New Home Sales Up, Busy Season Ahead for Housing

Data released today by the U.S. Census Bureau and the Department of Housing and Urban Development revealed that new residential home sales in April were up 6.4 percent from the revised March estimate of 407,000. Sales reached a total of 433,000, at a median sales price of $275,800. CFFunding is pleased to see another sign of economic recovery as this increase shows improvement in the housing industry.

The New Residential Sales report also shared revisions dating back to January 2012, when new home sales were at a rate of 335,000. New home sales saw large improvements from April 2012 to April 2013 with a jump from 354,000 to 452,000, and have dipped about 4.2 percent over the past year to reach the present estimate of 433,000. According to Wall Street Journal, “Sales of new single-family houses represent a fraction of homes purchased in the U.S. and can be subject to large revisions… but the report provides a more timely reading of the housing market than other measures because it tallies sales at the moment a contract is signed rather than at its closing.”

Many economists expect a busy spring and summer season for the housing industry, as new home construction increased for the third month in a row this April. Both multifamily and single-family construction increased, according to the Commerce Department. Stocks also increased for houses on the market in April, hitting a 3.5 year high, according to Lucia Mutikani. Although the outlook is positive, the industry is still considered to be in a “slump,” as high home prices, low inventory, and the harsh winter weather have had a negative effect over the past year. CF Funding hopes for a full recovery as the Federal Reserve plans to assist the housing industry by maintaining low interest rates.

Current mortgage rates remain unchanged, with the most prevalently quoted 30 year fixed rate (best-execution) at about 4.125-4.25 percent.  FHA and VA loans today range on average from 3.75 percent to 4 percent. 15 year fixed rate mortgages are at an average rate of 3.25 to 3.375 percent, and 5 year ARMs range from 3 to 3.5 percent. Homebuyers should keep in mind that interest rates range based on credit and program availability, and rates may change from day to day. Those interested in a purchase or refinance should contact a loans specialist at www.cffunding.com to see which programs and rates are available today.  

Housing Starts Rise Over 26 Percent

The U.S. Department of Housing and Urban Development has released the new residential construction statistics for April 2014, revealing that privately-owned housing starts increased by 13.2 percent last month, in comparison to the March revised estimate. CF Funding is happy to share that privately-owned housing starts were also up 26.4 percent in comparison to April 2013’s numbers. Increases in housing starts are an indicator of the housing industry’s recovery.

Building permits also rose in April, as privately-owned units were up 8.0 percent from the revised March rate of 1,000,000, reaching a seasonally adjusted rate of 1,080,000. Single-family building permits were up 0.3 percent from the revised March rate of 600,000, reaching 602,000. April marks the third month of permits reaching over 1 million annually.

Single-family housing starts were up 0.8 percent from March to reach 649,000. CF Funding is pleased to see that housing starts improved in every region in April. Privately-owned housing completions were down slightly (3.9 percent) from the revised March estimate. However, the 847,000 privately-owned completions were still 21.2 percent above April 2013’s rate or 699,000.

According to Doug Carroll of USA Today, “Bad weather was fingered as the main explanation for a slowdown in the housing market and the economy during the winter months. April’s housing starts report, along with better employment numbers, could be a sign that the economy will rebound in the second quarter.” CF Funding has explained previously on their blog the effects of bad weather on the housing market.

In other news from the HUD, the average size of newly constructed single-family homes increased during the first quarter of 2014, from 2,656 square feet to 2,736. The median rose from 2,465 square feet to 2,483. As seen in the following chart from the NAHB, there is a clear upward trend of increasing home sizes post-recession.  A new mix of buyers may also be contributing to the upward trend.

The NAHB says the recent rise is “consistent with the historical pattern coming out of recessions… home sizes fall into the recession as some homebuyers cut back, and then sizes rise as high-end homebuyers, who face fewer credit constraints, return to the housing market in relatively greater proportions.” CF Funding has noticed this trend as the lender finances jumbo home loans, construction loans, and second home purchases. The lender recently shared that second home purchases are increasing as the housing industry improves and a rise in home equity allows many homeowners to complete a cash-out refinance or second mortgage.

For more housing industry updates, follow CF Funding on Facebook at www.facebook.com/cffundingcorp.

Single-Family Home Starts Grow 6 Percent in February

The warm March weather caused an increase in housing starts last month, as single-family home starts grew 6 percent in comparison to February’s estimate. New home starts for privately-owned buildings were up about 2.8 percent from the revised February estimate, reaching 946,000 in March (seasonally adjusted annual rate). Although these increases also come with losses, as fewer permits were issued and fewer homes were finished in comparison to February, CF Funding is optimistic that housing starts will bounce back as the weather continues to improve.

Other stats in the U.S. Department of Housing and Urban Development’s Building Permits Survey include a 0.5 percent increase in single-family building permit authorizations as compared to February, and a 3.8 percent decrease in single-family housing completions as compared to the revised February rate. In March, there were 79,100 housing starts (on an unadjusted basis) as compared to 63,100 in February. 54,000 of those were single family units, as compared to 41,000 in February. On a non-seasonally adjusted basis, approximately 83,000 permits were issued in March, as compared to 70,500 in February.

CF Funding is happy to share that the Midwest saw large increases in permits, with a 26.0 percent increase month-over-month and an 18.7 percent increase year-over-year. According towww.mortgagenewsdaily.com, “Housing starts [in the Midwest] rose 65.5 percent from February and were 2.9 percent above the same period in 2013. There were 14.1 percent fewer completions than in the previous month but 15.5 percent more than a year earlier.” The West saw an unchanged rate of permits issued, and the Northeast saw a 33.3 percent increase. The South unfortunately saw a decrease in permits issued, with 17.1 percent less than February and 1.1 percent less than one year previous.

The Building Permits Survey is based on a voluntary mail survey by building permit officials. For more information visit www.census.gov.

Those who are looking to build a new home or remodel in 2014 should contact CF Funding Corporation for the best construction mortgage options, including our new Express Home Loanand One-Time Close Construction Mortgage. Those who are looking to buy a home should start shopping sooner than later to avoid rising prices. Lock in a low interest rate by contacting a CF Funding loan specialist at (888)344-3080 or http://www.cffunding.com.