new homes, mortgage rates, housing forecasts

How are mortgage folks and Realtors supposed to reconcile headline stories like, "Sales of newly built, single-family homes edged up 1.6% to a seasonally adjusted annual rate of 315,000 units in November - the third consecutive monthly gain in new-home sales and the fastest pace of such activity since April" and "The Office of the Comptroller of the Currency (OCC) reported that the number of new foreclosures increased by 21.1% during Q3, as servicers lifted voluntary moratoria implemented in late 2010 and exhausted alternatives to foreclosure for the large inventory of seriously delinquent mortgages working through the loss mitigation process. The increase in new foreclosures and the increase in average time required to complete foreclosures sales has resulted in the number of foreclosures in process increasing to 4.1% of the overall portfolio, or 1,327,077 loans, at the end of the third quarter of 2011"?

Comerica Bank takes a stab at it. "Residential real estate markets are looking a little better as both construction of new homes and sales of existing homes ticked up in November. Improving consumer confidence and gradually tightening labor markets look like they are helping to build a foundation under housing. Of course the firmest support to the foundation would be improving sales prices and that has not happened yet. Prices still look soft for most market areas, sagging under the weight of bloated inventories of distressed homes for sale."

Over at Wells Fargo, according to the National Association of Homebuilders/Wells Fargo Housing Market Index (HMI), builder confidence continued to show gains in December, the third consecutive monthly increase and the highest level since May 2010. Starts and permits have also perked up, with single-family starts up 4.6 percent on a year-ago basis in November and permits up 3.6 percent over the same period. "The increases mirror improvement in construction outlays and sales, which have also seen gains in the past few months.

While the increases are promising, we do not believe a 'genuine' recovery in housing activity has begun. Indeed, the major obstacles that have troubled the housing market over the past few years still remain intact, including the oversupply of single-family homes and mounting distressed transactions. We expect home prices to come under additional pressure this winter, as more foreclosures come on the market during the seasonally slow sales period. Appraisals are likely to remain conservative for at least the next year, or until the mountain of foreclosures hanging over the market finally clears."

read more...