NEW YORK (CNNMoney) – Mortgage rates sunk to record lows again this week.
The average rate on the 30-year fixed mortgage fell to 3.94%, matching the all-time low hit in early October, according to Freddie Mac’s weekly mortgage rate survey. Meanwhile, 15-year fixed-rate loans hit a new record low of 3.21%, surpassing the record set on October 6.

Five-year adjustable rate mortgages also plumbed new depths, hitting 2.86% for the week.
“We’ve been hanging around record lows for a few months now and we finally hit another one,” said Keith Gumbinger of HSH Associates, a provider of mortgage data.
Low-interest mortgages will be available at least through mid-2012, according to Freddie Mac’s chief economist, Frank Nothaft.
Real estate moguls in the making
The low rates can translate into big savings for home buyers. Five years ago, a home buyer would have been lucky to land a 5% rate on a 15-year loan. On a $200,000 mortgage, that would have meant the borrower would have paid $1,582 a month. Should a borrower land a 3.2% rate on a $200,000 loan now, the monthly mortgage payment would come to $1,400 — a savings of $182 a month.

Mortgage rates tend to closely track Treasury bond yields, which have also been very low lately. For the past three months, 10-year Treasury notes have often fallen below the 2% mark as bond investors steer clear of Europe and its debt woes and buy U.S. Treasuries instead.
Parents helping kids buy homes
“There’s been a flight to quality out of Eurobonds and into Treasuries,” said Gumbinger. On Thursday, the 10-year Treasury stood at 1.92%.
The rock-bottom interest rates, combined with the lowest housing prices in years, have made home buying extremely affordable right now. Although most borrowers are looking to refinance existing loans rather than buy.
Last week, mortgage applications climbed 4.1%, driven by a surge of home buyers trying to refinance to record-low rates. According to the Mortgage Bankers Association’s latest Market Composite Index, close to 80% of loan applications were to refinance existing loans.

WASHINGTON (AP) — U.S. home prices are falling again in most major cities after posting small gains over the summer and spring. The report suggests the troubled housing market remains weak and won’t recover any time soon.

The Standard & Poor’s/Case-Shiller index released Tuesday showed prices dropped in September from August in 17 of the 20 cities tracked. That was the first decline after five straight months in which at least half the cities in the survey showed monthly gains.

A separate index for the July-September quarter shows prices were mostly unchanged from the previous quarter.

Americans are reluctant to purchase a home more than two years after the recession officially ended. High unemployment and weak job growth have deterred many would-be buyers. Even the lowest mortgage rates in history haven’t been enough to lift sales.

David M. Blitzer, chairman of S&P’s index committee, said that while the steep price declines seen between 2007 and 2009 appear to be over, home prices are down from the same time last year and do not show signs of easing.

“Any chance for a sustained recovery will probably need a stronger economy,” Blitzer said.

The largest monthly price declines were in Atlanta, San Francisco and Tampa, Fla. And prices in Atlanta, Las Vegas and Phoenix fell to their lowest points since the housing crisis began four years ago. Blitzer called the new lows reached in those three cities a “bit disturbing.”

New York, Portland, Ore., and Washington were the only cities to show monthly price increases in September.

A majority of the cities tracked by the survey posted modest price increases from April through August, the peak buying months. The monthly changes are not adjusted for seasonal factors.

Even with the gains, home prices were down in all but two major cities in September from the same month one year ago.

Sales of previously occupied homes are on pace to match last year’s dismal figures — the worst in 14 years. And sales of new homes are shaping up to be the worst since the government began keeping records a half century ago.

Some people can’t qualify for loans or meet higher down payment requirements. Many with good credit and stable jobs are holding off because they fear that prices will keep falling.

“Despite record high affordability of real estate, the psychology of home buyers is still being weighed down by economic uncertainty, keeping them on the fence when it comes to buying homes,” said Stan Humphries, chief economist at Zillow.com, which measures home values.

Atlanta has been especially hard hit in the past year. Prices there dropped nearly 6 percent in September and have fallen nearly 10 percent over the past 12 months.

Since the fall of 2008, one out of every four sales in Atlanta has been a foreclosure, an auction or a bank sale.

Many homes there were built during the housing boom. The city has also been confronted by high unemployment. In September, the unemployment rate was 10.3 percent — more than a point higher than the national average.

The Case-Shiller index covers half of all U.S. homes. It measures prices compared with those in January 2000 and creates a three-month moving average. The September data is the latest available.

Prices are certain to fall further once banks resume millions of foreclosures. They have been delayed because of a yearlong government investigation into mortgage lending practices.

Home prices had stabilized in coastal cities over the past six months, helped by a rush of spring buyers and investors. But this year, prices in many cities, including Cleveland, Detroit, Las Vegas, Phoenix and Tampa, have reached their lowest points since the housing bust more than four years ago.

Foreclosures and short sales — when a lender accepts less for a home than what is owed on a mortgage — are selling at an average discount of 20 percent.

- New-home sales rose 1.3% in October, still at weak levels

- Annual rate less than half of what is considered a healthy level

- Texas general business activity gains in November, but production, new orders drop

WASHINGTON – New-home sales rose slightly in October, but the level of demand is historically very weak as U.S. unemployment remains high and would-be buyers can choose from cheaper existing homes.

Sales increased by 1.3% to a seasonally adjusted annual rate of 307,000 from a downwardly revised pace of 303,000 in September, the Commerce Department said Monday. September’s level was adjusted down from the previously reported 313, 000, the new data showed.

October’s pace came below the annual rate of 312,000 that economists surveyed by Dow Jones Newswires had forecast.

“The broad trend remains in place in which new home sales are moving sideways at historically low levels while inventory levels grind lower at a glacially slow pace,” said Michael Gapen, an analyst with Barclays Capital.

The median price for a new home last month was $212,300, the lowest level since the $204,200 recorded in October 2010.

Uncertainty in the direction of home prices can give would-be buyers second thoughts, with some of them waiting for a better deal. New homes are, generally, more expensive than previously owned property. People have been especially attracted to foreclosed homes because of the low pricetags.

The relatively low prices for new homes, however, could suggest “that home prices are getting back to levels where people will put money to work in the housing market again,” said Steven Ricchiuto, chief economist, with Mizuho Securities USA.

New-home sales amount to about a quarter of their peak before the bubble began deflating around five years ago. Sales are well below healthy levels, considered to be an annual rate of around 750,000.

For the housing sector to recover, the economy needs to create more jobs and housing prices must stabilize. But economists predict that the nation’s unemployment rate for November, set to be released Friday, will remain at 9.0%.

With builders pessimistic, the number of new homes listed for sale at the end of October was 162,000, which is historically low. That supply would take 6.3 months to deplete at the current sales pace and is around a healthy level. The supply in September was 6.4 months.

October’s tepid sales growth was led by strong increases in Midwest, up 22.2%, and the West, up 14.9%, which were partially offset by 9.5% decline in the South. New-home sales held flat in the Northest.

A separate report Monday showed business conditions for Texas manufacturers remain in expansion mode this month but production and new orders are shrinking.

The Federal Reserve Bank of Dallas’sTexas Manufacturing Outlook Survey showed general business activity index increased to 3.2 in November from 2.3 in October. Readings below 0 indicate contraction, and positive numbers indicate expanding activity.

However, the production index for November plunged to -5.1 from 4.1 last month and the volume of new orders declined to -5.1 from 8.3 over the same period.

-By Jeff Bater, Dow Jones Newswires; 202 862 9249; jeff.bater@dowjones.com

–Kathleen Madigan contributed to this article.

The Street – Freddie Mac (FMCC) announced on Thursday that according to its market survey, interest rates for 30-year and 15-year fixed-rate mortgage loans hit their all-time lows.

The rate declines came on the heels of the Federal Reserve’s “Operation Twist,” where the central bank announced plans to shift its investment strategy toward longer-term securities, in an effort to push long-term interest rates lower, while keeping short-term rates at very low levels.

According to the mortgage giant — which like its competitor Fannie Mae (FNMA_) was taken under government conservatorship in September 2008 — the national average rate for a conventional 30-year fixed-rate mortgage loan was 4.01% for the weekend ended September 29. The rate declined from 4.09% the previous week and 4.32% a year earlier.

For mortgage loans in the U.S., “conventional” means that the loan meets the standard underwriting requirements for the lender to be able to immediately sell a newly originated mortgage loan to Fannie Mae or Freddie Mac.

According to Freddie, the average rate for a conventional 15-year fixed-rate mortgage loan was 3.28%, declining from 3.29% the previous week and 3.75% a year earlier.

For both fixed-rate averages, Freddie assumed up-front fees, or “points,” of 0.7% of a loan’s initial principal balance.

The average rate for a 5-year Treasury-indexed hybrid adjustable-rate mortgage — with a floating rate after five years — was 3.02% for, which was the same as it was for the previous week, but down from 3.52% a year ago.

For a 1-year Treasury-indexed ARM — where the rate is fixed for only one year — the average rate was 2.83%, which was an increase from 2.82% the previous week, but down significantly from 3.48% a year earlier.

For both adjustable-rate averages, Freddie assumed up-front fees, or “points,” of 0.6% of a loan’s initial principal balance.

According to Freddie Mac chief economist Frank Nothaft, “the spring and summer home-buying season gave a boost to a number of house price indexes,” as the “Federal Housing Finance Agency reported that its National index (not seasonally adjusted) rose for the fourth consecutive month in July,” while the S&P/Case-Shiller 20-City composite index “rose 0.9 percent between June and July with 17 of the cities experiencing positive monthly growth.”

WASHINGTON (AP) – The number of Americans who signed contracts to buy homes fell in July, further evidence that the depressed housing market remains a drag on the economy.

The National Association of Realtors said Monday that its index of sales agreements fell 1.3 percent in July to a reading of 89.7.

A reading of 100 is considered healthy by economists. The last time the index reached that level was in April 2010, the final month that buyers could qualify for a federal tax credit.

Contract signings are usually a reliable indicator of where the housing market is headed. There’s typically a one- to two-month lag between a sales contract and a completed deal.

But the Realtors group says a growing number of buyers have cancelled contracts after appraisals showed the homes were worth less than they bid. A sale isn’t final until a mortgage is closed.

Michael Gapen, director of U.S. economic research at Barclays Capital Research, said the high number of cancellations suggest “heightened uncertainty on the part of purchasers and tighter credit standards in mortgage finance.”

Home loans are harder to come by. Many lenders are requiring 20 percent down payments and strong FICO credit scores to qualify.

Signings are still roughly 18 percent above the June 2010 reading of 75.9, the lowest figure since the housing market went bust more than four years ago.

Even though pending home sales rose in two of the past three months, that hasn’t translated into increased sales.

The pace of sales for previously occupied homes is trailing last year’s 4.91 million sold, the fewest since 1997. In a healthy economy, people buy roughly 6 million homes each year.

Sales of new homes fell in July for third straight month. This year is shaping up to be the worst for sales of new homes on records dating back to 1963.

Homes are the most affordable they’ve been in decades. But bargain prices and super-low mortgage rates have done little to boost sales. Economists say it could be years before the nation’s housing market recovers.

The number of people signing home contracts rose in both May and June. But those increases did not make up for a huge drop-off in April, when signings fell more than 11 percent.

Contract signings fell across most of the country. July’s index fell 0.8 percent in the Midwest, 2 percent in the Northeast and 4.8 percent in the South. It rose 3.6 percent in the West.

Home prices have risen for two straight months, according to the Standard & Poor’s/Case-Shiller home-price index. A flurry of spring buyers has boosted sales. After adjusting for seasonal factors, such as spring buying, prices fell in 11 of 20 metro areas tracked by the index.

A report on June’s home prices will be released Tuesday.

Another reason prices are stabilizing is because millions of foreclosures are in limbo. Many have been delayed until the government completes an investigation into improper practices by mortgage lenders. Once that probe is finished, banks will start seizing homes again and prices will likely fall again.

Analysts say the weakening job market and the uncertainty over foreclosures could lead to deeper price declines in the second half of the year. They estimate prices will fall another 5 to 10 percent by year’s end.

NEW YORK (CNNMoney) – New-home sales fell once again in July, the third straight month of declining sales for hard-pressed home builders.
New homes sold at a seasonally adjusted annualized rate of 298,000, a modest 0.7% drop from a downwardly-revised rate of 300,000 homes sold in June, the Census Bureau said Tuesday. It was also below the rate of 310,000 that a panel of housing market analysts at Briefing.com had forecast.

Sales rose 6.8% year-over-year from 279,000 in July 2010.
“We’ve been bouncing around the 300,000 level for months, for years, really,” said David Crowe, the chief economist for the National Association of Home Builders. “It reflects continued buyer concern with the weak economy.”
The median price for a new home sold in July was $222,000, down about 5.5% from June but up 8.8% from 12 months earlier.
The inventory of new homes for sale stood at 165,000 during the month. It would take 6.6 months to sell off those homes at the current sales rate.
With sales so slow, new-home construction is also slumping. The home building industry is normally a major contributor to the economy, but it is so depressed right now that it’s it a drag on the economic recovery.
Crowe said home sales might weaken even more in the aftermath of the debt-ceiling debate, the downgrading of U.S. debt and the subsequent volatility in the financial markets.
“We might see August figures drop because of the market turmoil and the uncertainly it creates in consumers,” he said.
Historically low interest rates do not seem to be helping. Applications for mortgages have spiked, but most of the increase is for refinancing old mortgages rather than for purchasing new homes, according to Crowe.

WASHINGTON (TheStreet) – Mortgage applications fell 2% last week as mortgage rates edged slightly higher, though purchase applications rose to the highest level of the year.

The volume of mortgage loan applications fell 2% on a seasonally adjusted basis in the week ending April 1, the Mortgage Bankers Association said early Wednesday.

Refinancing application volume fell 6.2% from the previous week. Home-purchase loan applications jumped 6.7% week-over-week to its highest level of the year. The government purchase index increased 10.3% to its highest level since May 7, 2010. On an unadjusted basis, the MBA’s purchase index remained 16.8% lower than in the year-earlier week.

“Purchase application volume increased last week reaching the highest level of the year, but remains relatively low by historical standards, at levels last seen in 1997,” said Michael Fratantoni, MBA’s Vice President of Research and Economics. “The increase last week was due to a sharp increase in applications for government loans. Borrowers were likely motivated to apply before a scheduled increase in FHA insurance premiums that became effective last Friday.”

A total of 61.2% of all loan applications last week were for refinancing existing mortgages, down from 64.3% in the prior week.

The average rate on a 30-year fixed mortgage edged higher to 4.93%, from 4.92% in the prior week, though it remained below the psychological benchmark of 5%.

“Rates were flat last week, but refinance activity fell, as the pool of borrowers who have both the incentive and the ability to qualify for a refinance continues to shrink,” Fratantoni added.

Data in recent weeks has shown the housing market continues to lag the overall economic recovery.

Home prices across the U.S. fell 3.1% in January after falling 2.43% in December, not quite as steep a decline as expected but still an indication that there has been no improvement in home prices.

Even so, pending home sales jumped 2.1% in February, though the index measures the number of contracts signed — not closed — to buy previously owned homes.

Existing-home sales dropped 9.6% in February to a far worse-than-expected seasonally adjusted annual rate of 4.88 million units.

February’s rate of home resales remained 24.8% below the cyclical peak of 6.49 million units in Nov. 2009, which was the initial deadline for the first-time homebuyer tax credit, and 2.8% below the home resale rate in February of 2010.

“Housing affordability conditions have been at record levels and the economy has been improving, but home sales are being constrained by the twin problems of unnecessarily tight credit, and a measurable level of contract cancellations from some appraisals not supporting prices negotiated between buyers and sellers,” said Lawrence Yun, NAR’s chief economist.

“This tug and pull is causing a gradual but uneven recovery,” he added.

Still, the homebuilder sector remains well off its late-spring peak last year when buyers were rushing to take advantage of federal tax credits for homebuyers, and is only slightly higher than at the beginning of 2010. Whereas other sectors have begun a rebound in earnest, the housing sector continues to lag.

The SPDR S&P Homebuilders(XHB_), an exchange-traded fund that tracks the homebuilder sector, remains around 60% off its peak of $46.08 in early 2006. The iShares Dow Jones US Home Construction(ITB_) ETF remains more than 70% off its peak of $50.10 in the spring of 2006.

Among individual builders, KB Home (KBH_) posted a much wider-than-expected quarterly loss on Tuesday, leading its shares sharply lower though the stock was 0.5% higher in premarket trading Wednesday.

Lennar (LEN_), which posted a surprise quarterly profit last week, gained 1.2% ahead of the opening bell.

Hovnanian Enterprises(HOV_) was also higher, gaining 2.1% in premarket trading. Toll Brothers(TOL_), D.R. Horton(DHI_) and PulteGroup(PHM_) were flat ahead of the opening bell.

– Written by Miriam Marcus Reimer in New York.

>To contact the writer of this article, click here: Miriam Reimer.

>To follow the writer on Twitter, go to @miriamsmarket.

>To submit a news tip, send an email to: tips@thestreet.com.

The Philadelphia Inquirer – The number of contracts signed for existing-home purchases rose 2.1 percent in February from January, the National Association of Realtors reported Monday.

The number of agreements of sale signed during the month was 8.2 percent below February 2010, the Realtors’ association reported.

The group’s chief economist, Lawrence Yun, said contracts had been trending up since hitting bottom in June 2010.

Even with periodic monthly declines, the Realtors’ pending-sales index – reflecting agreements of sale that will close in one or two months – was 20 percent above the June low point, which was a consequence of the expiration of the federal housing tax credit April 30.

The Realtors’ numbers showed that the Northeast recorded the only decline in pending-sales numbers in February – 10.9 percent below January and 18.4 percent below February 2010. Yun attributed the drop to bad weather.

Although month-to-month numbers’ movements “can be instructive,” Yun warned that an uneven recovery requires looking at longer-term performance. “We may not see notable gains in existing-home sales in the near term,” he said.

Sales of both existing and new houses in February, reported a week ago, were not encouraging. National new-home sales for the month hit the lowest point since the Commerce Department began its record-keeping in 1963.

Builders say, however, that the new-home numbers reported in the month were actually closings of houses for which construction contracts had been signed three to six months earlier, and that there has been an uptick in deposits in recent weeks.

February national existing-home sales were 9.6 percent less than in January, the lowest rate in nine years, and 2.6 percent below the same month in 2010, the Realtors reported.

Unlike previous recoveries, economists don’t expect housing to be a factor in this one.

Read more: http://www.kansascity.com/2011/03/28/2758961/pending-home-sales-rise-in-february.html#ixzz1Hw3r9ng9

LOS ANGELES (AP) — Hovnanian Enterprises Inc. said Tuesday it returned to a loss in its fiscal first quarter versus a year earlier, when the homebuilder benefited from a hefty federal tax gain.

The company also reported its net contracts for new homes dropped 13 percent in the November to January period, despite a pickup in customer traffic and home orders in January.

Ara Hovnanian, the builder’s chairman, president and chief executive, said he’s encouraged by the recent uptick. But the executive cautioned it’s still too early to tell how the spring, traditionally a strong period for home sales, will fare compared with last year, when federal tax credits helped motivate buyers to purchase a home.

Homebuilders are hoping to see improved sales this spring after a dismal 2010 that marked the fifth consecutive year new home sales declined.

Sales sank last year to the lowest level on records going back 47 years. They tumbled again in January.

While harsh winter weather was likely a factor in the January sales decline, many would-be homebuyers continue to be put off by high unemployment and uncertainty over home prices.

In recent weeks, several large builders have reported their home deliveries and contracts for new homes fell sharply in and around the final months of last year.

For the November to January quarter, Hovnanian reported net contracts for new homes, excluding joint ventures, fell to 792 homes. Completed home sales, also known as home deliveries, totaled 845 homes, down from 1,091 in the prior-year quarter.

The rate at which buyers walked away from contracts for new homes rose to 22 percent from 21 percent a year earlier.

Homebuilders are a bellwether for the housing market and the economy. Each new home built creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes paid to local and federal authorities, by some estimates.

Hovnanian, which is based in Red Bank, N.J., has operations in 18 states and is one of the nation’s largest builders of senior housing communities.

The company said it lost $64.1 million, or 82 cents a share, for the three months ended Jan. 31. That compares with net income of $236.2 million, or $2.97 a share, in the prior-year period, which included a tax gain of about $291 million.

Revenue fell 21 percent to $252.6 million from $319.6 million the year before.

Analysts polled by FactSet were expecting a loss of 66 cents a share on revenue of about $245.4 million.

Shares slipped four cents to $3.85 in aftermarket trading after the company released its results. The stock fell 19 cents, or 4.7 percent, to $3.89 during the regular session.

Like other builders, Hovnanian has been buying land and opening more communities where it’s selling homes. It’s banking on sales at these newer, more profitable communities to help it weather the softer housing demand.

Hovnanian also has been tapping the equity markets for funds to pay down debt.

Last month, it raised about $300 million in debt and equity and used the proceeds to pay off debt that was coming due next year and in 2013.

The Atlantic – It’s no secret that U.S. home values have begun broadly declining again since last summer. Online real estate marketplace Zillow provides some information today on how severe the effect has been. Home values fell 2.6% in the third quarter — the most since the first quarter of 2009, when the home buyer credit was put into place. Since it expired last spring, prices began to dip again. Declining home values are also putting more borrowers underwater.

How bad is it? According to Zillow:

Negative equity rose to 27 percent of all single-family homes with mortgages, from 23.2 percent in Q3. Accelerated home value declines and a temporary slowdown in foreclosures both caused negative equity rates to jump.
Think about what that means: more than one in four Americans with a mortgage are underwater. That’s a pretty grim reality. Yet Zillow does mention that the slowdown in foreclosures was part of the cause, which means that some of the underwater borrowers were scheduled to lose their mortgage instead. In most cases, their foreclosure will take place this year a little late. This is hardly any consolation, but it does explain part of why the percentage of underwater homes grew more than it would have due to falling home prices alone.