For January, 2013

New Home Sales Slip: Jobs Are the Key to the Housing Recovery, Says Chris Whalen


Sales of new homes fell 7.3% in December to a seasonally adjusted rate of 369,000, the Commerce Department reported Friday. But the government agency did revise November sales up 22,000 to a pace of 398,000 sales, which was the highest level of sales since April 2010. And, the $3,000-plus rise in the median prices of new homes sales was also a positive sign for the improving housing market.

“I think we’re off the bottom in a number of states, particularly the sand states like Arizona and California,” Chris Whalen tells The Daily Ticker. Whalen is executive vice president of Carrington Investment Services, a Connecticut-based firm that works in residential mortgage special servicing and origination. “And you’re seeing a lot of investors in the market, which is helping prices go up.”

While investors may be driving these types of price moves, they may not be the key to keep prices moving up.

“The key issue is the extent to which we can get homeowners to get financing and go out and buy homes, because that is what will make these price increases sustainable and real,” says Whalen.

Whalen argues jobs are the driver of housing, and unemployment may not be low enough and wage growth may not be high enough to drive this kind of homeowner demand.

Another roadblock to prospective homebuyers are the new consumers protections. Whalen says new mortgage rules from the Consumer Financial Protection Bureau may require fully documented loans, which is a good thing. But he notes certain consumers may not be able to qualify for a mortgage with a government guarantee.

Existing Home Sales Slip in December, But Housing Remains Strong


December existing homes sales slowed by 1% from November to a seasonally adjusted annual rate of 4.94 million, according to the National Association of Realtors (NAR). But sales are were up 12.8% in December from 2011, and the total number of sales in 2012 rose to the highest level in five years.

The annual price for existing homes also jumped to the highest level since 2005. The median price for all existing housing types was $180,800 in December. That’s 11.5% more than the same period in 2011.

To help make sense of the numbers, Barry Habib, VP and chief market strategist at Residential Finance Corporation, joined The Daily Ticker’s Lauren Lyster in the accompanying interview.

“I see some very bright spots here,” he says. “A 11% rise in the median home price year-over-year is very strong and we’ve seen this consistently throughout 2012 and it looks like we have a lot of strength going into 2013, especially highlighted by the levels of inventory.”

To his point, total housing inventory in December fell by 8.5% to 1.82 million existing homes for sale, according to NAR, or the lowest level of housing supply since May 2005.

“If there are fewer homes on the market and more people who want to purchase them, especially at these rates … it pushes home prices higher,” says Habib .

While the markets hit hardest during the housing crash will likely rebound the most, Habib forecasts at least a 5% rise in home prices across the board.

“The housing market does look strong, at least for the next three or four years,” he says.

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