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.

California's Short Sales at Lowest Since 2008

CF Funding is happy to share that California’s pending home sales increased significantly in March, while short sales dropped to a six-year low. According to the California Association of Realtors (CAR), “pending home sales increased more than usual [in March] and rose to the highest level in eight months… meanwhile, the share of short sales has fallen to levels last observed in 2008.”

Pending home sales increased 17.8 percent, and the PHSI (Pending Home Sales Index) rose from 97.1 in February to 114.4 in March. This is the highest index since July 2013. Although March of 2013 had about 9.9 percent more pending sales, the CAR says this decline “has been tapering over the past few months.” Equity sales, defined as non-distressed property sales, have increased over the past year and saw a 2.6 percent increase in March, reaching 87.6 percent. CF Funding expects that equity sales will continue to rise as the Spring season brings out more homebuyers and the economy continues to improve. In March 2013, equity sales made up only 71.8 percent of sales.

30 out of 38 counties in California saw a decrease in distressed sales month-to-month. Counties with the least amount of distressed sales included Alameda, Marin, San Diego, and Santa Clara. Alameda, Marin, and San Mateo also experienced the best year-over-year improvement (in reduced distressed sales), as well as Madera and Monterey counties. Declines in short sales and REO sales were significant across the state of California in March, falling from 15 to 12.4 percent. The C.A.R. says one year ago distressed sales were more than twice as high, reaching 28.2 percent.

As seen in the chart, equity sales have increased significantly since January 2012. Short sales and REO sales in California have drastically decreased, with REO sales declining 64 percent.

The inventory of properties declined in March (especially non-distressed), with the Unsold Inventory Index dropping from 4.8 months to 4 months, and the supply of REOs dropping from 3 months to 2.8 months. The short-sale inventory fell from 5 months in February to 4.7 months in March.

CF Funding is licensed in California, as well as Illinois, Colorado, Tennessee, Florida, and soon Texas and Virginia. Homebuyers in these states who are in need of a mortgage should contact CF Funding Corporation for a free consultation, as the lender compares rates and programs from multiple lenders. Call 888-344-4080 or visit www.cffunding.com for more information.