Foreclosure actions increased by 2.0 percent in May from April’s 75 month low point for foreclosure activity according to RealtyTrac’s U.S. Foreclosure Market Report released June 11. However, the good news is that May 2013 foreclosure filings were still 28 percent below May 2012 filings.

RealtyTrac reports that approximately one in 885 homes were in some stage of foreclosure in May. This does not mean that 1 in 885 homes was lost to foreclosure, but it does indicate that documents related to some phase of foreclosure (Notice of Default, Notice of Trustee Sale, and Bank Reposession) were filed.

Actual lender repossessions (REO) increased by 11 percent in May, but were down by 29 percent as compared to May 2012. 33 states reported increases in REOs with North Carolina, Oregon and Wisconsin having the highest numbers of REO properties added.

Judicial Foreclosure States Lagging In Clearing Foreclosure Inventory

Foreclosure starts were up by 4 percent in May, but were 33 percent lower than for May of 2012. States using judicial foreclosure proceedings were 5 of the top 6 states for foreclosure filings. The state of Nevada, which uses non-judicial foreclosure proceedings, was second after Florida and ahead of Ohio, South Carolina and Illinois.

In general, judicial foreclosure proceedings take longer to complete than non-judicial foreclosures. This results in homes being unavailable for sale for longer periods of time. Lenders are required to complete the foreclosure process and in some cases, they must await expiration of a redemption period before a foreclosed home can be repaired and sold.

In states using non-judicial foreclosure proceedings, the time between the initial foreclosure filing and the foreclosure sale can be as little as three to four months. Quickly turning over foreclosed homes is helpful for improving regional housing markets and making more homes available for purchase. Economists have recently cited low inventories of homes as holding back housing markets in some areas.

Bank Owned Properties Provide Buying Opportunities

Lender-owned properties provide potential opportunities for first-time buyers and others seeking affordable homes. Mortgage lenders tend to offer attractive sale terms on REO properties, as their objective is to move these homes out of their inventories as quickly as possible.

Some foreclosure properties are also lacking current maintenance and are often sold as-is. DIY enthusiasts can buy and renovate foreclosed homes for owner occupancy or investment. 

It’s a good idea to discuss your interest in the opportunities available for buying a Corpus Christi lender-owned home with a trusted real estate professional.

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Last week’s news was relatively quiet with no data significant to the mortgage lending released until Wednesday, when the federal government announced a $138 billion budget deficit for May.

According to the U.S. Treasury this figure is 11 percent higher than for May of 2012, but the federal budget is expected to come in with less than a -$1 trillion deficit for the 2013 fiscal year, which runs from October to September.

The Treasury estimates that the 2013 budget deficit will come in at approximately -$642 billion, well below fiscal 2012’s deficit of -$1.1 trillion. The federal budget has been running deficits over -$1 trillion since 2008.

Employment Market Continues To Strengthen

On Thursday, the Weekly Jobless Claims report brought good news; jobless claims fell from the prior week’s 346,000 jobless claims to 334,000 jobless claims. This was also less than expectations of 350,000 jobless claims. As more workers gain steady employment, this will enable more would-be home buyers to become active buyers.

May Retail sales also showed slight improvement as they moved from 0.60 percent from April’s 0.10 percent.

According to Freddie Mac’s Primary Mortgage Market Survey (PMMS), the average mortgage rate for a 30year fixed rate mortgage rose from last week’s 3.91 percent to 3.98 percent with discount points unchanged at 0.70 percent. The average rate for a 15-year fixed rate mortgage rose from last week’s 3.03 percent to 3.10 percent with discount points holding at 0.70 percent.

What‘s Coming Up This Week

Next week’s economic news schedule has a number of reports due including Wednesday’s FOMC statement and Fed Chair Ben Bernanke’s press conference. This meeting and press conference are significant as any move by the Fed to reduce or cease its current quantitative easing (QE) program could cause mortgage rates to rise further.

Monday’s news includes the Home Builders Index for June. Tuesday brings the Consumer Price Index (CPI) for May and the Core CPI, also for May. The indices measure prices paid by consumers for goods and services; the Core CPI eliminates the volatile food and energy sectors included in the CPI. Rising or falling consumer costs influence how much discretionary income consumers have for saving toward buying a home.

No news is scheduled for Wednesday other than the FOMC statement and press conference.

Thursday brings the Existing Home Sales Report, Weekly Jobs Report, Freddie Mac PMMS and Leading Indicators. These reports are expected to provide news about U.S. housing markets, mortgage rates and economic influences impacting consumers.

There is no economic news scheduled for Friday.

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Last week’s economic reports provided a mixed bag of results. On Monday, the Department of Commerce reported that construction spending increased by 0.40 percent in April and fell shy of the expected reading of 1.0 percent, but exceeded the March reading of -0.80 percent.

Home Prices Increase Fastest Since 2006

On Tuesday, CoreLogic released its Home Prices reported that the national average home price had increased by 12.10 percent year-over-year in April. The comparable year-over-year reading for April 2012 was 11.00 percent. This represents the fastest pace of home price increases since 2006.

The national average home price expanded by 3.20 percent as compared to March,  but average prices grew faster in the West, which is experiencing a pronounced lack of available homes and developed land for building.

New Jobs Created Showing Improvement Over April Revisions 

ADP released its private-sector Payrolls Report for May on Wednesday; 135,000 new private sector jobs were added as compared to investor expectations of 170,000 jobs added in May. The May reading surpassed April’s downwardly-revised reading of private-sector jobs added.

Friday’s Jobs Report, issued by the Bureau of Labor Statistics, consists of the Non-Farm Payrolls Report and the National Unemployment Rate. Non-Farm Payrolls added 175,000 public and private sector jobs and surpassed both the consensus reading of 164,000 new jobs and the prior week’s reading of 149,000 jobs added. The National Unemployment Rate ticked up from 7.50 to 7.60 percent. The Department of Labor attributes this increase to more people joining or returning to the labor market.

Investors Watching Fed Mortgage Backed Security Buying Activity Closely

The Federal Reserve Beige Book Report was also released Wednesday. It contained no surprises and noted modest to moderate economic growth in 11 of 12 Federal Reserve Districts. The Dallas Federal Reserve District reported strong growth, but investors will be watching next week’s Federal Open Market Committee (FOMC) meeting closely for proposed changes to the Fed’s current policy of buying bonds and mortgage backed securities (MBS) with the goal of keeping long term interest rates lower.

Thursday’s Primary Mortgage Market Survey brought disquieting news of rising mortgage rates. Freddie Mac reported that the average rate for a 30-year fixed rate mortgage had risen from the prior week’s rate of 3.81 percent to 3.91 percent. Discount points fell slightly from 0.80 percent to 0.70 percent with buyers paying all of their closing costs. The average rate for a 15-year fixed rate mortgage rose from last week’s average rate of 2.98 percent to 3.03 percent with discount rates remaining the same at 0.70 percent for buyers paying all of their closing costs.

What‘s Ahead for Next Week

There is no news scheduled for release on Monday. The rest of the week’s calendar includes the NFIB Small Business Index on Tuesday and the Federal Budget for May on Wednesday. Thursday’s scheduled releases include Weekly Jobless Claims, Average weekly mortgage rates as reported by Freddie Mac, and Retail Sales for May. Friday’s schedule includes the Producer’s Price Index for May and June’s Consumer Sentiment Report.

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Last week’s financial news was relatively limited due to the Memorial Day holiday and no economic reports being released on Wednesday.

The biggest news in terms of housing and mortgages was the S&P/Case-Shiller Housing Market Indices (HMI) released on Tuesday.

The March HMI data for national housing markets reflected a sharp increase in year-over-year home prices from 9.30 percent in February to 10.90 percent in March.

Twelve cities included in the Case-Shiller 20-city index reported double-digit year-over-year percentage gains for March home prices. While this data strongly supports recovering home prices, analysts cite the need for more jobs, which would enable more consumers to buy homes.

Thursday’s weekly Jobless Claims Report from the Labor Department highlighted ongoing problems with lagging employment as new jobless claims jumped to 354,000. The four-week moving average for new jobless claims increased by 6.75 percent to 347,250 new jobless claims.

Bullish Stock Market Affects Mortgage Interest Rates

Mortgage rates jumped in connection rising stock prices; Freddie Mac reported that the average rate for a 30-year fixed rate mortgage increased to 3.81 percent plus 0.80 percent in discount points.  The average rate for a 15-year fixed rate mortgage increased to 2.98 percent plus 0.70 percent in discount points.

Rising mortgage rates suggest that home buyers may benefit from considering hybrid adjustable rate mortgages; the average rate for a 5/1 hybrid ARM was 2.66 percent with 0.50 percent in discount points.

The Chicago Purchasing Managers Index (Chicago PMI) measures how manufacturing and related businesses perform on a monthly basis.  May’s reading increased to 58.70 and surpassed expectations of a 49.90 reading as well as April’s reading of 49.00. Readings above 50 are considered positive.

Consumer Sentiment rose in May to a reading of 84.50, which exceeded both the expected reading of 83.80 and April’s reading of 83.70. As consumers gain confidence in the economy, they are more likely to buy homes.

Next Week’s News

Construction spending for April is due Monday with a consensus of +1.00 percent as compared to -1.70 percent in March. Rising construction spending could indicate an increase in residential construction, which has been facing obstacles including increasing labor and material costs and a shortage of available land for residential building.

Thursday’s news includes the weekly Jobless Claims report and Freddie Mac’s weekly report of average mortgage rates.

Friday brings the monthly Jobs Report, which consists of the Department of Labor’s Non-farm Payrolls report and the monthly unemployment rate. These reports are significant for gauging national and regional labor markets and for anticipating the Fed’s decision regarding its current quantitative easing policy.

If the Fed ceases or reduces its purchase of Treasury securities and mortgage-backed securities (MBS), mortgage rates are likely to rise.

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The most recent S&P/Case-Shiller Index showed all three composites posting double-digit increases over the last four quarters.  The national composite, which is the broadest based index, showed an increase of 10.2% annually. The 20-City composite posted even stronger annual growth at 10.9%.

Click Here To Download The Full Report

The Case-Shiller Index measures changes in home prices by tracking same-home sales using 10-City, 20-City and national housing markets; and the change in sales price from sale-to-sale. Detached, single-family residences are used in the Case-Shiller Index methodology and data is for closed purchase transactions only.

12 Of 20 Metro Markets Notch Double-Digit Annual Growth

Between March 2012 and March 2013, home values rose in all 20 Case-Shiller Index markets. Phoenix, Arizona (+22.5%) once again was leading the national price recovery, quite possibly due to its precipitous fall during the onset of the housing crisis.

Another notable gainer was San Francisco (+22.2%), followed by Las Vegas, Nevada (+20.6%)  On the weaker end were Boston (+6.7%), Cleveland (+4.8%) and New York (+2.6%), but it is important to note that even these smaller numbers still represent significant gains across the board.

There were a total of 12 year-over-year double digit gainers in home value which included those mentioned above as well as Atlanta, Detroit, Los Angeles, Miami, Minneapolis, Portland, San Diego, Seattle and Tampa.

All 20 Metro Markets Show Positive Growth For 3 Consecutive Months

In another very strong supporting point for the housing recovery, all 20 metro markets measured showed positive home price growth for at least 3 consecutive months.  This consistency in growth contributes to an overall indication of strength in the housing sector rebound.

The only potential back-pedaling in the report came from noting that higher than normal multi-family housing numbers, large numbers of homes still in the foreclosure process, and significant investor activity may demonstrate that the housing recovery is not yet complete.

This latest S&P/Case-Shiller Home Price Indices report seems to indicate that the housing market continues to show positive growth.  

Now may very likely be the best time to move forward with your next Corpus Christi real estate transaction.  A positive next step is to call your local, trusted real estate professional for advice today. 

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The National Association of REALTORS reported that sales of existing homes in April reached 4.97 million on a seasonally-adjusted annual basis.

Although this reading fell short of Wall Street’s expectations of 5.00 million existing homes sold, it surpassed the March 2013 upwardly revised reading of 4.94 million existing home sales. This represents a 0.60 percent increase from March to April, and a 9.70 increase year-over-year.

Low Mortgage Rates Contribute To High Sales Levels 

Low mortgage rates and pent-up demand for homes are driving sales of existing homes, which reached their highest level since November 2009. 

Lawrence Yun, chief economist for the National Association of REALTORS, indicated that housing market momentum is overcoming obstacles: “The robust housing market recovery is occurring in spite of tight access to credit and limited inventory. Without these frictions, existing home sales would be well above the five million unit pace.”

Inventories of homes for sale are gradually increasing; at the end of April, the total inventory of existing homes had increased by 11.9 percent to 2.16 million existing homes for sale. This represents a 5.20 month supply of available homes in April as compared to a 4.7 month supply of homes in March 2013. Listed inventory is 13.60 percent below April 2012, when there was a 6.60 month supply of homes available.

Average Home Sales Prices Up 14 Months In A Row

The national average price for all housing types was $192,800, and increase of 11.0 percent over April 2012. This represents the fourteenth consecutive month of rising average home prices; the last time this occurred was between April 2005 and May 2006.

Homes sold through foreclosure or short sales fell by three percent to 18 percent of existing homes sold in April.  Of these sales, 11.0 percent were foreclosure sales and 7.0 percent were short sales. Foreclosure sales averaged 16.0 percent below market value and short sales averaged 14.0 percent below market value.

The Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac, provided more positive news for U.S. housing markets as of March 2013. Average home prices for homes mortgaged by Fannie Mae and Freddie Mac increased by 7.20 percent year-over-year, and were up by 1.20 percent from February 2013. FHFA also reported that home prices had risen by 6.70 percent in the first quarter of 2013 as compared to the same period in 2012.

New Home Sales Show Rising Trend As Well

In related news, the Department of Commerce reports that New Home Sales are up by 2.30 percent from March to 454,000 units on a seasonally-adjusted annual basis.  This handily exceeds Wall Street’s consensus of 430,000 new homes sold in April, and is also higher than March’s reading of 444,000 new homes sold.

Buyers are turning to new homes due to pent-up demand in housing markets caused by low inventories of existing homes and low mortgage rates. It’s also likely that with home prices rising, would-be buyers are acting on indications that record low rates and home prices are expected to increase.

Rising home prices suggest that as demand increases, mortgage rates may not be far behind. Buyers in the North Padre Island market today can still gain the advantage of historically low mortgage rates.

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Home builders are gaining confidence in current and future market conditions for new homes, but continue to see below-average foot traffic in new homes.

The reading for May’s National Association of Home Builders (NAHB) /Wells Fargo Housing Market Index (HMI) increased by three points to a reading of 44 as compared to April’s revised reading of 41. The HMI measures builder confidence in current sales conditions for newly built homes, buyer foot traffic in new homes and builder expectations for future sales conditions.

Builder Confidence In Future New Home Sales Highest Since February 2007

The HMI reading for current sales conditions for newly built homes rose from 44 to 48. The reading for buyer foot traffic in new homes rose from 30 to 33, and builder confidence in future sales of new homes rose from 52 to 53, which is the highest reading posted for builder expectations since February 2007.

A reading of more than 50 indicates that more builders consider housing markets good than bad. 

NAHB Chairman Rick Judson noted that home builders are facing challenges including rising costs for building materials, lots and labor as supply chains recover from the recession. He also said that builders took note of “urgency” among home buyers wanting to take advantage of low mortgage rates, but who are facing a dwindling supply of available homes.

Regional Housing Market Index Unchanged Except In West

HMI readings for three of the four geographical regions used in the HMI survey of builders remained unchanged with the Northeast at 37, Midwest at 45 and South at 42.

The reading for the West declined by five points to 49, and likely reflects the shortage of building space and available new homes for sale. The regional HMI figures are calculated as a three-month rolling average.

In some areas of the West, home sellers are again receiving multiple offers for homes, a clear indication of diminishing inventories of homes for sale.

As an example, the Sacramento Bee recently reported the dilemma of builders faced with fewer available construction-ready lots alongside an increasing demand for homes. As inventories of both new and pre-owned homes shrink, demand for homes is growing as buyers take advantage of low mortgage rates.

With builders feeling confident about the future and poised to ramp up their home building efforts, it is a great time to consider buying or selling a home in North Padre Island.  

Contact your trusted real estate professional to discuss your options right away to take advantage of this exciting opportunity.

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RealtyTrac recently reported that national foreclosure filings are down while foreclosure filings are seeing marked increases in some states.

There are two systems for foreclosing residential real estate in the United States; judicial and non-judicial foreclosure. The states individually decide which foreclosure process will be followed in their state.

Click Here To Download An Overview Of The Foreclosure Process

Judicial foreclosure requires action by the courts because the mortgage is not written including a “power of sale clause”. Judicial foreclosure proceedings generally take longer than non-judicial processes due to this court involvement.

A log-jam of delayed judicial foreclosures are beginning to move through backlogged courts with the result of higher numbers of foreclosures started, foreclosure auctions scheduled, and properties either sold to third parties at foreclosure auctions or repossessed by mortgage lenders.

In states allowing non-judicial foreclosure, the matter may be handled outside of the judicial system as the mortgage is written with the power of sale clause which allows the lender to take control of the mortgaged property to satisfy the outstanding lien.

Here are highlights of April’s foreclosure report:

Nationally, 144,790 foreclosure filings were made in April, a decrease of 5 percent compared to March and representing an annual decrease of 23 percent year-over-year. 

Overall, April’s residential foreclosure activity was at its lowest since February 2007. About one of every 905 U.S. housing units had a foreclosure filing during April.

Due to the aforementioned backlog of judicial foreclosures, scheduled foreclosure auctions hit a 30-month high in April rising by 22 percent between March and April.

Some states had markedly higher rates of foreclosure sales scheduled in April 2013 as compared to April 2012. Examples include Maryland (+199 percent), New Jersey (+91 percent), Ohio (+73 percent), Oklahoma (+57 percent), and Florida (+55 percent)

Foreclosure auctions scheduled in non-judicial states were 7 percent lower in April as compared to March, and were an encouraging 43 percent lower in April 2013 as compared to April 2012; this was the lowest reading for non-judicial foreclosure sales scheduled since December of 2005.

Non-judicial foreclosure sales were impacted in some states as the result of legislation affecting foreclosure procedures. Affected states included Arkansas, California, Nevada, Oregon and Washington.

70,133 U.S. homes went into foreclosure in April 2013, which is 40 percent lower than for March 2013 and 28 percent lower than during April 2012.

With home values increasing and large numbers of delayed foreclosures clearing the books, this data offers further evidence that the U.S. real estate market is steadily improving.  As more foreclosures are removed from the housing inventory, home prices should continue to stabilize and increase in the Corpus Christi area.

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The Bureau of Labor Statistics released its monthly Non-farm Payrolls and National Unemployment Rate for April last Friday. These two reports are collectively called the Jobs Report.

165,000 jobs were added in April, while the unemployment rate dropped from 7.60 percent in March to 7.50 percent in April. 673,000 jobs have been added since January. Jobs were added in employment sectors including business and professional, health care and eating and drinking establishments.

The main impact of the jobs report on home sales and mortgage lending is the ability of would-be home buyers to qualify for mortgage loans.

Long term unemployment and under-employment has worked against consumers wanting to buy homes when interest rates and home prices hit significant lows.

 Falling Long Term Unemployment Numbers Help New Home Buyers Buy Homes

Long-term unemployment (workers unemployed for 27 weeks or more) fell by 258,000 workers to 4.4 million in April. The share of long term workers among all unemployed fell by 2.2 percent to 37.4 percent of unemployed workers.

Since January, the number of long-term unemployed has decreased by 687,000 workers and 3.1 percent. Gaining employment is a plus for the economy and for households facing financial stress due to unemployment.

Another significant data set in terms of U.S. jobs measures workers who are working part-time, but who want to work full time. This sector increased by 278,000 in April to 7.9 million.

February and March 2013 Non-farm Payrolls numbers were revised upward. In February, jobs added were changed from 268,000 to 332,000. In March, jobs added were revised from 88,000 to 138,000. This adjusts the number of jobs added for February to March by an additional 114,000 new jobs.

Federal Reserve Bond Purchase Point To Continued Low Mortgage Rates

The Federal Reserve is continuing its program of quantitative easing (QE) by buying $85 billion in bonds and mortgage backed securities (MBS) monthly.

Reducing or eliminating QE would lessen the demand for bonds and MBS; when bond and MBS prices fall, mortgage rates usually rise. Lower mortgage rates can help offset rising home prices and allow more consumers to buy homes.

While home prices are gradually increasing, mortgage rates are still low. This helps moderate-income home buyers with affordability, but these conditions won’t last indefinitely.

In some regions, such as the West, available homes and land are in short supply, which is driving up home prices. This trend is helping home owners, and potentially home sellers, gain higher sales prices for their real estate. Overall, increasing the number of jobs is positive for the economy.

Contact your trusted mortgage lender for a personalized mortgage interest rate quote and to learn more about affordable home loan options.

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Housing markets continue to improve according to the S&P Case Shiller Home Price Indices released April 30 for February’s data.

The Indices consist of a 10-City Composite Index and a 20-City Composite Index with housing markets for each city reported based on a three-month rolling average of home prices.

Case Shiller Posts Highest Growth Rates Since 2006

The data released yesterday comprised the Indices’ highest growth rates since May 2006.

For the 12 months between February 2012 and February 2013, the 10-City Composite Index reports that average home prices posted a gain of 8.6 percent and average home prices for the 20-City Composite Index grew by 9.3 percent on a non-seasonally adjusted basis. 

All 20 cities posted a year-over-year gain for at least two consecutive months.

The 10-City Composite Index grew by 0.4 percent between January and February, while the 20-City Composite Index grew by 0.3 percent for the same time period.

16 of the 20 cities reported rising annual growth rates for home sales between January and February 2013, while four cities including Detroit, Miami, Minneapolis and Phoenix saw decreases between -0.1 and -0.4 percent in annual home prices between January and February 2013 readings.

Longer-term readings provide a more positive light, as with the example for Phoenix, Arizona.

The month-to-month reading of annual home prices indicated a decrease, but the reading for Phoenix year over year indicates a + 23.0 percent increase in average home prices.

Ten Metro Areas Gain Double Digits Over Past Year

10 cities posted double-digit year-over-year growth rates; they include Atlanta, Detroit, Las Vegas, Los Angeles, Miami, Minneapolis, Phoenix, San Diego, San Francisco and Tampa.

San Diego and Tampa have joined the double-digit cities in February with average home prices increasing for each city of just over 10 percent.

Phoenix, San Francisco, Las Vegas and Atlanta posted the highest year-over-year gains in average home prices.

Three older cities, New York, Boston and Chicago posted the lowest year-over-year rates in average home price readings.

Atlanta and Dallas achieved the highest annual growth rates since the inception of the 10-City Composite (1991) and the 20-City Composite (2001).

Improving Housing Markets Seen As Beacon Of Economic Recovery

Improving housing markets are considered a leading indicator of overall economic recovery as home ownership typically increases wealth and leads to more spending.

Economists note that while current news for housing markets is good, average home prices remain at 2003 levels, which can be very good for new home buyers.

Shortages of available homes in some areas and news that apartment construction is increasing can impact availability and ultimately, the sale of single-family homes.

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