The US Commerce Department reported Wednesday that construction spending slipped last month, reaching its lowest level in seven months and prompting some economists to lower their estimates for first-quarter economic growth in the world's largest economy. The March slip in spending by builders is the biggest such decline since 2006, when the housing market began a downturn that triggered the worst US recession since the 1930s. According to the report, spending fell 1.7 percent from February's spending to just under $857 billion. The decline came after a previously reported 1.5 percent jump in spending in February. The decline also caught Wall Street by surprise, as a group of economists in a recent Bloomberg survey expected the report to show a 0.7 percent increase, on average.
An Appeals Court judge in New York ruled Friday that a lawsuit against Swedish bank UBS over Fannie Mae and Freddie Mac mortgage-related losses may proceed. Filed by the Federal Housing Finance Agency, the agency that oversees the two mortgage behemoths, the claim is but one of more than a dozen suits brought against banks over massive losses suffered by the mortgage insurers when the housing market collapsed in 2007. According to the FHFA, the two companies lost close to $200 billion on bad mortgages during the recession. UBS asked the judge, presiding over the 2nd US Circuit Court of Appeals, to dismiss the suit, but the judge ruled that the FHFA did not wait too long after taking control of Fannie and Freddie and that it had a basis to bring a case.
The National Association of Realtors on Wednesday released its report on pending home sales for February. The report hinted at a gradual slowdown is the sales of previously owned homes across the country, tempering excitement generated by recent trends that show an improving housing sector, something most economists agree is pivotal to the overall economic recovery. According to the report, the number of contracts signed to buy existing homes fell 0.4 percent last month. Of course, the slip came on the heels of January's numbers, which were revised upward 3.8 percent. Both readings were higher than in any month since April 2010, showing the underlying trend is still positive. On a year-over-year basis, the pending home sales index was up 5 percent from February a year ago.
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The National Association of Home Builders reported Monday that its index of builder sentiment, compiled jointly with Wells Fargo, fell for the third straight month in March, following eight straight months of gains. While home prices are up, and many builders are seeing elevated demand, builders are being hindered by legislative delays in developing lots as well as rising costs for labor and building materials. In addition, many potential buyers are unable to qualify for credit to buy new homes because of lenders' demands for high credit scores or down payments.
Since the onset of America's worst economic downturn since the 1930s, the economy has been in a state of constant recovery. Manufacturing, consumer spending and other parts of the economy have shown signs of solid growth at times, but a couple of US economic sectors have lagged behind: housing and the labor market. Based on recent reports, however, it seems as if both sectors are finally gaining some momentum. To put an even more positive spin on things, the housing recovery actually drives improvement in the labor market, as new homes require workers to build them, so the trend is likely to gain even more steam.
The Mortgage Bankers Association reported Friday that applications for home loans surged a whopping 14.8 percent for the week ended March 1st following three straight weeks of declining applications. The report showed significant gains in demand for not only home purchase loans, but also refinance mortgages, as both categories rose about 15 percent. The report underscores the building momentum in the recovery of the housing market, which has essentially held back the broader economy for better than four years. The reported gain in mortgage application levels brought the MBA's index to its highest level since the middle of January.
The Case-Shiller composite index showed that 19 out of 20 metropolitan areas saw an increase in prices. The overall average was up 0.9% on a seasonally adjusted basis, beating analyst expectations of 0.5%.
For the final quarter of 2012, home prices were up 7.3%. To put things in perspective, in 2011 year-over-year home prices declined in each quarter. In the first quarter of 2012, year-over-year home prices were down 1.2%. Then, each quarter thereafter saw a year-over-year gain: 2Q was +1.5%, 3Q was +3.6%, and 4Q was 7.3%.
The latest numbers can be attributed to a decline in foreclosures as well as inventory, record-low mortgage rates and an economy that has shown some signs of recovery. While the housing market is improving, some analysts warn not to get too far ahead of ourselves. Barclays projects a 6% to 7% through 2013 and a 5% to 6% increase in 2014.
Ex-KISS guitarist Ace Frehley appears to be letting his Yorktown home be repossessed. It has been reported that Frehley hasn't made a mortgage payment on the home in nearly two years. The recent foreclosure filing requests that the court order a sale of the home for the outstanding principal of $703,581.48 plus interest and late charges. In addition to the foreclosure filing, the 'Spaceman' has not been paying his property taxes either. Back taxes include a 2011 lien of $5,131.61 for town and county taxes, plus $13,425.94 for 2012 taxes.