by Calculated Risk on 3/17/2006 10:40:00 AM

DQNews reports: Slowdown in Bay Area home sales, appreciation rate

Bay Area home sales remained at their lowest level in five years in February, as price increases continued to slow, a real estate information service reported.

A total of 6,206 new and resale houses and condos were sold in the nine-county region last month. That was up 3.4 percent from 6,004 for January, and down 16.8 percent from 7,463 for February last year ... Last month was the eleventh in a row to see a year-over-year sales decline.

"We'll know more about what's going on once next month's numbers come in. March sales have a more typical purchase pattern than February's or January's. Right now we don't see anything ominous in the numbers, just a real estate cycle that is past the frenzy phase," said Marshall Prentice, DataQuick president.

The median price paid for a Bay Area home was $616,000 last month. That was up 1.5 percent from January's $607,000, and up 12.2 percent from $549,000 for February a year ago. The annual price increase was the lowest since prices rose 9.7 percent to $443,000 in January 2004.

It appears housing is in the 2nd stage of a slowdown - falling transactions (the first stage is rising inventories). On distress:

Indicators of market distress are still largely absent. The use of adjustable-rate mortgages has decreased significantly the last three months. Foreclosure rates are coming up from last year's low point, but are still below normal levels. Down payment sizes are stable and there have been no significant shifts in market mix ...

by Calculated Risk on 3/16/2006 01:53:00 PM

This was just a formality, but ...

Bloomberg reports: Congress Raises Debt Cap, Fourth Increase Under Bush

The U.S. Congress approved a $781 billion increase in the federal government's debt limit, the fourth time lawmakers have raised the cap since President George W. Bush took office.

The Senate voted 52-48 to increase the legal limit on federal borrowing to $8.97 trillion, up from $8.18 trillion. The House approved the measure last year, meaning the legislation now goes to the president for his signature.

This year will most likely set a new record with over $600 Billion added to the National Debt.

by Calculated Risk on 3/15/2006 07:59:00 PM

The National Association of Homebuilders reports: Builder Confidence Virtually Unchanged in March


Click on graph for larger image.

A one-point decline in the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for March indicates that housing demand and sales are gradually returning to a sustainable pace that is right in line with our forecasts, said NAHB today.

"Today’s HMI provides the latest evidence of a predicted and orderly cooling process for the nation’s single-family new-home market, which easily hit record highs in 2005," said NAHB President David Pressly, a home builder from Statesville, N.C.

Noting that the confidence gauge has remained within a narrow two-point range for four consecutive months following a retreat from its peak in mid-2005, NAHB Chief Economist David Seiders attributed March’s slight downshift to eroding affordability conditions as well as a gradual withdrawal of investor demand in some areas.

"Rising interest rates and high rates of home-price appreciation have raised the bar for homeownership to beyond what some families can reach," he noted. "Meanwhile, a retreat of short-term investors from certain markets is helping restore equilibrium between supply and demand."

There is plenty of happy talk about restoring "equilibrium", but the last time the market index was lower than March was right after 9/11/2001.

by Calculated Risk on 3/15/2006 07:21:00 PM

The Federal Reserve released the Beige Book today.

Most Districts said that residential construction and real estate activity slowed from high levels ...

Here are some more housing related quotes:

Boston:

A couple of companies mention that a softening housing market may cause some erosion in demand for housing-related and other products this year.

New York:

The Second District's economy continued to expand at a good pace, on average, across sectors in the first two months of 2006, though housing and consumer lending have softened.
...
The region's housing market was mixed but, on balance, softer in early 2006. New Jersey homebuilders report a growing inventory of homes at the higher end of the market. The number of transactions has been well below comparable 2005 levels, selling prices have been basically flat since last autumn, and builders are offering more concessions.

Richmond:

Fifth District economic growth moderated in January and February as the pace of retail and housing activity slowed. ... Housing markets continued to cool; real estate agents told us that home sales slowed and noted that properties for sale were staying on the market longer. In the financial sector, bank lending expanded at a more moderate pace as growth in residential mortgage lending tapered off.

Altanta:

Real estate contacts noted further slowing in several housing markets ...

Dallas:

Contacts in both the construction and manufacturing sector are keeping their eyes on the housing market with optimistic trepidation. At this point there is little evidence that slowing in other housing markets has spread to this region.

San Francisco:

Activity in residential real estate markets continued at high levels but showed further evidence of softening in some areas. The pace of home construction and sales was rapid in general, and sales prices held steady or increased in most areas. However, a decline in the pace of home sales and slowdowns in other indicators reflect significant cooling in some previously hot markets, notably in Hawaii, Arizona, and parts of California.

by Calculated Risk on 3/15/2006 11:05:00 AM

The Mortgage Bankers Association (MBA) reports that the 30-year fixed rate mortgage increased to the highest level since July 2002. Mortgage application volume was steady for the week ending March 10th.

Click on graph for larger image.

The Market Composite Index — a measure of mortgage loan application volume was 574.4 – a decrease of 0.2 percent on a seasonally adjusted basis from 575.6 one week earlier. On an unadjusted basis, the Index increased 0.2 percent compared with the previous week but was down 20.4 percent compared with the same week one year earlier.

The seasonally-adjusted Purchase Index increased by 1.0 percent to 403.0 from 399.0 the previous week whereas the Refinance Index decreased by 1.9 percent to 1583.6 from 1614.4 one week earlier.

Mortgage rates increased:

The average contract interest rate for 30-year fixed-rate mortgages increased to 6.42 percent from 6.31 percent...

The average contract interest rate for one-year ARMs decreased to 5.64 percent from 5.69 percent ..

Change in mortgage applications from one year ago (from Dow Jones):

Total	-20.4%
Purchase	-13.1%
Refi	-30.2
Fixed-Rate	-16.1%
ARM	-29.3%

Purchase activity is off 13% from the same week in 2005 and overall mortgage activity is off 20%. Those are significant declines in activity.