Higher FHA loan limits reinstated for high-cost housing markets

Uncle Sam has thrown California and other high-priced housing markets a lifeline.

President Obama on Friday signed into law a bill that will reinstate higher limits for Federal Housing Administration-backed mortgages in high-cost areas. In expensive housing areas such as Los Angeles and Orange counties, the limit for these FHA-backed loans had dropped to $625,500 from $729,750 on Oct. 1. The change became effective Friday.

Similar ceilings applying to loans that can be backed by Fannie Mae and Freddie Mac will not increase. The California Assn. of Realtors and its larger national partner association had lobbied for all of the loan limits to be reinstated.

The group is “pleased the Senate and House were able to come to a reasonable compromise,” LeFrancis Arnold, president of the group, said in a statement Friday. “However, we are disappointed that the Senate and House could not agree on increasing the loan limits for Fannie Mae- and Freddie Mac-insured loans.”

A bipartisan group of California lawmakers had sought the increase of all of the old limits, but the House Appropriations Committee had raised concern that Fannie and Freddie, which have received more than $150 billion in financial rescue money from taxpayers, have received public scrutiny for “questionable business practices,” The Times previously reported.

The FHA has also come under increased scrutiny as that agency said in a report to Congress this week that it could be headed for its own taxpayer bailout.

Rep. Brad Sherman (D-Sherman Oaks), in a statement said the passage of the higher FHA loan limits would help “prevent a collapse of housing prices in high-cost areas like Los Angeles.”

Indeed, sales of properties in Orange and Los Angeles counties with loans between $625,500 from $729,750 fell sharply, to 102 last month, according to San Diego real estate firm DataQuick. That was a 71% decline from 350 in September and down 71.5% from 358 sales in October 2010.

But the Obama Administration warned this week that it is important for the federal government to get out of the mortgage business.

“We believe that lowering the limits is a step to ensuring that private capital will return to the market,” Carol Galante, the acting FHA commissioner, said during a congressional confirmation hearing Thursday. “We understand at the present time FHA is playing a somewhat outsized role in the market.”

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Photo: Simon Salloom, a Coldwell Banker real estate agent, walks through a condominium in Santa Monica. Credit: Mel Melcon/Los Angeles Times

Two O.C. loan officers indicted in Las Vegas foreclosures case

In what appear to be the first criminal charges to stem from the fracas over improper foreclosures last year, two Southern California title loan officers have been indicted by a Nevada grand jury for allegedly filing tens of thousands of improper documents related to Las Vegas-area foreclosures.

The Clark County grand jury charged Gary Trafford, 49, of Irvine and Geraldine Sheppard, 62, of Santa Ana on 606 counts, alleging that the two headed up a vast “robo-signing” operation that resulted in the filing of tens of thousands of fraudulent foreclosure documents.

The documents were filed with the Clark County recorder’s office between 2005 and 2008, according to the indictment. The two title loan officers worked for the firm Lender Processing Services, a foreclosure processing company based in Florida that has been used by most of the largest banks in the nation to process home repossessions.

"I am not allowed to speak with you. I have no comment at this time," Sheppard said when reached by phone. Trafford could not be reached for comment.

The two have not been arrested, a spokeswoman for Nevada Atty. Gen. Catherine Cortez Masto told The Associated Press. LPS said in a statement that it is working with the authorities.

The company, in its statement, acknowledged that some of its documents were flawed but said the documents did not result in wrongful foreclosures.

“I am deeply committed to ensuring that LPS meets rigorous standards of professional conduct and operating excellence,” LPS Chief Executive Hugh Harris said in the statement. “I have full confidence in the ability of our leadership team and over 8,000 dedicated employees to deliver on that commitment."

Trafford is charged with 102 counts of offering false instruments for recording, a felony; false certification on certain instrument, a felony; and notarization of the signature of a person not in the presence of a notary public, a misdemeanor.

Sheppard is charged with 100 counts of offering false instruments for recording, a felony; false certification on certain instruments, a felony; and notarization of the signature of a person not in the presence of a notary public, a misdemeanor.

The indictment says that two title loan officers directed the fraudulent notarization and filing of paperwork used to initiate foreclosure on homeowners in the Las Vegas area. Nevada alleges that the two directed their employees to forge foreclosure documents, notarize the signatures on the documents they had forged and then file the fraudulent paperwork with the Clark County recorder's office in order to begin foreclosures on homes throughout the county.

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Photo: A foreclosure sign in front of a bank-owned home for sale in Las Vegas. Credit: Robyn Beck / AFP/Getty Images

Home prices fall in October as mortgage changes take hold

Uncle Sam’s steps to exit the mortgage market took a toll on Southern California’s housing market in October as fewer higher-cost homes sold.

The median price, the point at which half the properties sold for more and half for less, dropped because sales of more expensive homes took a dive with government-backed financing for those homes scaling back last month.

The region’s median sale price was $270,000 in October, according to real estate market tracker DataQuick. That was the lowest since January, a 3.6% decline from September and a 4.6% drop from October 2010.

“For a few months now, lower prices and amazingly low mortgage rates have kept resale activity slightly ahead of last year,” John Walsh, DataQuick president, said in a statement. “Of course, that’s not saying a lot when you consider sales were 25% to 30% below average.”

With 16,829 new and previously owned homes sold, October’s sales pace was 29.3% below the average for that month going back to 1988, when DataQuick records start. Sales were down 7.3% from September and up 0.5% from October 2010.

One big change to the market last month was the federal government's first step to reduce its role in the mortgage business by lowering the size of home loans it will guarantee.

The government currently supports about 90% of new mortgages — essentially propping up the home loan market after credit dried up and home sales plunged in the wake of the subprime mortgage crisis. The loan limit determines the maximum size of a mortgage that the Federal Housing Administration, Fannie Mae and Freddie Mac can buy or guarantee.

So-called nonconforming jumbo loans that are offered on the private mortgage market typically require bigger down payments and carry a higher interest rate, resulting in higher monthly payments for borrowers. In Los Angeles and Orange counties, the limit for FHA, Fannie and Freddie loans dropped from $729,750 to $625,500.

According to DataQuick, sales of properties in those two counties with loans between those limits fell 71% from the month before and 71.5% from a year earlier.

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Photo: A home for sale in Altadena. Credit: Associated Press

Federal Housing Administration could require bailout, audit finds

There is a nearly 50% chance that the Federal Housing Administration will require a taxpayer bailout as the struggling housing market continues to eat away at the cash reserves of the agency, which insured about one in seven residential mortgages issued this year, according to a government audit released Tuesday.

The reserves, which are not supposed to be below 2% of projected losses, continued to fall this year, dropping to 0.24% from the already seriously low level of 0.5% last year, the report said. The drop was caused by the FHA's cash reserves falling by $2.1 billion, to just $2.6 billion.

But under the report's baseline projection for housing prices, which assumes they will drop 5.6% in 2011 before rebounding next year to 1.3% growth, the FHA would not need a bailout, the report said. In fact, the reserve fund would return to its mandated 2% level by 2014, slightly earlier than projected last year.

"It would take very significant declines in home prices in 2012 to create a situation in which the current portfolio would require any kind of additional support," said acting FHA Commissioner Carol Galante. She said the agency's reserve fund continues to be "actuarially sound."

But the report by an independent actuary found that if home prices continue to decline next year, the FHA probably would need a bailout. The size of the bailout would depend on how much housing prices drop.

If the FHA needs taxpayer money to keep it afloat, it does not have to seek approval from Congress or the White House. The agency has existing authority to tap the U.S. Treasury for funds.

The FHA, which was created during the Great Depression to help revive a devastated housing market, has never required taxpayer assistance. It has been playing a major role in the housing market since the subprime housing bubble burst, and most of the losses come from loans it guaranteed that were made before early 2009.

With its reserves dwindling because of losses on insurance for those loans, the FHA took steps in late 2009 to improve its finances. Those steps included requiring higher premiums and better credit scores from borrowers. Those moves have helped buffer the agency against the continued slide in housing prices, and the high average credit score of 700 for borrowers whose loans were insured last year set a record for the FHA, Galante said.

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Photo: A house for sale in Glendale in September. Credit: Getty Images

Falling prices mean rising affordability, California Realtors say

Call it the silver lining of falling home prices.

With low interest rates and cheaper housing throughout the Golden State, the percentage of homebuyers who could afford to purchase a home increased in the third quarter, a real estate group said Thursday.

The number of households who could afford a home priced at the statewide median of $292,120 rose in the third quarter, according to an index produced by the California Assn. of Realtors. Fifty-two percent of California households could afford that price, compared to 51% in the second quarter.

Now if these households would only buy.

Beth L. Peerce, president of the group, said in the news release that one problem potential homebuyers could face is tight credit. Many first-time buyers don’t qualify for a loan, she said. Indeed, some analysts have noted that banks have tightened their loan criteria since the housing crash. But it was those loose lending standards that caused the real estate bubble in the first place, so many other analysts also argue that more carefully scrutinizing borrowers is appropriate.

The federal government has been providing enormous support to the mortgage market through loans backed by the Federal Housing Administration, though it has recently taken steps to scale back that support.

In California, potential buyers needed to earn at least $61,530 a year per household to qualify for the median-priced home. The median is the point at which half the homes in the state sold for more and half for less.

The real estate group calculated the monthly payment for a mortgage on such a home to be $1,540, including taxes and insurance, and assuming a 20% down payment and a 4.63% effective composite interest rate.

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Photo: A home on the market in Altadena features a sign of the times. Credit: Associated Press

 

California state housing agency reverses on foreclosures

A state-run housing agency at least temporarily has suspended the practice of foreclosing on a small number of borrowers who rented out their homes.

The office of Senate President Pro Tem Darrell Steinberg (D-Sacramento) on Friday announced that the California Housing Finance Agency had agreed to his request to halt the foreclosures, even though the homeowners had not fallen behind on their monthly payments.

Earlier this week, Senate investigators issued a report that said the agency, known as CalHFA, initiated or threatened foreclosures on about 200 borrowers because they were no longer living in the homes as required by state regulations and interpretations of federal tax law.

The borrowers, who owed more on their properties than their market values, moved out for a variety of personal reasons but did not want to sell the homes at losses.

"The agency is making the right decision during difficult economic times," said Steinberg. "Struggling families, who are working to do the right thing in meeting their obligations, shouldn't be saddled with an extra, unnecessary burden."

The agency said it finances $4.2-billion worth of low-interest mortgages through the sale of tax-free bonds. U.S. Internal Revenue Service Rules specifically prohibit that the money from the sale of bonds be lent to home buyers who do not live in the properties.

Nevertheless, the agency in a letter to Steinberg and Senate Housing Committee Chairman Mark DeSaulnier (D-Concord) said it asked its board of directors to revisit the issue of owner-occupancy at its January board meeting. In the meantime, it is temporarily ceasing foreclosure proceedings  against "those who may be renting out their residence while staying current on their payments."

DeSaulnier said he is asking the agency to make the change permanent. "CalHFA serves predominately low-income, first-time home buyers," he said. These Californians should not fear foreclosure when they are doing everything right."

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Photo: A foreclosed Glendale home in September. Credit: Kevork Djansezian / Getty Images

Home prices up slightly in August, according to index

A closely watched index of home prices in American cities rose slightly in August from the prior month.

Prices of previously owned single-family homes rose 0.2% in August over July and, according to the Standard & Poor's/Case-Shiller index of 20 metropolitan areas. The index dropped 3.8% from the same month a year prior.

“We see a modest glimmer of hope with these data,” David M. Blitzer, chairman of the index committee at S&P Indices, said in a statement.

Ten out of the 20 metro areas covered by the index saw home prices rise over the prior month.

California cities stumbled. Los Angeles fell 0.4% over the prior month, San Diego 0.2% and San Francisco 0.1%. Atlanta saw the biggest decline, down 2.4%. Las Vegas fell 0.3% and Phoenix was down 0.1%.

The Midwest has made gains in recent months and Chicago and Detroit were both up 1.4% over the prior month. Washington D.C. has also faired better than other regions and gained 1.6% over the prior month.

The monthly rise in the 20-city index made for the fifth consecutive month of gains. Earlier this year the index dropped below its previous bottom hit in April 2009, confirming a double-dip in prices but has come up above that since. Some economists predict a renewed decline in prices in fall and winter.

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California housing agency forcing foreclosures

A state agency that provides low-interest mortgages is foreclosing on a small number of clients even though they are making their monthly payments, a state Senate watchdog group reported.

The California Housing Finance Agency is foreclosing on homes because their financially strapped owners temporarily rent them out and move into cheaper rental properties, the Senate Office of Oversight and Outcomes said Monday.

The agency, which finances the mortgages through the sale of tax-free bonds, allows borrowers to rent their homes only if they suffer a severe economic hardship, such as losing a job.

That tight restriction was recommended to the agency by its bond counsel prior to the collapse of the state's housing market and the deep recession of 2007-09.

About 350 Housing Finance Agency borrowers rented their homes without permission and 21, so far, have been foreclosed on. Another 186 are being threatened with foreclosure despite staying current on their monthly loan payments, the oversight office said.

According to the report, the agency said it didn't know how many borrowers were denied permission to rent.

The agency did not respond to requests for further comment.

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Photo: A "for sale" sign on a foreclosed Glendale house in September. Credit: Kevork Djansezian / Getty Images

Obama administration touts refinancing program as economic boost

Obama administration officials touted an overhaul of a program to allow more underwater homeowners to refinance as a boost to the broader economy, although they were unable to project how many people the initiative would help.

"Today’s announcement is a very significant step in moving more families who have met their responsibilities into a position to refinance at significant savings," Gene Sperling, the top White House economic adviser, told reporters Monday.

Sperling and Housing and Urban Development Secretary Shaun Donovan noted that with mortgage interest rates at record lows, a homeowner can save an average of about $2,500 a year by refinancing. The additional money in the hands of a consumer would help stimulate the economy, which in turn would help stabilize the housing market.

"It's the equivalent of a substantial tax cut for these families," Donovan said.

The independent Federal Housing Finance Agency on Monday announced major changes to the administration's 2½-year-old Home Affordable Refinancing Program, which has helped 894,000 homeowners refinance.

The most significant change is to expand eligibility to more people who owe more on their homes than it is worth. The FHFA will remove a limit that prevented participation in the program by borrowers who owed more than 125% of the value of their homes.

Borrowers would have to be up-to-date on their mortgages, with no late payments in the previous six months and no more than one late payment in the last 12 months. Only people with loans owned by seized housing finance giants Fannie Mae and Freddie Mac are eligible, and those loans must have been sold to the firms by May 31, 2009.

The administration officials stressed that the expansion of the HARP program was only one step in dealing with the struggling real estate market, but one that could be taken without requiring the partisan-gridlocked Congress to pass legislation.

White House Communications Director Dan Pfeiffer said President Obama was trying to find ways to help the economy that do not depend on Congress, which has balked at passing his new jobs package. Administration officials are calling the push for such executive action "We can't wait."

Obama will highlight the refinancing rules during an appearance Monday in Nevada, which is one of the state's hardest hit by the foreclosure crisis, along with California and Florida.

"When Congress won't act, this president will," Pfeiffer said.

Sperling said the administration was trying to find the right combination of programs to reverse the foreclosure crisis.

"The president is committed to attacking the housing crisis on all fronts," Sperling said. "This significant effort on refinancing … is an important part of that arsenal but it’s only one part."

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 Photo: Housing and Urban Development Secretary Shaun Donovan. Credit: Bloomberg

 

 

 

New home construction surges in September; recovery still elusive

New residential construction surged 15% in September, turning in its best performance in 17 months, though economists warned that a housing recovery has yet to take hold.

While new construction is key to getting the economy going, much of the new building came from the apartment sector, which can be very volatile. Many economists also noted that permits pulled for new construction, also an important measure of builders’ plans for the future, declined in September.

Nevertheless, the news of the increase cheered investors on Wall Street as well as several housing analysts who follow the numbers closely.

“A strong residential construction number is a welcome relief for an economy struggling to hang on to expansion and a hopeful harbinger of better days to come,” Celia Chen, a housing economist with Moody’s Analytics, wrote in a research note Wednesday morning. “Caution, however, needs to be taken in interpreting the surprisingly strong top-line housing starts for September.”

Builders started new residential units at a seasonally adjusted annual rate of 658,000 in September, a 15% increase over the prior month and up 10.2% from the same month the year before, according to the U.S. Commerce Department.

Single-family homes were built at a rate of 425,000 units, which is only 1.7% above a revised August estimate, meaning the bulk of the increase came from the building of structures with five or more units.

News of the increase in new home starts came one day after builder confidence in the market rose, according to a closely watched index that measures builder sentiment. The National Assn. of Home Builders/Wells Fargo Housing Market Index jumped by four points to 18 in what was the biggest one-month gain since April 2010, when a tax credit for buyers was fueling purchases. Sentiment remains pretty dismal, however, as a number above 50 indicates more builders view conditions as good than poor.

“A stagnant economy and labor market has meant that housing recovery over the past year has been painfully slow, but we do believe that housing is gradually healing and recovering,” Nishu Sood, a home-building analyst with Deutsche Bank, wrote in a research note Wednesday.

Despite that cautious optimism, economists also pointed to the housing permits number released Tuesday by the Commerce Department, which signaled a more mixed picture for housing. New residential building permits were issued at a seasonally adjusted annual rate of 594,000 units, which is 5.0% below the revised August rate, though still up 5.7% from September 2010.

“We would warn against getting too excited as the fundamental picture has not changed; household formation is still too low and the excess supply is still too high to warrant a major rise in home building,” read part of an analysis by Capital Economics.

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Photo: Homes under construction in Southern California. Credit: Getty Images

Bay Area home sales pick up as prices fall

As prices fell, Bay Area home sales picked up in September from the same month a year prior.

Sales were up 6.6% from the same month a year ago. As is typical, sales fell from August to September, down 10.2%, to total 6,749 homes sold last month, according to real estate research firm DataQuick of San Diego.

The median price for the region fell 7.6% from the same month a year prior and was down 1.4% from August, hitting $365,000.The median is the point at which half the homes in the region sold for more and half for less.

Foreclosures and other so-called distressed properties remain a big part of the market. Foreclosures accounted for 25.6% of the resale market last month, down from a revised 25.7% in August and 27.5% in September 2010.

Short sales -– when the home is sold for less than the outstanding debt on the property -– made up 20.1% of the Bay Area market last month. That was up from 18.2% of August and 15.4% in September 2010.

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Photo: A San Francisco neighborhood. Credit: Getty Images

Southern California housing market stalls in September

Southern California’s housing market stalled in September as sales were essentially flat over the same month a year earlier and the region's median price fell.

Sales increased 0.3% from the same month a year earlier, when the market was reeling from the effect of an expired tax credit that had boosted sales for much of the year.

With 18,419 homes sold across the six-county region, September's tally was 24% below the average for that month going back to 1988, according to real estate research firm DataQuick of San Diego.

The median price for the region fell 5.2% from the same month a year earlier to $280,000. That was essentially flat from August, up 0.4%. It was the seventh month in a row that the region's median home price fell on a year-over-year basis.

Photo: The Antelope Valley has been especially hard hit by the foreclosure crisis. Credit: Michael Robinson Chavez / Los Angeles Times

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More borrowers gain permanent mortgage relief in August

The number of borrowers who received permanent aid through the Obama administration's signature foreclosure relief program ticked up slightly in August.

A total of 690,969 borrowers had received active permanent modifications through the Home Affordable Modification Program by the end of August, up 2.3% from July, the Treasury Department said Wednesday.

Also in August, the number of troubled homeowners eligible for the program fell to below 1 million. A total of 992,968 borrowers potentially qualified for HAMP, the Treasury Department said.

A total of 1,902,606 borrowers were in extended temporary, trial modifications.

Launched in 2009, the initiative was aimed at helping 3 million to 4 million homeowners avoid foreclosure through 2012. Critics charge that the program is on track to fall below those goals.

Loss of income remains the overwhelming reason that people seek mortgage relief through the program, cited by 61.5% of those receiving a permanent modification.

That compared with 11.2% who said excessive obligation was the main reason for seeking help and 2.9% who said they were prompted by illness of the principal borrower.

The government did not report reasons given for the remaining 24.4% of borrowers.

Last month, the Treasury Department said that Bank of America and JPMorgan Chase Bank were in "substantial" need of improvement in helping troubled borrowers modify their mortgages and that those two banks have been denied financial incentives for completing modifications until their performance in the program improves.

Wells Fargo and Ocwen Loan Servicing, after previously being on the list of banks that needed "substantial" improvement, were categorized in last month's Treasury report as needing only "moderate" improvement, as were American Home Mortgage Servicing, CitiMortgage and Select Portfolio Servicing.

The banks that were in need of minor improvement included GMAC Mortgage, Litton Loan Servicing and OneWest Bank, the government said last month.

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Photo: A San Antonio home facing foreclosure. Credit: Associated Press

Massachusetts prepares to sue banks over foreclosures

Massachusetts Atty. Gen. Martha Coakley said she is preparing to sue the nation's big banks for allegedly wrongfully foreclosing on borrowers after having "lost confidence" in settlement talks aimed at resolving the matter.

The banks -- Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc. and Ally Financial Inc. -- are in settlement discussions with state and federal officials and seeking releases that would protect them from future lawsuits.

California Atty. Gen. Kamala Harris bowed out of the negotiations last week, saying the banks were asking for too much and vowing that her office would launch a more rigorous investigation.

Coakley has said she won’t sign on to a deal that includes broad legal release. New York, Delaware, Nevada, Kentucky and Minnesota have also signaled that they are unhappy with the proposed deal being discussed because of legal release from liability being offered to the banks.

New York and Delaware have been cooperating in their own probes separate from the coalition.

Coakley has indicated she would not support an agreement that was too easy on the banks or potentially impeded further investigations.

Below is her full statement released Wednesday:

“I have lost confidence that the banks will bring to the table an agreement that properly holds them accountable for wrongful foreclosures. Because our office for some time has anticipated that result, we have begun preparing for litigation. Our office is aggressively proceeding with efforts to file lawsuits regarding creditor misconduct in connection with unlawful foreclosures, including the failure to establish the right to start a foreclosure as well as filing false or misleading documents with registries in the Commonwealth. We will, as we have in the past, use our resources to hold the big banks accountable to fully protect homeowners and restore a healthy economy.”

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Troubled homes hanging over U.S. housing market drop

Call it a sliver of a silver lining for America's beaten down housing market: The inventory of troubled U.S. homes not yet listed for sale is diminishing.

Homes in foreclosure -- or headed into foreclosure -- are being sold at a fast enough clip to chip away at the so called "shadow inventory" that hangs over the U.S. market, Santa Ana data provider CoreLogic reported Tuesday. Shadow inventory at the end of July was down to 1.6 million units, representing a five-month supply of homes.

That means that there are 1.6 million homes in the pipeline not listed for sale. This is down from 1.9 million units, a six-month supply, from about a year ago.

"The steady improvement in the shadow inventory is a positive development for the housing market," CoreLogic Chief Economist Mark Gleming said. "However, continued price declines, high levels of negative equity and a sluggish labor market will keep the shadow supply elevated for an extended period of time."

The company derives the estimate for shadow supply, or pending supply, by taking the number of so-called distressed properties not listed on any real estate listing services. It considers distressed properties to be those that are either bank-owned or delinquent by three-plus months.

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Photo: Boulder County Sheriff's Deputy Patrick Gallagher checks the final paperwork during a home foreclosure last week in Longmont, Colo. Credit: John Moore / Getty Images

Case Shiller index shows home prices rising in American cities

An index of home prices in the nation's largest cities rose from June to July, though is still down from the same month a year earlier.

The Standard & Poor’s/Case-Shiller index of 20 American cities, a key measure that is closely watched by economists, was up 0.9% over June, but down 4.1% from July 2010. The month-over-month bump is most likely due to the seasonal boost the housing market gets over the summer and will most likely do little to cheer economists about the housing market's future.

"While we have now seen four consecutive months of generally increasing prices, we do know that we are still far from a sustained recovery," David Blitzer, chairman of the S&P index committee, said in a release announcing the new data Tuesday.

The rise in prices made for the fourth consecutive month of gains. Earlier this year the index pushed below its previous bottom hit in April 2009, confirming a much-feared double-dip, but has come back above that level since.

Some economists predict prices will drop again in fall and winter.

All of California cities in the index posted minor month-over-month gains. Los Angeles was up 0.2%, San Diego 0.1% and San Francisco 0.3%.

Home prices in the California cities are comparatively healthy despite the state's high unemployment rate, because the markets tracked by the index are close to key job centers such as Hollywood and Silicon Valley and are also near the ocean -- where overbuilding was relatively constrained. The index does not track prices in California's Central Valley or the Inland Empire, where housing is still weak.

The Case-Shiller index also includes data that are adjusted for seasonal variations, but the experts who publish these numbers have cautioned that the large number of foreclosures on the market have distorted the statistics. The adjusted data showed the index was flat from June to July.

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Photo: A home for sale in Tempe, Ariz. Credit: Bloomberg

New home sales stuck at the bottom in August

Sales of newly built homes in the U.S. appear to be stuck at the bottom.

The August read on new home sales showed properties selling at a seasonally adjusted rate of 295,000, down 2.3% from a revised July rate of 302,000 and just 6.1% above August 2010, according to the Commerce Department.

"With job growth at a standstill, the stock market swinging wildly, Congress wrangling over the debt ceiling and the euro zone’s problems sending consumer confidence down, sales of new homes are slipping from an already weak pace," Celia Chen, director of housing economics at Moody’s Analytics, wrote in a note Monday morning. "New-home sales fell below the 300,000 mark in August and are nearing the cyclical (and 48-year) low of 278,000 that sales hit in August 2010."

Patrick Newport, U.S. economist with IHS Global Insight, said that the trend for new home sales has been flat for the last 16 months.

"This year is shaping up to be the worst year on record for new home sales," Newport wrote in a note.

An estimated 162,000 newly built homes were on the market in August, representing a supply of a little more than six months and two weeks. A supply of about six months typically represents a healthy market, so if sales do pick up in a meaningful way then new construction is likely to feel a boost.

The median sales price of a new home, which is the point at which half the new homes sold for more and half for less, fell nearly 9% to $209,100 in August. That was the lowest price since October.

The steep drop in prices indicates that builders are struggling to attract buyers from even cheaper so-called distressed properties, homes that are foreclosures or have a borrower in default.

-- Alejandro Lazo

Twitter.com/AlejandroLazo

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Photo: A Meritage Homes Corp. for sale sign lies on the ground near a construction site recently in Gilbert, Ariz. Credit: Bloomberg

U.S. home sales up sharply in August

Sales of previously owned U.S. homes were up sharply in August, a ray of light for the nation's beaten-down housing market. But economists are skeptical the gains will last. 

The number of homes sold rose 7.7% from July and were up 18.6% from August 2010, when sales were depressed after the expiration of a popular tax credit for buyers, according to the National Assn. of Realtors.

Although analysts had expected an increase in sales last month, many were surprised they rose as much as they did. Economists polled by Bloomberg News had estimated on average a 1.7% gain.

Economist Tom Lawler expected a stronger jump, based on regional data he had gathered.

"Of course, sales in many of those markets were extremely weak last August, which was pretty soon following the expiration of the home buyer tax credit," Lawler wrote Tuesday on the Calculated Risk blog.

Other economists also doubt that last month’s gain signals a turnaround.

"The recent trend in mortgage applications is downwards, so it is hard to see any further sustained rise in sales in the near-term," said Ian Shepherdson, chief U.S. economist for High Frequency Economics.

The Realtor group which reports monthly figures using a seasonally adjusted annual rate of sales, said

Homes sold in August at a seasonally adjusted annual rate of 5.03 million units in August, up from an upwardly revised 4.67 million in July and 4.24 million in August 2010.

The national median home price was $168,300 in August, down 5.1% from the same month a year prior.

Distressed property sales –- those of homes in foreclosure or where the borrower is in default –- accounted for 31% of transactions last month.

The inventory of properties fell 3% to 3.58 million previously owned homes available for sale, which represents a supply of about 8-1/2 months at the current sales pace. Economists typically consider a supply of six months to be healthy.

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Photo: Tract homes in Corona. Credit: Konrad Fiedler / Bloomberg

 

California home sales rise in August, but prices dip

Home sales in California jumped in August, but that was mostly due to a quirk in the calendar, with more business days than usual for the month. The state's median home price dropped year-over-year for the 11th consecutive month.

Sales of so-called distressed properties -– homes where the borrower was either in default or where the property was a foreclosure -- continued to make up more than half of California's market for previously owned homes, according to a report by the real estate information firm DataQuick of San Diego.

Sales statewide were up 8.8% in August over July and 10.2% from the same month a year earlier. A total of 34,239 properties in the Golden State sold last month, with Southern California accounting for 52% of those sales.

"The sliver of positive news here is that, no matter how you look at it, last month's sales beat the year-ago numbers, which were pretty lousy," DataQuick President John Walsh said in a statement. "Lower prices and mortgage rates lured some homebuyers off the sidelines last month, but too many others lacked the confidence to step into the game."

The median price, the point at which half the homes sold for less and half for more, declined 1.2% in August from July and dropped 4.2% from the same month a year earlier, to $249,000. The state’s median home price remained 12.7% above the most recent bottom, hit in April 2009.

Foreclosure properties made up 34.6% of homes sold statewide, up from 34.5% in July and down from 35.6% in August 2010. Short sales -– in which a bank allows a property to be sold for less than the outstanding debt on the property -– made up an estimated 17.8% of sales. That was up from 17.3% in July but down from 18.0% in August 2010.

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Home sales up in Bay Area while median price declines

Sales of Bay Area homes increased in August from the same month a year earlier but remained below average for the month. Prices continued to drop. The median home price fell in August from the same month a year earlier for the 11th consecutive month.

Sales of so-called distressed homes –- where the borrower is in default or the home is in foreclosure –- made up half of the market for previously owned homes, according to San Diego real estate firm DataQuick.

Sales were up 9.1% from the prior month and 12.2% from the same month a year prior. A total of 7,513 new and previously owned properties sold. The median, which is the point at which half the homes sold for more and half for less, declined 1.1% from the prior month and was down 3.9% from a year prior to hit $370,000.

“The sliver of positive news here is that, no matter how you look at it, last month’s sales beat the year-ago numbers, which were pretty lousy,” said John Walsh, DataQuick president. “Lower prices and mortgage rates lured some homebuyers off the sidelines last month, but too many others lacked the confidence to step into the game."

Sales of foreclosed homes made up 26.4% of the resale market while short sales -– where the bank allows a home to be sold for less than the debt on the property -– made up about 18.6% of the market.

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Photo: San Francisco. Credit: Getty Images