Real Estate Home Loans in Boise Idaho, Waterstone Mortgage - Prime Equity Group: December 2009

Dec. 22 (Bloomberg) -- Sales of existing U.S. homes rose more than forecast in November, to the highest level since February 2007, a sign housing is gaining strength along with the broader economy entering 2010.

Purchases increased 7.4 percent to a 6.54 million annual rate from a revised 6.09 million pace the prior month, the National Association of Realtors said today in Washington. The median sales price declined 4.3 percent from the same month a year earlier, the smallest decrease since November 2007.

Lower interest rates, cheaper homes and a homebuyer tax credit have resuscitated a housing market that contributed to the worst economic slump since the 1930s. A sustained recovery in housing and the economy depends on a resumption of payroll growth after employers cut 7.2 million jobs in the past two years.

"The tax credit had the intended impact of drawing buyers in and lowering inventory," Lawrence Yun, chief economist at the Realtors group, said in a press conference. "An estimated 2 million buyers have taken advantage of the credit."

Stocks extended gains and Treasury securities fell after the report. The Standard & Poor's 500 Index added 0.4 percent to 1,118.01 at 10:03 a.m. in New York. The 10-year Treasury note fell, pushing the yield up to 3.75 percent from 3.68 percent late yesterday.

Economic Growth

The economy grew at a 2.2 percent annual rate in the third quarter, compared with a prior estimate of 2.8 percent, the Commerce Department said earlier today in Washington in its final revision to gross domestic product.

Home prices fell 1.9 percent in October from a year earlier, the Federal Housing Finance Agency in Washington said today in a separate report. The group's U.S. housing index is down 10.8 percent from the April 2007 peak.

Existing home sales were forecast to rise to a 6.25 million annual rate, according to the median forecast of 69 economists in a Bloomberg News survey. Estimates ranged from 5.2 million to 6.5 million, after an initially reported 6.1 million rate in October.

Previously owned home sales are compiled from contract closings and may reflect purchases agreed upon weeks or months earlier. Many economists consider new home sales, recorded when a contract is signed, a more timely barometer of the market.

New-Home Sales

The Commerce Department may report on Dec. 23 that new home sales rose 1.7 percent in November to a 438,000 annual pace, according to the Bloomberg survey.

Existing home sales reached a 4.49 million pace in January, their lowest level since comparable records began in 1999.

Purchases of existing homes rose 44 percent in November compared with a year earlier, the biggest increase on record. The median price fell to $172,600.

The number of previously owned unsold homes on the market fell 1.3 percent to 3.52 million. At the current sales pace, it would take 6.5 months to sell those houses compared with 7 months at the end of October. The ratio is the lowest since December 2006.

The share of homes sold as foreclosures or otherwise distressed properties was 33 percent, Yun said.

Single-Family Homes

The report showed sales of existing single-family homes rose 8.5 percent to an annual rate of 5.77 million. Sales of condos and co-ops were unchanged at a 770,000 rate.

Purchases increased 10.6 percent in the West, 8.4 percent in the Midwest, 6.6 percent in the Northeast, and 4.8 percent in the South.

Federal Reserve debt purchases are helping keep mortgage rates close to record lows, while President Barack Obama's Nov. 7 extension and expansion of the tax credit through April may provide more impetus to sales and construction in coming months.

The Fed last week signaled it would keep lending rates low for "an extended period" to foster growth. The average rate on a 30-year fixed mortgage was 4.94 percent last week and has averaged 4.85 percent since the end of October, according to Freddie Mac.

"Household spending appears to be expanding at a moderate rate, though it remains constrained by a weak labor market, modest income growth, lower housing wealth, and tight credit," Fed policy makers said in their statement last week after holding interest rates near zero.

Unemployment Forecast

Unemployment forecast to average 10 percent through 2010 remains a risk to the recovery in housing and the broader economy. Fed Chairman Ben S. Bernanke said Dec. 7 that the labor market and tight credit were limiting the economy.

Record foreclosures are also restraining housing by driving down prices. Foreclosure filings in the U.S. will reach a record for the second consecutive year with 3.9 million notices sent to homeowners in default, RealtyTrac Inc. said on Dec. 10. This year's filings will surpass 3.2 million for all of 2008, the Irvine, California-based company said.

Toll Brothers Inc., the largest U.S. luxury-home builder, projected that deliveries may fall by as much as 33 percent in the 12 months through October 2010, and the average selling price may drop as low as $540,000.

"We believe it may take some time for Americans to regain confidence in our economy, their job status and the benefits of home ownership," Robert Toll, chief executive officer at Toll Brothers, said in a Dec. 3 statement. "We anticipate a gradual recovery in housing, similar to the one that occurred in the early 1990s."

To contact the report on this story: Bob Willis in Washington at bwillis@bloomberg.net

Last Updated: December 22, 2009 10:18 EST

December 15, 2009 (The Bookings Institute) - Nationwide, the recession is technically over. Or at least that is the view of most economists. They note that real U.S. gross domestic product (GDP) finally expanded in the third quarter of 2009, growing at a 2.8 percent annual rate after four consecutive quarters of contraction. They point to a significant slowing of job losses in November, rising housing prices, and a slight downtick in unemployment as other positive signs. Their conclusion: Economic recovery is at last underway.

And yet, the pace of renewal seems tentative and its geography patchy. Most notably, the aggregate national story of recovery and expansion overlooks the fact that just as the American economy varies from region to region, and metropolitan area to metropolitan area, so does the recovery.

Consider, for example, the economic landscape of the Intermountain West and its metros, as depicted in this inaugural edition of the Mountain Monitor-a companion product to Brookings' national MetroMonitor and a production of the new Brookings Mountain West initiative, a partnership between Brookings and the University of Nevada at Las Vegas.

Drawing on data covering the third quarter of 2009 (ending in September), the new Monitor documents that no multistate region has been hit harder by the last year's economic crisis than the six-state Intermountain zone.

Across the region, the deflation of a massive housing "bubble," widespread job losses, and the onset of a significant public-sector fiscal crisis have wreaked havoc on many communities. In many Intermountain region locations, the sheer abruptness of the shift from hyper-growth early in the decade to a severe contraction in the last year has spawned a sense of almost existential whiplash.

As the findings below highlight, even within the region the effects of the recession and recovery have not been uniformly felt. Phoenix, Boise, and Las Vegas, for example, remained three of the most troubled metropolitan areas in the entire nation in the third quarter, with all residing in the weakest quintile of metros on a combined measure of overall economic performance. Still, metros like Colorado Springs, Albuquerque, and Denver have only been moderately affected by the recession and seem poised to renew their upward trajectory as the pace of recovery quickens. The upshot: While the Intermountain West is an increasingly distinct region in national affairs, it remains disparate-a still-loosely linked network of individual metropolitan economies, some of which remain mired in recession and many of which are clearly recovering.

Which is the point of the Mountain Monitor. Designed to serve as a barometer of the health of the Intermountain West's metropolitan economies, this Western monitor looks beneath the single account of the national statistics to draw into clear light the diverse metropolitan landscape of America's New Heartland as originally highlighted in the Brookings report "Mountain Megas." In this fashion, the Mountain Monitor aims to distinguish the particular contours of the Great Recession and its aftermath in the Mountain region from those elsewhere, and so contribute to the region's growing self-understanding.

To that end, we examine data on employment, unemployment, output, home prices, and foreclosure rates for the region's 10 large metropolitan areas, the nation's 100 largest metros, and 17 smaller metros dispersed around the Intermountain region. This exercise finds that:

• In aggregate, the 10 large Intermountain West metros have suffered disproportionately in the Great Recession compared to the rest of the country and other large metros. Average percentage job loss for the region's metro areas ran to 7.0 percent from pre-recession employment peaks through the third quarter of 2009, as compared to just 4.3 percent for the largest 100 metros across the nation. Gross metropolitan product (GMP) has also declined more among Mountain West large metros than in the typical large metro, while home prices have also slid inordinately. On that front, the average real price of a home in the 10 large metros of the Intermountain region declined by 8.5 percent between the third quarters of 2008 and 2009, compared to the 3 percent average decline registered in the 100 largest metros nationwide. Put it all together, and the region is struggling more than most in terms of job loss, loss of output, and declines in housing prices. Despite that, the aggregate unemployment rate across the 10 big Mountain metros remained a percentage point lower than that across the largest 100 metros nationally and has not increased as much during the recession.

• In terms of recovery, the region also lags but is largely moving in the same direction as the rest of the country in that GMP rose from the second quarter to the third in every metro, though job growth remains elusive. GMP expanded during the third quarter in every metro, with output growth ranging from Denver's tepid 0.3 percent increase to Ogden's robust 1.7 percent growth. However, employment growth has yet to materialize in the region. Not one of the largest 10 metros in the region posted employment gains in the quarter (only 13 major metros did nationally), and in fact job losses proceeded twice as fast as the national average. Ogden and Phoenix, for example, were hit especially hard with new job losses of over 1.5 percent in the quarter, and for their part, metropolitan Salt Lake City, Las Vegas, and Boise each saw employment slide by another point. With that said, nine of the 10 larger Mountain metros (Ogden was the exception) were losing jobs at a slower rate in September than they had been in the quarter before. In short, recovery seemed on its way in September but had not fully begun.

• Overall the major metros of the Intermountain West have been registering highly uneven economic performance even as the nation began an economic recovery. Las Vegas, Boise, and Phoenix have all seen massive job losses and contend with the highest unemployment rates in the region, languishing among the bottom quintile among large U.S. metros in terms of overall performance during the recession. On the more fortunate side, Colorado Springs and Denver escaped a collapse in housing prices and have seen only modest increases in unemployment. Albuquerque has maintained its pre-recession level of output and has lost a smaller share of its jobs than most metros. Colorado Springs and Ogden, UT, have also weathered the downturn better than the average U.S. metro.

• Heavily influencing the region's below-average aggregate profile on economic performance is the severe distress afflicting Las Vegas, Phoenix, and Boise-three metros that have been heavily hit by the collapse of the housing bubble. These westernmost large metros in the region remain three of the most severely distressed metros in the nation, and they inordinately define the region's recession landscape. Each of these metros has been devastated by the bursting of the housing bubble inflated by years of easy credit and a proliferation of exotic and usually subprime mortgages. Without these locales' acute distress, the region would still look hard-hit on employment loss, but it would appear rather typical on GMP and housing price declines, and it would actually look better than average on foreclosures. Construction and real estate industry concentration tells the story. Specifically, the share of employment in the main construction industries and real estate ran to 13.4 percent of all non-farm jobs in Las Vegas in 2006, and 12.8 percent for both Phoenix and Boise. By comparison, the average for large metros around the country on this remained just 8.0 percent, and it was 10 percent for the other Intermountain West metros.

• More broadly, metropolitan education levels and concentration in such industries as health services and related social services seem to have protected some metros from the worst economic stress. Most notably, those metros with a more educated workforce-such as Denver and Colorado Springs-have weathered the recession significantly better than other Mountain metros on almost every measure. High concentrations in health and social related services have also protected areas against economic decline on a variety of measures, with Albuquerque and Tucson being indicative. These findings underscore the critical roles human capital levels and sectoral composition play in regional economic performance.

• House prices have not yet stabilized in the Intermountain West, and the region's aggregate rate of bank owned properties remains high, although it is highly concentrated in Las Vegas and Phoenix. To be specific, only metropolitan Denver and Colorado Springs among the 10 large Mountain West metros had registered slim year-over-year home price increases by the end of the third quarter, while in September the incidence of real estate-owned (REO) properties remained disturbingly high. On this front, the region's aggregate large-metro REO rate (measured in REO properties per 1,000 mortgageable properties) of 8.15 nearly doubled the large-metro rate nationally. However, it bears noting that that showing was largely driven by the difficulties of Las Vegas and Phoenix, where the REO rates continued their upward trend-albeit at a slower rate-to 17.40 and 12.19 REOs per 1000 properties, respectively, in the third quarter while elsewhere the variation was on a more moderate plane.

• Patterns of recession and recovery among the smaller metropolitan areas of the region, finally, generally track with those engulfing their larger neighbors. Job losses and output declines were at once varied and inordinately severe in some of the West's smaller places, and unemployment rates continued to trend upwards. On the one hand, employment and output were off their pre-recession peak only modestly in the third quarter in places like Fort Collins, CO or Las Cruces, Farmington, and Santa Fe in New Mexico, but these indicators were hugely diminished in places like Lake Havasu-Kingman, AZ; St. George, UT; and Reno-Sparks, NV as these metros contended with double-digit losses on multiple indictors. Here as elsewhere, variations in industry composition and educational attainment are significantly affecting local performance. Smaller metros that have avoided the worst dislocations of the Great Recession-such as Las Cruces, Santa Fe, or Fort Collins-have frequently benefited from high industry concentrations in sectors like medical services, nursing care, and social assistance, or the arts, as well as high educational attainment. By contrast, the hardest hit metros have frequently been those most heavily specialized on real estate, construction, and the building trades (Reno, Prescott, and St. George) or those with low educational attainment (Lake Havasu, Yuma).

In sum, the arrival of widespread output growth among the metropolitan areas of the Intermountain West in the third quarter of 2009 reflected the arrival in the region of the nascent national recovery. However, the strength and durability of the nascent recovery remain uncertain. Quarterly job gains have yet to materialize, and large inventories of foreclosed homes and vast differences in performance levels (not to mention a major slump in household consumption and interstate migration) weigh heavily on the region's resilience.

These difficulties are going to require patience and creativity and also require that careful attention be paid in Washington-as Congress and the Obama administration consider new proposals to improve the nation's dismal jobs picture-to the particular stamp of the recession in the metropolitan areas of the Mountain West.

Link to story (click here)

Dec. 18 (Bloomberg) -- Moody's Investors Service placed $143 billion of jumbo-mortgage bonds under review for downgrades because of higher loss projections.

Grades of senior securities issued in 2005 will be most affected by the new loan-loss projections, the New York-based ratings company said in a statement dated yesterday. It now expects losses of 3.8 percent on loans underlying 2005 prime- jumbo bonds, with estimates of 8 percent for 2006 securitizations, 10.9 percent for 2007 debt and 12.3 percent for 2008 securities.

The revisions were prompted by "the rapidly deteriorating performance of jumbo pools in conjunction with macroeconomic conditions that remain under duress," Moody's said.

Recent jumps in "serious delinquencies" among jumbo loans will be compounded by weakness in the housing market and economy, the company said. An "overhang of impending foreclosures will impact home prices negatively," with values likely to decline 9 percent more before bottoming in the second half of 2010, Moody's said. At the same time, U.S. unemployment will rise to peak at about 10.6 percent, said to the firm, which had earlier forecast the jobless rate cresting at 9.8 percent.

Moody's also said it expects the U.S. government's effort to curb foreclosures to be less effective than it previously expected because it has "failed to gain traction."

Jumbo home-loans are larger than government-supported mortgage companies Fannie Mae or Freddie Mac can finance. Their limits now range from $417,000 in most places to as much as $729,750 in high-cost areas.

Criticism of Ratings

Ratings reductions typically boost the capital needs of bondholders such as banks and insurers and force some investors to sell debt. Moody's and Standard & Poor's, criticized by lawmakers for assigning top grades to mortgage debt proven too high by later defaults, have already cut ratings on hundreds of billions of dollars of notes in the $1.6 trillion market for so- called non-agency mortgage bonds, which lack government backing, lowering many securities multiple times.

In its last forecast in March, Moody's predicted cumulative losses, as percentage of original loan balances, of 1.7 percent for 2005 jumbo bonds, 3.6 percent for 2006 securities, 5.1 percent for 2007 securitizations and 6.2 percent for 2008 debt.

Since March, serious delinquencies among the pools, as a percentage of original balances, have risen to 3.2 percent from 2.1 percent for the 2005 bonds, 6 percent from 3.8 percent for the 2006 securities, 7.6 percent from 4.8 percent for the 2007 debt, and 7.8 percent from 4.6 percent for the 2008 group, Moody's said.

To contact the reporter on this story: Jody Shenn in New York at jshenn@bloomberg.net.

Last Updated: December 18, 2009 12:44 EST

Dec. 17 (Bloomberg) -- Homeowners with mortgages of more than $1 million are defaulting at almost twice the U.S. rate and some are turning to so-called short sales to unload properties as stock-market losses and pay cuts squeeze wealthy borrowers.

"The rich aren't as rich as they used to be," said Alex Rodriguez, a Miami real estate agent with JM Group USA Inc., whose listings include a $2.9 million property marketed as a short sale because the price is less than the mortgage, leaving the bank with a loss. "People have reached the point where they can't afford the carrying expenses of a $2 million home."

Payments on about 12 percent of mortgages exceeding $1 million were 90 days or more overdue in September, compared with 6.3 percent on loans less than $250,000 and 7.4 percent on all U.S. mortgages, according to data from First American CoreLogic Inc., a Santa Ana, California-based research firm. The rate for mortgages above $1 million was 4.7 percent a year earlier.

As defaults on the biggest mortgages rise, borrowers such as Steve Holzknecht are turning to short sales to exit loans that now are larger than the market value of the house. In such a transaction, the lender agrees to accept less than a 100 percent payoff on a mortgage to expedite the property's sale.

Holzknecht, 53, last month cut the asking price for his 7,280-square-foot home in Kirkland, Washington, by $550,000 to $1.25 million, lower than the balances of his two mortgages. Holzknecht, the former owner of Four Suns Inc., a Seattle luxury homebuilder that went out of business two months ago, constructed the Craftsman-style home in 2000. He declined to identify his lenders or the amount he owes.

Common Plight

"It's not uncommon to see this situation on the high end of the market -- homes selling for less than it would cost to build them," said Holzknecht's agent, Joe Flick of Roanoke Group in Seattle. The property came on the market eight months ago priced at $1.85 million, he said.

Porter Michael Peterson, a 33-year-old linebacker for the National Football League's Atlanta Falcons, bought a mansion near Tampa, Florida, four months ago for $1.1 million -- almost half the amount of the mortgage taken out by the sellers three years earlier, according to real estate records. Reggie Roberts, a spokesman for the Falcons, didn't return a call seeking comment.

Short sales almost tripled to 40,000 in the first six months of 2009 from the same period a year earlier, according to data from the Office of Thrift Supervision. The bank regulator doesn't break out short sales by size of mortgage.

Upside Down Mortgages

"You are just starting to see the tip of the iceberg with luxury short sales," said Adrian Heyman, owner of Property Advisors, a real estate broker in Scottsdale, Arizona. "A lot of wealthy people are upside down in their mortgages and they just can't afford the second or third vacation home anymore."

There are 114,000 home loans of more than $1 million, according to First American. About a quarter of all mortgaged homes in the U.S. have loan balances bigger than their current value, known as being upside down or underwater, the data company said.

The Dow Jones Industrial Average lost more than half its value as it tumbled to a 12-year low in March. The number of U.S. households with a net worth of more than $1 million, not counting primary residences, fell to a five-year low of 6.7 million last year from a record 9.2 million in 2007, according to Spectrem Group, a Chicago-based consulting firm.

The financial-services industry was among the hardest hit by the recession. While Goldman Sachs Group Inc. set aside a record $16.7 billion in the first nine months of the year for employee bonuses, some Wall Street executives will see pay cuts, according to Johnson Associates Inc., a New York-based compensation-consulting firm.

Distress

Year-end bonuses for people at hedge funds, asset- management firms and insurance companies probably will drop an average 20 percent, the firm said.

"There's a lot of distress," said Tracy McLaughlin, co- owner of Morgan Lane Real Estate in Ross, California, north of San Francisco. "You have hedge-fund guys whose funds evaporated and a year-and-a-half later they're still not working."

The entry-level segment of the housing market was aided this year by an $8,000 first-time buyers tax credit that pushed resales to a 6.1 million annual pace in October, the highest since February 2007, the National Association of Realtors said in a Nov. 23 report.

President Barack Obama signed a bill last month extending the program into next year. The new version keeps the first-time buyer benefit and makes a smaller credit available to some move- up buyers. It can't be used for homes priced above $800,000.

Luxury Market Left Out

The Federal Reserve set out in January to lower fixed mortgage rates by purchasing $1.25 trillion of bonds backed by home loans. The 30-year fixed rate for so-called conforming loans that can be bought by Fannie Mae and Freddie Mac dropped to an all-time low of 4.71 percent in the week ended Dec. 4, according to McLean, Virginia-based Freddie Mac, the second- largest U.S. mortgage financier. The rate rose to 4.81 percent last week.

The Fed purchases haven't affected the high end of the market because they exclude so-called jumbo loans. Mortgages above the $729,750 limit set by Congress for the nation's highest-priced markets cost almost 1 percentage point more than conforming loans, according to Keith Gumbinger, vice president at HSH Associates, a mortgage-data company in Pompton Plains, New Jersey. That's quadruple the historic spread.

"There is no refinance market for you if you are underwater and outside the Fannie and Freddie framework," Gumbinger said. "High-end neighborhoods are all suffering from the same problems of diminished income at a time when there is little equity to work with."

Trapped by Market

Masoud Bokaie, co-founder of engineering firm BORM Associates Inc. in Irvine, California, owes $2.6 million on a 3,664-square-foot house with marble floors and granite counters about 10 miles (16 kilometers) away in Newport Beach. He's waiting to hear whether lenders Luther Burbank Savings and Wells Fargo & Co. will approve a short sale.

He received an offer last month "close to" the loan balances, said Shirley Cameron, his agent at Coldwell Banker Platinum Properties in Irvine, who declined to specify how much. Bokaie said he doesn't want to pay $7,000 a month in net costs including the property's mortgages and taxes when real estate values in the area continue to tumble.

"What's the point when the market is going in the other direction?" Bokaie said in an interview.

The U.S. median home price was $173,100 in October, 25 percent lower than its July 2006 peak, according to the National Association of Realtors. Prices fell 7.1 percent from a year earlier, the slowest pace of the year.

More Declines Expected

"The reason the low end stopped falling is because the government stepped in with affordable loans," said Scott Simon, managing director at Pacific Investment Management Co., a Newport Beach-based investment firm that runs the world's largest bond fund. "There is no political will to bail out a million-dollar house."

Luxury home prices probably will drop another 5 percent before reaching a bottom in September 2010, according to Sam Khater, senior economist at First American.

Those declines may lead to losses on jumbo mortgages that dwarf the "haircut," or discount to full value, that banks take on short sales or foreclosures of moderately priced homes, said Rodriguez, the agent with JM Group in Miami.

"When the bank takes a loss on a $3 million property it's a lot bigger than the loss on a home with a $150,000 mortgage," Rodriquez said.

To contact the reporters on this story: Kathleen M. Howley in Boston at kmhowley@bloomberg.net; Dan Levy in San Francisco at dlevy13@bloomberg.net

Last Updated: December 17, 2009 00:00 EST

Dec. 16 (Bloomberg) -- Housing starts in the U.S. rose in November and a gauge of consumer prices was unchanged, supporting forecasts for an economic recovery that will generate little inflation.

Builders broke ground on 574,000 homes at an annual rate in November, an 8.9 percent increase from the prior month, the Commerce Department said in Washington. A Labor Department report showed consumer prices excluding food and energy were unchanged, compared with a median forecast for a 0.1 percent increase in a Bloomberg News survey of 79 economists.

Permits for future construction climbed to the highest level in a year, signaling builders expect sales to rise as homebuyers are lured by lower prices, tax credits and mortgage rates near record lows. Federal Reserve policy makers meeting today may indicate the recovery is gaining strength while repeating a pledge to keep the benchmark interest rate almost at zero for an "extended period" to push down an unemployment rate that's forecast to exceed 10 percent through June.

"The housing market is stabilizing at very low levels, which of course is better than plunging," said Harm Bandholz, an economist at UniCredit Research in New York who correctly forecast no change in the so-called core consumer-price index. "The Fed will be a little more upbeat about the economy, but core inflation will continue to trend lower. The Fed does not want mortgage rates to rise right now or in the near future."

The Standard & Poor's 500 Index was up 0.7 percent to 1,115.11 at 11:10 a.m. in New York. The S&P's Supercomposite Homebuilding Index rose 3 percent to 237.51.

Projected Gain

Housing starts matched the median estimate of 78 economists surveyed by Bloomberg News and followed a 10 percent drop the prior month. The government revised October's reading down to a 527,000 pace from the 529,000 previously estimated.

Building permits increased to a 584,000 pace, the highest level since November 2008, from 551,000 the prior month. Permits were forecast to rise to 570,000.

Toll Brothers Inc., the largest U.S. luxury homebuilder which reported a 42 percent surge in fiscal fourth-quarter orders, is anticipating a gradual recovery in the market, said Chief Executive Officer Robert Toll during a Bloomberg Television interview on Dec. 11.

"There is a pretty good reservoir of pent-up demand," he said in New York City. "We don't know how fast we're coming back, but we do know we're coming back."

Weather Factor

Favorable weather may have played a role in boosting construction last month, said Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts. November was the third warmest in 115 years of record keeping, according to the National Climatic Data Center, giving builders an opportunity to keep working. By contrast, October was the wettest in the past century.

President Barack Obama's extension last month of a first- time homebuyers' tax credit of as much as $8,000 until April 30 will also give builders reason to speed up projects over the next couple of months.

Any sustained recovery will require gains in employment, economists said. The economy has lost 7.2 million jobs since the recession began, and economists surveyed by Bloomberg early this month forecast joblessness will average 10 percent next year.

Fed Chairman Ben S. Bernanke, in comments Dec. 7 at the Economic Club of Washington, listed a weak labor market and tight credit as among the "formidable headwinds" that he said would probably "keep the pace of expansion moderate." The Fed's decision on interest rates is due today at about 2:15 p.m. New York time.

Shelter, Clothing

The so-called core consumer price index that excludes food and energy showed no increase last month for the first time this year, restrained by a drop in rents and cheaper clothing.

Overall, consumer prices rose 0.4 percent, matching economists' forecasts and up from a 0.3 percent gain in October, today's Labor Department report showed.

Compared with a year earlier, consumer prices were up 1.8 percent. Core prices rose 1.7 percent from November 2008, matching the year-over-year gain in October.

After rising 4.1 percent in November, fuel costs have retreated so far this month, and comments from companies such as Best Buy Co. indicate unemployment close to a 26-year high is prompting retailers to discount merchandise.

Computer Discounts

Best Buy, the largest electronics retailer, said yesterday that its fourth-quarter gross profit rate will be lower than anticipated because of discounted laptop computers and $299.99 flat-screen TVs to attract customers.

Construction of single-family houses, which accounted for 84 percent of the industry last month, increased 2.1 percent to a 482,000 rate. Work on multifamily homes, such as townhouses and apartment buildings, jumped 67 percent to an annual rate of 92,000.

All four regions showed a gain in starts in November, led by a 16 percent increase in the Northeast.

A separate Commerce Department report today showed the U.S. current-account deficit widened to $108 billion in the third quarter from a seven-year low of $98 billion in the previous three months, reflecting a larger shortfall in trade as imports rose faster than exports.

Last Updated: December 16, 2009 11:18 EST

First-time home buyers reached the highest market share on record during the past year, according to the latest consumer survey of home buyers and sellers. The study was released here today at the 2009 REALTORS® Conference & Expo.

The 2009 National Association of Realtors® Profile of Home Buyers and Sellers is the latest in a series of large national NAR surveys evaluating demographics, preferences, marketing and experiences of recent home buyers and sellers. Among national surveys, NAR's Profile of Home Buyers and Sellers is unprecedented in size and scope.

Paul Bishop, NAR vice president of research, said several factors have been at play. "Tax incentives, record high affordability conditions and a pent-up demand brought a record share of first-time home buyers into the market," he said. "These buyers are critical to housing and a general economic recovery because the market always heals from the bottom up - they absorb inventory, free existing owners to make a trade and stimulate related goods and services."
The number of first-time home buyers rose to 47 percent of all home sales from 41 percent of transactions in last year's study, and was the highest on record dating back to 1981. The previous high was 44 percent in 1991. "It's interesting to note the last cyclical peak of first-time home buyers was during the last noteworthy economic downturn, with first-time buyers starting the chain reaction that led the nation out of recession," Bishop said.

Aided by the home buyer tax credit, the outlook for housing and the economy appears headed for a sustainable recovery, according to the National Association of Realtors®.
Lawrence Yun, NAR chief economist, said the projections are enhanced by a tax credit expansion to more home buyers through the middle of 2010. "Given the success of the first-time buyer tax credit to date, and the need for qualified buyers to continue to absorb inventory that will include additional foreclosures over the coming year, we are hopeful about the impact of the expanded tax credit because it will stabilize home prices," he said. "In fact, the credit is working better than first projected - it now looks like we'll have 2.3 to 2.4 million first-time buyers this year."
A large consumer study being released later today, the 2009 National Association of Realtors® Profile of Home Buyers and Sellers, shows first-time buyers accounted for a record 47 percent share of home sales over the past year, up from 41 percent in the 2008 survey. The share has risen steadily since a cyclical low of 36 percent in 2006.
Existing-home sales are expected to total 5.01 million in 2009, a gain of 2.0 percent over last year, and then are forecast to rise 13.6 percent to 5.69 million in 2010. "A steady draw down of inventory will help home values to turn positive in 2010, but risks such as unemployment remain in the economy," Yun said.
New-home sales are projected at 397,000 this year, recovering to 549,000 in 2010. Housing starts, including multifamily units, should total 564,000 units this year but grow to 752,000 in 2010.
The 30-year fixed-rate mortgage will probably average 5.3 percent in the fourth quarter, rising gradually to 5.8 percent by the end of next year. NAR's housing affordability index will set a record in 2009, averaging 30 percentage points higher than 2008. Affordability will decline from record highs next year but will remain at historically attractive levels for home buyers.
"We've seen a steady downtrend in housing inventory for well over a year and home prices appears to be in the early stages of stabilizing. With expansion of the tax credit to additional buyers through the middle of next year, and no major unforeseen events impacting the economy, home prices should rise between 3 and 5 percent in 2010, but with wide geographic differences," Yun said.
He expects growth in the U.S. gross domestic product to be at a pace of 2.5 percent in the current quarter, with GDP up 2.8 percent in 2010.
The unemployment rate is close to peaking and is projected to ease to 9.5 percent by the end of next year.
"The size of the U.S. budget deficit is a concern going forward, and carries the risk of higher inflation. At this point, that risk appears to be restrained," Yun said. Inflation, as measured by the Consumer Price Index, is seen contracting 0.4 percent this year, then rising 1.6 percent in 2010. Inflation-adjusted disposable personal income is estimated to grow 0.4 percent this year and 1.2 percent next year.
The National Association of Realtors®, "The Voice for Real Estate," is America's largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.

Realtors® are the face of the housing market, the focal point of information, involvement and inventory, and the Federal Housing Administration is committed to help them be successful, FHA Housing Commissioner Dave Stevens told more than 1,000 Realtors® at a gathering here today.

"You help to stabilize the community, and without homeownership, there can be no stability in communities," Stevens said. "Together, we must never let overexuberance overtake the housing market again, and interrupt the housing market and the lives of untold millions of Americans. Our goal must be nothing less than to craft a solid, sustainable housing market, a market with a secure foundation for the future."

Stevens said he and Shaun Donovan, secretary of the Housing and Urban Development, recognize that the National Association of Realtors has been at the forefront of efforts to address the housing crisis, and he has met with NAR on several occasions to consider their concerns. FHA has taken direct action on a number of those concerns.

Stevens announced that effective Monday, Nov. 16, FHA will no longer require a second appraisal on high-balance loans for properties in declining markets. "We did not find our previous policy to be particularly helpful and were very concerned about the additional burden on lenders and consumers," Stevens said. He noted the policy change will bring industry alignment, streamline loan processing and reduce costs to consumers.