New home sales: 'Really good news'

[thundley4]

NEW YORK (CNNMoney.com) -- Sales of newly constructed single-family homes spiked 11% in June to an annualized rate of 384,000 homes, according to a report released Monday.

The gain over May was much greater than expected. A consensus of housing industry analysts had forecast seasonally adjusted sales of 352,000, according to Breifing.com.

However, sales are still 21% below the levels of a year ago, when new homes sold in June at an annualized rate of 488,000, according to the report released by the U.S. Department of Housing and Urban Development. Four years ago, during the height of the housing boom, the sales rate for June was 1,374,000, nearly three-and-a-half times higher than last month.

CNNMoney
 

[debk]

Part of the information that I provide in the reports that I do for the lenders on residential properties here, include general market data on lists and sales specific to the designated mls area of the subject property.

I did a report this morning on a property in the south part of my county. While number of properties on the market has gone down somewhat (under 200) in the last 3-4 months.....average days on market has increased from the low 80's to 120.

While this specific area has had list levels go down and number of active foreclosure properties has also decreased....most other areas have not only seen the number of lists and foreclosure properties increase...so have the days on market.

What I am seeing now....is that more and more higher priced properties are coming on the market. As regular resales, but also a definite increase in short sales and foreclosures.

To me, this is not so indicative of mortgages given to people who couldn't afford them... as many have been owned for more than 5 yeara (though that is a point of interest re-set on adjustable rate mortgages)....as it is indicative of job loss.

Glad to see that it is improving in some areas, but I don't think we have hit bottom here nor are we expected to before the end of the year.    (E Tn)

[Lacarnut]

I think we are at least a year or two before there is any good news. From what I have read there is going to be a bunch of resets coming due plus there is still over a 9 month supply of homes on the market. People in severly depressed markets that have seen the value on their house depreciate 40 to 50 per cent are walking away on high dollar homes. They can afford the notes but to them it does not make much sense to stay in a house they paid $800k 3 years ago and it is only worth $500k today. Re-financing at a low interest is also an issue.

[debk]

I think we are at least a year or two before there is any good news. From what I have read there is going to be a bunch of resets coming due plus there is still over a 9 month supply of homes on the market. People in severly depressed markets that have seen the value on their house depreciate 40 to 50 per cent are walking away on high dollar homes. They can afford the notes but to them it does not make much sense to stay in a house they paid $800k 3 years ago and it is only worth $500k today. Re-financing at a low interest is also an issue.

All the mortgages that were done in 2004-2005 that were on 5yr ARMs are due to be reset. Going to be really hard on people who are living in those areas that have depreciated. I think that's why we are starting to see so many "short sale" listings come on the market.

Not only is the re-financing at a low interest going to be more difficult....but for those who want to refinance at the time of the reset, which is common....many are going to be in a world of hurt because their property will not appraise enough to cover the existing mortgage.

Even with only a 5-10% depreciation, it will be tough to refinance unless the homeowner can put some money down to reduce the principal or pay the refinancing fees...otherwise many will end up being even more upside down on their mortgages than they already are as they will end up with 100%+ mortgages. The banks will be forced to take on those mortgages as they can't afford to foreclose on all those properties and potentially lose even more than they will with taking on the risk of 100%+ mortgage.....there just aren't enough buyers in many places for all the properties currently on the market.