad based across industries and the workweek and earnings improved. Payroll employment may have regained some momentum in the second half of 2011 after a wobbly start to the year. Payroll employment has increased by at least 100 thousand every month since July.

Higher FHA Loan Limits Restored

In an important victory for NAHB, the housing industry and consumers, Congress this week approved a much-debated deal to restore higher loan limits through 2013 for mortgages backed by the Federal Housing Administration (FHA).

“We commend congressional leaders in both parties and each chamber of Congress for taking this action to boost overall mortgage liquidity in the marketplace, create jobs, and provide home owners and home buyers with safe and affordable financing,” said NAHB Chairman Bob Nielsen.

“Restoring the higher FHA loan limits will help to stabilize home values, provide constancy while private investors re-enter the market, and enable millions of creditworthy consumers to get home loans with the best mortgage rates and lowest fees and downpayment requirements, he added.

President Obama signed the legislation into law on Nov. 18.