Posted on Tuesday, September 14, 2010
Housing conditions continued to show signs of stabilizing during the second quarter of this year, following a downward trend that began to reverse itself in mid-2009, HUD says in a new report. The federal agency immediately follows that assessment, though, with “the housing market’s recovery remains fragile.”
HUD’s 92-page quarterly commentary on the state of housing in the United States sums up a dichotomy of positives and negatives in market indicators.
In the marketing sector, sales of existing homes rose, but sales fell for new homes, the agency notes. In the production sector, single-family housing permits and starts both fell in the second quarter of 2010, although the number of single-family housing completions rose.
HUD cited numbers from the National Association of Realtors (NAR), which showed that the second quarter’s seasonally adjusted annual rate (SAAR) of existing-home sales was 5.607 million, up 9 percent from the first quarter.
According to a supplemental NAR practitioner survey, sales to new homebuyers accounted for 46 percent of all transactions in the second quarter compared to 42 percent in Q1. Foreclosures and short sales represented 32 percent of all home sales in the second quarter, down from 36 percent.
The SAAR for new single-family homes in Q2 was 340,000, a drop of 6 percent from the 360,000 rate in the first quarter.
Inventories of available homes at the current sales rate increased in Q2, reaching an average rate of 8.5 months’ supply for existing homes and a 7.8 months’ supply of new homes, HUD noted. Those figures represent a 14 percent increase and 8 percent decrease from last year, respectively.
“Of concern is the ‘shadow inventory’ of homes resulting from the high rate of delinquencies and foreclosures, which has the potential to increase the supply of homes for sale and further depress home prices,” HUD said in its report.
NAR reported that the median price of existing homes sold was $176,900 in the second quarter, up 6 percent from the prior three-month period. The median price of new homes sold was $210,200, down 6 percent from the first quarter.
The federal agency also pointed out that the national homeownership rate declined to 66.9 percent in the second quarter of 2010. HUD says the drop in homeownership “reflects the subprime lending crisis, the high rates of unemployment, and the recent severe recession.”
Addressing the nation’s still-present foreclosure crisis, HUD says servicer emphasis on home retention actions, including those under the federal government’s Making Home Affordable program, are helping to keep the number of newly initiated and completed foreclosures down, despite rising delinquencies.
“These programs cannot help all delinquent borrowers, however,” HUD stressed in the report. “In this regard, servicers have indicated that completed foreclosures are likely to increase as alternatives for seriously delinquent borrowers are exhausted.” -DSNews