Buying a home may never be cheaper
Buying a home may never get any cheaper than this. Several
housing experts are predicting that this year will be the
last chance for bargain hunters to cash in on the best deals
of the weak housing market. With home prices down 34%
nationally since 2006 and mortgage rates at historic lows,
homes have never been more affordable -- but it won't stay
this way for much longer. Stuart Hoffman, chief economist
for PNC Financial Services, said he expects home prices to
flatten out by the third quarter and start climbing by next
year. A number of factors will help bolster the housing
market, he said, including a decline in the number of
foreclosures and continued job growth. In addition,
homebuyers will have better access to mortgages as they get
their finances in order and improve their credit scores.
Some economists, like Trulia's Jed Kolko, expect home prices
to pick up even more quickly. Trulia's data shows that the
national average for asking prices already increased 1.4% in
the first quarter of 2012, compared with the last three
months of 2011. "This is a strong indicator that we will
start seeing home price indexes, like the S&P/Case-Shiller,
start to report home price increases this summer," he said.
Prospective homebuyers who've been sitting on the fence
shouldn't worry if they aren't quite ready to make the leap.
Analysts are predicting that the initial price gains will be
modest, at least, in most markets. Hoffman, for example, is
forecasting a 2% increase in 2013 compared with 2012.
Meanwhile David Stiff, chief economist for Fiserv, predicts
that prices will turn in the last quarter of 2012 and will
rise 4.2% for the 12 months through September 2013.
Job cuts up
Planned job cuts increased by 7.1% to 40,559 in April from
March, the latest job cut report released by outplacement
firm Challenger, Gray&Christmas showed today. From the same
month a year ago, job cuts were up 11.2% and so far this
year the number of job cuts has increased by 9.8% to
183,653. But despite the year-on-year increase, the monthly
average in the first four months of this year is below the
12-month average of last year, the report pointed out.
April’s job cuts were led by the education sector, with a
total of 9,027 planned cuts, up 142% from March as school
districts continue to be under pressure to cut costs amid
massive state and local budget deficits. But the pace of
downsizing in the sector fell 32% from a year ago, the
report added. Consumer products companies have been the
main job cutters for the year, having announced 20,134
planned job cuts through April, 257% more than the cuts
announced by this point last year.
“Even at its best, job creation is falling well short of
what is needed to make a substantial dent in
unemployment,” John Challenger, chief executive officer of
Challenger, Gray & Christmas, said in a statement. “While
some would like to attribute the lack of hiring to
uncertainty and regulatory roadblocks, the fact is that
demand for goods and services simply has not reached a level
that warrants accelerated hiring,” Challenger added. He
added that state and local governments, as well as the
federal government, were still “in cost-cutting mode,”
consumer spending remained soft and although business
spending was improving, it was not nearly enough to make up
for the shortfall in consumer and government spending.
LPS - foreclosures down
The March Mortgage Monitor report released by Lender
Processing Services, Inc. shows that while March foreclosure
starts increased a modest 8.1% since last month, overall,
they were still down more than 31% year-over-year. Also in
March, first-time foreclosure starts hit a five-month high.
However, despite the increase, the number of first-time
foreclosure starts in March was still far below those seen
throughout much of 2011 and all of the previous three years.
As reported in LPS’ First Look, the national foreclosure
inventory stayed relatively stable in March, remaining at
the historically high levels maintained since the end of
2010. This national performance masks underlying differences
between judicial states, where foreclosure inventory levels
stand at 6.5%, and non-judicial states, where foreclosure
inventory levels are more than 2.5 times lower at 2.45%.
The March data also showed that mortgage delinquencies have
continued to decline, reaching their lowest level since
August 2008, with seriously delinquent inventory (loans more
than 90 days delinquent) declining in both judicial and
non-judicial foreclosure states. Likewise, the rate of new
problem loans (seriously delinquent loans that were current
six months ago) continues to improve nationally, in both
judicial and non-judicial states. At the same time, the LPS
March mortgage performance data did show that foreclosure
sales continued to behave somewhat erratically, dropping to
their lowest level since December 2010, and most sharply in
non-judicial states. On the origination front, the data
showed that February mortgage originations rebounded
somewhat from their January lows, and that, despite slightly
higher interest rates, prepayments increased in March.
Mortgage prepayment activity – a key indicator of mortgage
refinances – increased broadly, across all investor
categories.
As reported in LPS' First Look release, other key results
from LPS' latest Mortgage Monitor report include:
Total US loan delinquency rate: 7.09 %
Month-over-month change in delinquency rate: -6.3 %
Total US foreclosure pre-sale inventory rate: 4.14 %
Month-over-month change in foreclosure pre-sale inventory
rate: -0.1 %
States with highest percentage of non-current* loans: FL,
MS, NJ, NV, IL
States with the lowest percentage of non-current* loans:
MT, AK, SD, WY, ND
*Non-current totals combine foreclosures and delinquencies
as a% of active loans in that state.
Jobless claims down slightly
Initial claims for state unemployment benefits dropped
27,000 to a seasonally adjusted 365,000, the Labor
Department said. That was the biggest weekly drop since
early May last year. The prior week's figure was revised up
to 392,000 from the previously reported 388,000. The
four-week moving average for new claims, considered a better
measure of labor market trends, edged up 750 to 383,500 -
the highest level since December. Economists polled by
Reuters had forecast claims falling to 380,000 last week.
The data has no bearing on the government's closely watched
employment report for April, to be released on Friday.
Employers are expected to have added 170,000 new jobs to
their payrolls last month, a step up from March's 120,000
tally, according to a Reuters survey. However, there is a
downside risk to this forecast as initial claims were
elevated for much of April. An independent survey on
Wednesday showed private employers added only 119,000 jobs
last month, the fewest in seven months, and well below
economists' expectations for a gain of 177,000 positions.
Nonfarm payrolls had averaged 246,000 jobs per month between
December and February. Most economists have viewed the
pull-back in job growth as payback after the weather-induced
gains in the previous months.
The number of people still receiving benefits under regular
state programs after an initial week of aid dropped 53,000
to 3.28 million in the week ended April 21. The number of
Americans on emergency unemployment benefits slipped 4,772
to 2.72 million in the week ended April 14, the latest week
for which data is available. The number of people on
extended benefits declined 57,528 to 354,883. Nine states
lost eligibility for extended benefits beginning that week
and five others reduced the duration of emergency
compensation. A total of 6.60 million people were claiming
unemployment benefits during that period under all programs,
down 85,523 from the prior week.
WSJ - Beazer homes surges in home sales
Beazer Homes USA Inc. reported a narrower
fiscal-second-quarter loss Wednesday as the builder recorded
a surge in home closings and sounded a hopeful note for the
months ahead. The Atlanta-based company, one of the largest
home builders in the US, said its closings climbed 50% in
the latest period to 844 homes. New orders, meanwhile,
climbed 29% to 1,512 homes. The results come as the US
housing market has begun to show signs of emerging from the
worst downturn in generations, albeit in fits and starts, as
buyers get back into the game. With several home builders
reporting increased sales and orders in recent weeks, many
industry-watchers now think the hard-hit sector is set for a
rebound. "We remain hopeful, but cautious, about the
prospects for a sustained market recovery, as a number of
factors continue to pose challenges for prospective home
buyers," Chief Executive Allan Merrill said Wednesday in a
statement accompanying the results.
For the quarter ended March 31, Beazer posted a loss of
$39.9 million, or 51 cents a share, compared with a
year-earlier loss of $53.8 million, or 73 cents a share.
The latest period included charges of $1.2 million for
inventory impairments and $2.7 million tied to the
refinancing of debt. The year-earlier period included
charges of $17.8 million for inventory impairments. Revenue
surged 52% to $191.6 million. Analysts expected a loss of 43
cents a share on $192 million in revenue. The average sales
price rose to $224,700 from $216,300, while home-building
gross margin narrowed to 10.9% from 12.4% in the prior year.
Several of Beazer's peers are seeing improved margins. The
builder's cancellation rate rose to 22.5% from 20%,
indicating more deals are unraveling before completion.
"Given that most peers had declining cancellation rates, we
were surprised" by the increase, wrote David Goldberg, a
builder analyst with Credit Suisse, in a client note.
Retail slows
Retailers are reporting sales gains for April that show a
slowdown in spending from the previous month as cooler
weather, an early Easter and renewed worries about the
economy dampened shoppers' enthusiasm to buy. As merchants
report their sales figures Thursday, Costco Wholesale Corp.
and Target Corp. posted gains that were smaller than Wall
Street expected. Teen retailer Wet Seal Inc. posted a
bigger-than-expected sales drop. The figures are based on
revenue at stores open at least a year. That metric is
considered a key indicator of a retail health because it
measures growth at established locations while excluding
results from stores recently opened or closed.
Freddie earns $577 million
Freddie Mac reported net income of $577 million in the first
quarter before it made a $1.8 billion dividend repayment to
the Treasury Department. The government-sponsored
enterprise and one of the largest mortgage financiers in the
country drew $19 million from the Treasury as part of its
ongoing conservatorship bailout. Net income for the quarter
dropped from a $676 million gain one year ago because of
higher derivative losses and lower net interest income.
Higher valuations of the mortgage bonds Freddie holds
available for sale pushed total comprehensive income to
$1.78 billion in the first quarter. The $1.8 billion
repayment to the Treasury offset this total, forcing the
remaining to be drawn from the government. Freddie financed
over $114 billion in mortgages during the first quarter, up
from $105 billion one year ago. Roughly 87% of its business
was refinancing. More than 416,000 borrowers refinanced
their Freddie-guaranteed home loan in the first three months
of 2012, but the company said it is still too early to
estimate how many will ultimately qualify for the expanded
Home Affordable Refinance Program.
Buying a home may never get any cheaper than this. Several
housing experts are predicting that this year will be the
last chance for bargain hunters to cash in on the best deals
of the weak housing market. With home prices down 34%
nationally since 2006 and mortgage rates at historic lows,
homes have never been more affordable -- but it won't stay
this way for much longer. Stuart Hoffman, chief economist
for PNC Financial Services, said he expects home prices to
flatten out by the third quarter and start climbing by next
year. A number of factors will help bolster the housing
market, he said, including a decline in the number of
foreclosures and continued job growth. In addition,
homebuyers will have better access to mortgages as they get
their finances in order and improve their credit scores.
Some economists, like Trulia's Jed Kolko, expect home prices
to pick up even more quickly. Trulia's data shows that the
national average for asking prices already increased 1.4% in
the first quarter of 2012, compared with the last three
months of 2011. "This is a strong indicator that we will
start seeing home price indexes, like the S&P/Case-Shiller,
start to report home price increases this summer," he said.
Prospective homebuyers who've been sitting on the fence
shouldn't worry if they aren't quite ready to make the leap.
Analysts are predicting that the initial price gains will be
modest, at least, in most markets. Hoffman, for example, is
forecasting a 2% increase in 2013 compared with 2012.
Meanwhile David Stiff, chief economist for Fiserv, predicts
that prices will turn in the last quarter of 2012 and will
rise 4.2% for the 12 months through September 2013.
Job cuts up
Planned job cuts increased by 7.1% to 40,559 in April from
March, the latest job cut report released by outplacement
firm Challenger, Gray&Christmas showed today. From the same
month a year ago, job cuts were up 11.2% and so far this
year the number of job cuts has increased by 9.8% to
183,653. But despite the year-on-year increase, the monthly
average in the first four months of this year is below the
12-month average of last year, the report pointed out.
April’s job cuts were led by the education sector, with a
total of 9,027 planned cuts, up 142% from March as school
districts continue to be under pressure to cut costs amid
massive state and local budget deficits. But the pace of
downsizing in the sector fell 32% from a year ago, the
report added. Consumer products companies have been the
main job cutters for the year, having announced 20,134
planned job cuts through April, 257% more than the cuts
announced by this point last year.
“Even at its best, job creation is falling well short of
what is needed to make a substantial dent in
unemployment,” John Challenger, chief executive officer of
Challenger, Gray & Christmas, said in a statement. “While
some would like to attribute the lack of hiring to
uncertainty and regulatory roadblocks, the fact is that
demand for goods and services simply has not reached a level
that warrants accelerated hiring,” Challenger added. He
added that state and local governments, as well as the
federal government, were still “in cost-cutting mode,”
consumer spending remained soft and although business
spending was improving, it was not nearly enough to make up
for the shortfall in consumer and government spending.
LPS - foreclosures down
The March Mortgage Monitor report released by Lender
Processing Services, Inc. shows that while March foreclosure
starts increased a modest 8.1% since last month, overall,
they were still down more than 31% year-over-year. Also in
March, first-time foreclosure starts hit a five-month high.
However, despite the increase, the number of first-time
foreclosure starts in March was still far below those seen
throughout much of 2011 and all of the previous three years.
As reported in LPS’ First Look, the national foreclosure
inventory stayed relatively stable in March, remaining at
the historically high levels maintained since the end of
2010. This national performance masks underlying differences
between judicial states, where foreclosure inventory levels
stand at 6.5%, and non-judicial states, where foreclosure
inventory levels are more than 2.5 times lower at 2.45%.
The March data also showed that mortgage delinquencies have
continued to decline, reaching their lowest level since
August 2008, with seriously delinquent inventory (loans more
than 90 days delinquent) declining in both judicial and
non-judicial foreclosure states. Likewise, the rate of new
problem loans (seriously delinquent loans that were current
six months ago) continues to improve nationally, in both
judicial and non-judicial states. At the same time, the LPS
March mortgage performance data did show that foreclosure
sales continued to behave somewhat erratically, dropping to
their lowest level since December 2010, and most sharply in
non-judicial states. On the origination front, the data
showed that February mortgage originations rebounded
somewhat from their January lows, and that, despite slightly
higher interest rates, prepayments increased in March.
Mortgage prepayment activity – a key indicator of mortgage
refinances – increased broadly, across all investor
categories.
As reported in LPS' First Look release, other key results
from LPS' latest Mortgage Monitor report include:
Total US loan delinquency rate: 7.09 %
Month-over-month change in delinquency rate: -6.3 %
Total US foreclosure pre-sale inventory rate: 4.14 %
Month-over-month change in foreclosure pre-sale inventory
rate: -0.1 %
States with highest percentage of non-current* loans: FL,
MS, NJ, NV, IL
States with the lowest percentage of non-current* loans:
MT, AK, SD, WY, ND
*Non-current totals combine foreclosures and delinquencies
as a% of active loans in that state.
Jobless claims down slightly
Initial claims for state unemployment benefits dropped
27,000 to a seasonally adjusted 365,000, the Labor
Department said. That was the biggest weekly drop since
early May last year. The prior week's figure was revised up
to 392,000 from the previously reported 388,000. The
four-week moving average for new claims, considered a better
measure of labor market trends, edged up 750 to 383,500 -
the highest level since December. Economists polled by
Reuters had forecast claims falling to 380,000 last week.
The data has no bearing on the government's closely watched
employment report for April, to be released on Friday.
Employers are expected to have added 170,000 new jobs to
their payrolls last month, a step up from March's 120,000
tally, according to a Reuters survey. However, there is a
downside risk to this forecast as initial claims were
elevated for much of April. An independent survey on
Wednesday showed private employers added only 119,000 jobs
last month, the fewest in seven months, and well below
economists' expectations for a gain of 177,000 positions.
Nonfarm payrolls had averaged 246,000 jobs per month between
December and February. Most economists have viewed the
pull-back in job growth as payback after the weather-induced
gains in the previous months.
The number of people still receiving benefits under regular
state programs after an initial week of aid dropped 53,000
to 3.28 million in the week ended April 21. The number of
Americans on emergency unemployment benefits slipped 4,772
to 2.72 million in the week ended April 14, the latest week
for which data is available. The number of people on
extended benefits declined 57,528 to 354,883. Nine states
lost eligibility for extended benefits beginning that week
and five others reduced the duration of emergency
compensation. A total of 6.60 million people were claiming
unemployment benefits during that period under all programs,
down 85,523 from the prior week.
WSJ - Beazer homes surges in home sales
Beazer Homes USA Inc. reported a narrower
fiscal-second-quarter loss Wednesday as the builder recorded
a surge in home closings and sounded a hopeful note for the
months ahead. The Atlanta-based company, one of the largest
home builders in the US, said its closings climbed 50% in
the latest period to 844 homes. New orders, meanwhile,
climbed 29% to 1,512 homes. The results come as the US
housing market has begun to show signs of emerging from the
worst downturn in generations, albeit in fits and starts, as
buyers get back into the game. With several home builders
reporting increased sales and orders in recent weeks, many
industry-watchers now think the hard-hit sector is set for a
rebound. "We remain hopeful, but cautious, about the
prospects for a sustained market recovery, as a number of
factors continue to pose challenges for prospective home
buyers," Chief Executive Allan Merrill said Wednesday in a
statement accompanying the results.
For the quarter ended March 31, Beazer posted a loss of
$39.9 million, or 51 cents a share, compared with a
year-earlier loss of $53.8 million, or 73 cents a share.
The latest period included charges of $1.2 million for
inventory impairments and $2.7 million tied to the
refinancing of debt. The year-earlier period included
charges of $17.8 million for inventory impairments. Revenue
surged 52% to $191.6 million. Analysts expected a loss of 43
cents a share on $192 million in revenue. The average sales
price rose to $224,700 from $216,300, while home-building
gross margin narrowed to 10.9% from 12.4% in the prior year.
Several of Beazer's peers are seeing improved margins. The
builder's cancellation rate rose to 22.5% from 20%,
indicating more deals are unraveling before completion.
"Given that most peers had declining cancellation rates, we
were surprised" by the increase, wrote David Goldberg, a
builder analyst with Credit Suisse, in a client note.
Retail slows
Retailers are reporting sales gains for April that show a
slowdown in spending from the previous month as cooler
weather, an early Easter and renewed worries about the
economy dampened shoppers' enthusiasm to buy. As merchants
report their sales figures Thursday, Costco Wholesale Corp.
and Target Corp. posted gains that were smaller than Wall
Street expected. Teen retailer Wet Seal Inc. posted a
bigger-than-expected sales drop. The figures are based on
revenue at stores open at least a year. That metric is
considered a key indicator of a retail health because it
measures growth at established locations while excluding
results from stores recently opened or closed.
Freddie earns $577 million
Freddie Mac reported net income of $577 million in the first
quarter before it made a $1.8 billion dividend repayment to
the Treasury Department. The government-sponsored
enterprise and one of the largest mortgage financiers in the
country drew $19 million from the Treasury as part of its
ongoing conservatorship bailout. Net income for the quarter
dropped from a $676 million gain one year ago because of
higher derivative losses and lower net interest income.
Higher valuations of the mortgage bonds Freddie holds
available for sale pushed total comprehensive income to
$1.78 billion in the first quarter. The $1.8 billion
repayment to the Treasury offset this total, forcing the
remaining to be drawn from the government. Freddie financed
over $114 billion in mortgages during the first quarter, up
from $105 billion one year ago. Roughly 87% of its business
was refinancing. More than 416,000 borrowers refinanced
their Freddie-guaranteed home loan in the first three months
of 2012, but the company said it is still too early to
estimate how many will ultimately qualify for the expanded
Home Affordable Refinance Program.
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