Housing Starts, Sales To Rebound In 2011

Speaking at a National Association of Home Builders annual meeting, David Crowe, the NAHB’s chief economist, said he expects housing starts to rise 21 percent from last year’s level and sales to improve 26 percent from 2010. Crowe pointed to trends indicating growing consumer confidence, such as better-than-expected holiday sales numbers and improvements in sales of cars and furniture, as evidence that, with better job creation numbers this year, buyers will be ready to move forward. Freddie Mac chief economist Frank Nothaft is also forecasting a sales rebound in 2011. Nothaft predicts home sales will increase 10 percent this year due to more robust growth of jobs and incomes. More here, here, and here.

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Mortgage Loan Demand Rises as Rates Fall

According to The Mortgage Bankers Association’s Weekly Applications Survey, total loan application volume rose 2.2 percent last week due to a 4.9 percent increase in the Refinance Index. The Purchase Index fell 3.7 percent. The average contract interest rate for 30-year fixed-rate mortgages dropped to 4.78 percent from 4.82 percent the week before. More here and here.

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Reports Show Prices, Inventory Down At End Of Year

Reports from CoreLogic and Altos Research show both home prices and inventory fell at the end of the year. Altos Research’s Real-Time Housing Market Update for December 2010 shows a 1.63 percent drop in prices and a 5.89 percent decrease in inventory at the end of December. Altos says the monthly data is in keeping with seasonal declines and they expect a likely increase once the spring-selling season begins. CoreLogic’s Home Price Index had home values down 1.6 percent in November from October and 5.0 percent lower than the year before. More here, here and here.

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The Mortgage Market Forecast For 2011

Though mortgage rates are expected to rise this year, the increases will be gradual and are expected to keep rates near five percent, which is still historically low. According to Holden Lewis of Bankrate, economists had predicted a rise in rates by the third quarter of 2010, but at the end of the year rates were still hovering in the four percent range. The Mortgage Bankers Association expects total mortgage applications to fall this year, though they also expect purchase applications to increase and become a greater share of the mortgage market. Overall, financial experts and market observers suggest homeowners and prospective buyers apply for a mortgage based on their individual needs rather than trying to time the market. More here.

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Federal Housing Policy and The Price Floor

Mark Zandi, Moody’s Analytics’ chief economist, says federal housing policy may not have worked exactly as planned but did a reasonably good job of keeping price declines from being more substantial than they were.

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