Nationwide, fewer homes are going under contract to sell.

According to the National Association of REALTORS®, the Pending Home Sales Index fell 5 percent last month. September marks the fourth consecutive month in which the index has dropped. 

The Pending Home Sales Index is a monthly index which measures the number of homes under contract to sell, but not yet closed. As such, it’s among the few “forward-looking” housing indicators; a data set meant to predict future home sales. 

80% of homes under contract close within 2 months so, if the September Pending Home Sales Index is to be believed, we should expect home sales to decline through October and November. 

And that’s before we account for cancelled contracts.

Also from the National Association of REALTORS®, we learn that 18 percent of homes under contract failed to close in September. This is double the failure rate from September 2010 and it, too, should drag Existing Home Sales volume lower this fall.

On a seasonally-adjusted, regional basis, the Pending Home Sales Index fell everywhere. 

• Northeast Region: -4.7% from August
• Midwest Region : -6.2% from August
• South Region : -5.5% from August
• West Region : -2.1% from August

For home buyers and sellers in Fitchburg , though, regional data remains too broad to be useful. Housing markets are local, meaning that each block on each street on each city has its own distinct economy. When 9 states are grouped into a single “region”, it’s neither helpful nor relevant to people making buy/sell decisions.

That said, the Pending Home Sales Index remains important because it’s about housing, and housing is a keystone of the U.S. economic recovery.

The market looks ideal for buyers. Home prices are rising, but slowly; and mortgage rates remain near rock-bottom levels. Home affordability is high and should remain that way for the next few weeks.

If you’re shopping for a home, it’s an excellent time to go under contract.

Home builders continue to sell homes and work through inventory.

According to data from the Census Bureau, the number of new homes sold in September jumped 6 percent from the month prior, beating analyst expectations. On a seasonally-adjusted, annualized basis, buyers in Massachusetts and nationwide closed on 313,000 newly-built homes last month.

It’s the highest reading since April and a major reason why the available number of new homes for sale is shrinking. 

As compared to September 2010, there are 19% fewer homes for sale nationwide. At today’s sales pace, the complete new home inventory would be “sold out” in 6.2 months – the quickest sell-out pace since the April 2010 federal home buyer tax credit expiration.

It’s no wonder builder confidence is rising. More… »

The August 2011 Case-Shiller Index was released this week. On an monthly basis, 10 of 20 tracked markets worsened. On an annual basis, valuation degradation was worse.

Only Detroit and Washington, D.C. posted higher home values in August 2011 as compared to August 2010, rising 2.7% and 0.3%, respectively.

However, the index has been moving in the right direction. Since bottoming out in March of this year, the Case-Shiller Index is up nearly 4 percent.

As home buyers and sellers in Worcester , though, we have to remember that the Case-Shiller Index is a flawed product; its methodology too narrow to be the final word for housing markets.

The Case-Shiller Index has 3 main flaws.

The first Case-Shiller Index flaw is its relatively small sample size. Although it’s positioned as a national housing index, Case-Shiller data represents just 20 cities nationwide, and they’re not even the 20 most populous U.S. cities. For example, cities like Houston (#4), Philadelphia (#5), San Antonio (#7) and San Jose (#10) are excluded from the Case-Shiller Index findings.

By contrast, Minneapolis (#48) and Tampa (#55) make the list. More… »

The Federal Home Finance Agency announced big changes to its Home Affordable Refinance Program Monday. More commonly called HARP, the Home Affordable Refinance Program is meant to give “underwater homeowners” opportunity to refinance.

With average, 30-year fixed rate mortgages still hovering near 4.000 percent, there are more than a million homeowners in Fitchburg and nationwide who stand to benefit from the program overhaul.

To qualify for the re-released HARP program, you must meet 4 basic criteria :

1. Your existing home loan must be guaranteed by Fannie Mae or Freddie Mac
2. Your home must be a 1- to 4-unit property
3. You must have a perfect mortgage payment history going back 6 months
4. You may not have had more than one 30-day late payment on your mortgage going back 12 months 

Most notable about the new HARP refinance program, though, is that the government is waiving loan-to-value requirements on a HARP loans. Homeowners’ participation in the program  are no longer restricted by their home’s appraised value. In fact, the new HARP doesn’t even require an appraisal, in most instances.

With the new HARP program, underwater mortgages can be refinanced without LTV limit or penalty.

According to the government’s press release, pricing considerations for the new HARP program will be released on or before November 15, 2011; and lenders are expected to be offering the program as of December 1, 2011.

If you think you may be eligible, first confirm that either Fannie Mae or Freddie Mac is backing your loan. Both groups provide a simple, online lookup.

• Fannie Mae loan lookup : http://www.fanniemae.com/loanlookup/
• Freddie Mac loan lookup : https://ww3.freddiemac.com/corporate/

If your loan cannot be located on either of these two sites, your current mortgage is not backed by Fannie Mae or Freddie Mac, and is not HARP-eligible.

The FHFA’s official press release contains an FAQ section. In it, you’ll find minimum qualification standards, as well as information related to condominiums and to mortgage insurance.

The HARP program is meant to help a wide group of homeowners, but each applicant’s situation is unique. For specific HARP questions, be sure to talk with a loan officer. 

Despite fewer homes for sale nationwide, the number of home resales remains steady.

According to data from the National Association of REALTORS®, on a seasonally-adjusted, annualized basis, September’s Existing Home Sales eased by 150,000 units, falling to 4.91 million units nationwide.

An “existing home” is a home that’s been previously occupied and, despite last month’s drop, September’s sales volume remains the second-highest on record since April 2011.

This statistic is noteworthy for two reasons :

1. There are 9.9% fewer homes available for sale as compared to 12 months ago
2. Contract “failures” are twice as high as compared to September 2010, now averaging 18 percent nationwide

A contract failure is typically the result of homes not appraising for the purchase price; mortgage denials in the underwriting process; and, insurmountable home inspection issues. More… »

A Massachusetts man lost something he never had – his home. The Masachusetts Supreme Judicial Court ruled this week that when Francis Bevilacqua purchased the home from U.S. Bank in 2006, the bank did not actually hold the home’s title.

The court ruled that because U.S. bank did not hold the mortgage note when it foreclosed on the property, it did not obtain the title in the foreclosure. Therefore, Bevilacqua did not purchase a legal title when he made the purchase.

In its ruling in Bevilacqua v. Rodriguez, the court referenced a case tried in the same court last January, U.S. Bank, N.A. v. Ibanez, in which the court ruled that if a bank cannot provide proof it owns the mortgage note, any foreclosure filings it initiates are void.

The Ibanez case, however, simply involved a foreclosure action. Bevilacqua extends that ruling to instances when a new homeowner has already purchased the property. More… »

Headlines in newspapers can be misleading — especially with respect to housing figures. Media coverage of the most recent Housing Starts data serves as an excellent illustration.

Wednesday, the Census Bureau released its September Housing Starts report. In it, the government said that national Housing Starts rose 15 percent in September as compared to August 2011, tallying 658,000 units on a seasonally-adjusted annualized basis.

The September reading is the highest monthly reading since April 2010, the last month of last year’s home buyer tax credit.

The sudden surge in starts is big news for a housing market that has struggled of late, and the press was eager to carry the story. Here is a sampling of some headlines:

• U.S. Housing Starts Rise 15%, Hit 17-Month High (MarketWatch)
• Home Building Jumps 15% in September (ABC)
• New Construction Surges In September (LA Times)

These headlines are each accurate. However, they’re also misleading.

Yes, Housing Starts did surge in September, but if we remove the “5 or more units” grouping from the Census Bureau data — the catgory that includes apartment buildings and condominium structures — we’re left with Single-Family Housing Starts and Single-Family Housing Starts rose just 1.7 percent last month. More… »

Homebuilder confidence is rebounding sharply.

Just one month after falling to a multi-month low, the Housing Market Index rebounded four points to 18 for October. It’s the highest reading for the HMI since May 2010 — the month after last year’s homebuyer tax credit expiration.

The Housing Market Index is published monthly by the National Association of Homebuilders and is scored on a scale of 1-100. Readings above 50 indicate favorable conditions for homebuilders. Readings below 50 indicate unfavorable conditions.

The index has been below 50 since May 2006 — a 66-month streak.

The Housing Market Index is a composite reading; the result of three separate surveys sent to home builders each month. Builders are asked about current single-family home sales volume; projected single-family home sales volume over the next 6 months; and current “foot traffic”.

In October, builder responses were stronger in all 3 categories :

• Current single-family sales : 18 (+4 from September)
• Projected single-family sales : 24 (+7 from September)
• Buyer foot traffic : 14 (+3 from September)

Meanwhile, of particular interest to today’s Fitchburg home buyers is that builders expect volume to surge over the next two seasons. And, with current sales volume rising and foot traffic strengthening, the fall and winter months could be strong ones in the new homes market.

In addition, the builder trade group press release states that rising costs for materials are squeezing building profit margins.

For buyers, it all adds up higher home prices ahead. As builders grow more confident about the housing market, they’re less likely to make concessions on pricing or upgrades. Rising building costs fortify that argument. The “great deal” will be tougher to negotiate. 

At least mortgage rates are low.

Low mortgage rates are keeping homes affordable in Massachusetts and nationwide. If you’re looking for the right time to buy new construction, therefore, this month may be it.

Foreclosure activity continues to slow throughout the United States.

According to data from RealtyTrac, a national foreclosure-tracking firm, the number of foreclosure filings dipped below 215,000 in September 2011, a 6 percent decrease from August.

A “foreclosure filing” is defined as any foreclosure-related action including Notice of Default, Scheduled Auction, or Bank Repossession.

September marks the 12th straight month in which foreclosure filings fell year-over-year.

There are several reasons why foreclosure filings are down, including an increase in the amount of time it takes banks to move a foreclosure through its pipeline. It now takes a nationwide average of 336 days from the date of initial default notice to bank repossession.

Some states work quicker than others, however, because of a combination of state law and personnel. More… »

Wednesday, the Federal Reserve released the minutes from its 2-day meeting September 20-21, 2011.

The release shows a divided Fed in disagreement about the current U.S. monetary policy. The group reached compromise for new economic stimulus, however, and maintained its commitment to accommodative interest rates.

Wall Street reacted tepidly to the minutes. Mortgage rates in Leominster worsened slightly post-release.

The Fed Minutes gets less press than the FOMC’s post-meeting press release, but it’s every bit as important. Because it details the conversations that take place among voting and non-voting Fed members at FOMC meetings, the Fed Minutes is an inside-look at the debates and discussion that lead to new monetary policy.

As examples, here are some of the topics covered at the September FOMC meeting :

• On growth : Economic growth was slow, but “did not suggest a contraction”
• On housing : The market continues to be “depressed by weak demand”
• On rates : The Fed Funds Rate will remain low until mid-2013

Then, with Fed members divided on whether the central bank should add new stimulus, it reached a compromise instead, launching the $400 billion “Operation Twist” program. Operation Twist is meant to lower longer-term interest rates, including mortgage rates.

Since Operation Twist began, mortgage rates are higher by nearly 0.375%.

Also noteworthy within the Fed Minutes was concern for an economic slowdown and how the Federal Reserve may react. According to the record, a slowdown may prompt the Fed to introduce its third round of qualitative easing, or QE3. An out-sized stimulus plan would likely lead rates higher.

Nothing will happen until the Fed’s next meeting, however. Chairman Ben Bernanke & Co meet next November 1-2 for a 2-day meeting..