Builder confidence in the market for newly built, single-family homes gained five points in May from a downwardly revised reading in the previous month to reach a level of 29 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today. This is the index’s strongest reading since May of 2007.

“Builders in many markets are reporting that buyer traffic and sales have picked back up after a pause this April,” says Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla. “It seems we have resumed the gradual upward trend in confidence that started at the beginning of this year, as stabilizing prices and excellent affordability encourage more people to pursue a new-home purchase.”

“While home building still has quite a way to go toward a fully healthy market, the fact that the HMI has returned to trend is an excellent sign that firming home values, improving employment and low mortgage rates are drawing consumers back,” says NAHB Chief Economist David Crowe. “The pace of this emerging recovery could be stronger were it not for the significant impediments that the market continues to face with regard to builder and consumer access to credit, inaccurate appraisals, and more recently, rising materials prices.”

Derived from a monthly survey that NAHB has been conducting for 25 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores from each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

Each of the index’s components rebounded from declines in the previous month. The component gauging current sales conditions and the component gauging traffic of prospective buyers each rose five points in May to 30 and 23, respectively, with the traffic component hitting its highest level since April of 2007. The component gauging sales expectations in the next six months rose three points to 34.

Three out of four regions registered improving builder sentiment in May. This included a six-point gain to 32 in the Northeast, and five-point gains to 27 and 28 in the Midwest and South, respectively. The West posted a two-point decline, to 29.

HMI tables can be found at www.nahb.org/hmi ^[1]. More information on housing statistics is also available at www.housingeconomics.com ^[2].

^[1]Pending home sales increased in March and are well above a year ago, another signal the housing market is recovering, according to the National Association of REALTORS®.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, rose 4.1 percent to 101.4 in March from an upwardly revised 97.4 in February and is 12.8 percent above March 2011 when it was 89.9. The data reflects contracts but not closings.

The index is now at the highest level since April 2010 when it reached 111.3.

Lawrence Yun, NAR chief economist, said 2012 is expected to be a year of recovery for housing. “First quarter sales closings were the highest first quarter sales in five years. The latest contract signing activity suggests the second quarter will be equally good,” he says.

“The housing market has clearly turned the corner. Rising sales are bringing down inventory and creating much more balanced conditions around the county, which means home prices will be rising in more areas as the year progresses,” Yun says.

The PHSI in the Northeast slipped 0.8 percent to 78.2 in March but is 21.1 percent above March 2011. In the Midwest the index declined 0.9 percent to 93.3 but is 16.9 percent higher than a year ago. Pending home sales in the South rose 5.9 percent to an index of 114.1 in March and are 10.6 percent above March 2011. In the West the index increased 8.7 percent in March to 108.0 and is 9.0 percent above a year ago.

The National Association of REALTORS®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.

*The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales; it coincides with a level that is historically healthy.

NOTE: Existing-home sales for April will be reported May 22, the next Pending Home Sales Index will be released May 30 and first quarter metro area home prices will be released May 9; release times are 10:00 a.m. EDT.

For more information, visit www.realtor.org ^[2].

^[1]Down payments greater than or equal to 20 percent were made by 34 percent of all residential home purchasers last month, a percentage that has remained relatively stable over the past year, according to the latest REALTOR® Confidence Index survey from the National Association of REALTORS®.

However, over the past several years, lenders have been raising down payment requirements.

The survey shows higher down payment costs than NAR’s 2011 Profile of Home Buyers and Sellers, which is based n part on 2010 transactions. For both conventional and FHA loans, which require only a 3.5 percent down payment, NAR reported the median down payment for all buyers was 11 percent in 2010-2011. First time buyers put about 5 percent down in 2011. Repeat buyers, pooling equity with savings, typically put down about 15 percent. However, investment and vacation-home buyers have been paying higher down payments than those buying a primary residence. The median down payment for both was 27 percent, according to NAR’s Profile of Investment and Vacation Buyers.

In January, Lending Tree reported that states with the highest median down payments were Washington, D.C. (13.5 percent), New York (13.47 percent), Hawaii (13.33 percent) and California (13.22 percent). The state with the lowest average down payment is North Dakota, where buyers put down an average of 11.34 percent.

Attention has focused on down payments in recent months for two reasons. Down payments are a major barrier to first-time buyers, whose market share has dwindled since the home buyer tax credits expired in 2010. A survey of buyers by Move, Inc. last fall found that half of all potential buyers planning to buy in two years or more are waiting in part because they lack the money for a down payment or closing costs.

A second focus has been a proposed regulation called QRM that would create incentives for lenders to offer loans at 20 percent or more. The regulation, being reviewed by regulators, is opposed by many housing, consumer and minority groups concerned that it would put homeownership out of reach of many American families.

For more information, visit www.realestateeconomywatch.com

^[1](MCT)—The most popular online photo-sharing service just got a whole lot more powerful.

On Monday April 9, Facebook announced that it will spend $1 billion to acquire the hugely popular mobile photo app Instagram. As Facebook prepares for an initial public offering of stock later this spring, the deal is the first major purchase by the world’s most popular social network of another online property with millions of users.

“For years, we’ve focused on building the best experience for sharing photos with your friends and family,” Facebook founder and CEO Mark Zuckerberg said in a post. “Now, we’ll be able to work even more closely with the Instagram team to also offer the best experiences for sharing beautiful mobile photos with people based on your interests.”

Zuckerberg said that Facebook would allow Instagram to keep its independence, including the ability to post photos to competing social networks such as Twitter, Foursquare, Tumblr and Google+.

“We plan on keeping features like the ability to post to other social networks, the ability to not share your Instagrams on Facebook if you want, and the ability to have followers and follow people separately from your friends on Facebook,” Zuckerberg wrote.

“These and many other features are important parts of the Instagram experience and we understand that. We will try to learn from Instagram’s experience to build similar features into our other products. At the same time, we will try to help Instagram continue to grow by using Facebook’s strong engineering team and infrastructure.”

Zuckerberg said the Instagram purchase is a significant milestone for the Menlo Park, Calif.-based company.

“We don’t plan on doing many more of these, if any at all,” he said. “But providing the best photo sharing experience is one reason why so many people love Facebook and we knew it would be worth bringing these two companies together.”

For Instagram co-founders Mike Krieger and Kevin Systrom, the deal represents the amazing conclusion for a company they founded just over two years ago to improve the sharing of smartphone photos. Instagram initially launched only for the iPhone, and only recently added an app for Android devices.

“It’s important to be clear that Instagram is not going away,” Systrom, who is also Instagram’s CEO, said in a blog post. “We’ll be working with Facebook to evolve Instagram and build the network. We’ll continue to add new features to the product and find new ways to create a better mobile photos experience.”

©2012 the San Jose Mercury News (San Jose, Calif.)

Distributed by MCT Information Services ^[2]

The 30-year fixed mortgage rate on Zillow(R) Mortgage Marketplace is currently 3.97 percent, up 23 basis points from 3.74 percent at this same time last week.

This signifies the highest rate recorded on Zillow Mortgage Marketplace in the last five months. The 30-year fixed mortgage rate steadily rose for the majority of the week, dropping to 3.9 percent on Monday. The rate briefly reached to 4 percent late Monday night before falling to the current rate early this morning.

“Mortgage rates hit 4 percent for the first time in five months after a collection of positive news. The Federal Reserve delivered a better assessment of the economy and reduced speculation that the Fed would buy even more mortgage-backed securities, bank stress test results were more positive than many expected, and Greece’s second bailout plans appeared on track,” said Erin Lantz, director of Zillow Mortgage Marketplace.

“Rate movement this coming week should help indicate whether we return to the even lower levels we’ve enjoyed for the past five months, or whether we’ve reached a new plateau,” said Lantz.

Zillow’s real-time mortgage rates are based on thousands of custom mortgage quotes submitted daily to anonymous borrowers on the Zillow Mortgage Marketplace site, and reflect the most recent changes in the market. These are not marketing rates, or a weekly survey.

The rate for a 15-year fixed home loan is currently 3.16 percent, while the rate for a 5-1 adjustable-rate mortgage (ARM) is 2.85 percent.

Below are current rates for 30-year fixed mortgages by state.

Recently, Acting Federal Housing (FHA) Commissioner Carol Galante announced significant price cuts to FHA’s Streamline Refinance Program that could benefit millions of borrowers whose mortgages are currently insured by FHA. Beginning June 11, 2012, FHA will lower its Upfront Mortgage Insurance Premium (UFMIP) to just .01 percent and reduce its annual premium to .55 percent for certain FHA borrowers.

To qualify, borrowers must be current on their existing FHA-insured mortgages which were endorsed on or before May 31, 2009. Late last month, FHA also announced it will increase its upfront premiums on most other loans by 75 basis points to 1.75 percent. In addition, FHA will raise annual premiums 10 basis points and 35 basis points on mortgages higher than $625,500.

“This is one way that FHA can make a real difference to help homeowners who are doing the right thing, paying their bills on time and want to take advantage of today’s low interest rates,” says Galante. “By significantly reducing costs for these borrowers, we can make certain they cut their monthly mortgage burden, which will benefit the housing market and the broader economy in the process.”

Currently, 3.4 million households with loans endorsed on or before May 31, 2009, pay more than a five percent annual interest rate on their FHA-insured mortgages. By refinancing through this streamlined process, it’s estimated that the average qualified FHA-insured borrower will save approximately $3,000 a year or $250 per month. FHA’s new discounted prices assume no greater risk to its Mutual Mortgage Insurance (MMI) Fund and will allow many of these borrowers to refinance into a lower cost FHA-insured mortgage without requiring additional underwriting. FHA-insured homeowners should contact their existing lender to determine their eligibility.

Last month, the Obama Administration announced a broad package of actions and legislative proposals to help responsible homeowners save thousands of dollars through refinancing. This includes the changes announced today that will benefit current FHA borrowers—particularly those whose loan value may exceed the current value of their home. By lowering monthly mortgage costs for home-owners, FHA hopes to help more borrowers stay in their homes, thereby decreasing the potential for future default and reducing losses to the Mutual Mortgage Insurance (MMI) Fund.

The changes outlined in today’s mortgagee letter apply to all mortgages insured under FHA’s Single Family Mortgage Insurance Programs except:
• Title I
• Home Equity Conversion Mortgages (HECM)
• Section 247 (Hawaiian Homelands)
• Section 248 (Indian Reservations)
• Section 223(e) (Declining Neighborhoods)

For more information, visit www.hud.gov ^[1].

^[1]Being in real estate has always required a certain level of hand-holding and diplomacy. Yet today, more than ever, those of us who work with sellers are putting our counseling skills to the test, due to consumer confidence that’s taken a beating in a down economy.

Before aggressively investing time in sellers who may never be ready to price their homes realistically for today’s buyers, get to know them and establish routine communications. If you connect with prospects effectively and provide a full picture of the market, the true sellers will eventually signal when they are prepared to make the move.

A key element in assessing client attitude is the level of service you provide. It’s only by staying in contact regularly and investing time to thoroughly explain your local market that you will earn loyalty and trust. Share market reports with clients at least weekly, as a gentle reminder that homes that are selling in their neighborhood are within a certain price range—and likely below what they initially envisioned.

Negotiate in advance for target dates at which you will consider a price change, based on milestones like a set number of market days. This will free you from having to visit price frequently in conversation.

Keeping your clients informed is easy today, with the housing market data available through your local REALTOR® association Multiple Listing Service and other resources. Be steadfast and earn your clients’ respect as a reliable and patient advisor. Consistency is critical. If you let even two weeks elapse without client contact – even just a quick check-in call—chances are you will have waited too long and lost their interest or loyalty.

Clients who receive regular attention and excellent service will reward you with signs when they are ready to act. For instance, you may notice that they become very cooperative and interested in your counsel concerning listing price. You may also notice that they’re willing to detach emotionally from the property and get excited about what type of home they might purchase next.

It’s not unusual today to meet potential clients who approach the prospect of selling with a nostalgia that won’t allow them to price right and sell right. Your knowledge is your power. By keeping clients consistently informed of up-to-date market data, there is no need to forcibly push your reasons for a price adjustment. By offering insight into local selling trends, there is no need to trumpet what you think your clients need to do to sell their house. They will let you know when they are ready – and, as they learn from your regular market updates — may even become enthused about their future new home.