US home sales rise 2.1 percent in October

WASHINGTON (AP) — U.S. sales of previously occupied homes rose solidly in October, helped by improvement in the job market and record-low mortgage rates.

The increase along with a jump in homebuilder confidence this month suggests the housing market continues to recover.

The National Association of Realtors said Monday that sales rose 2.1 percent to a seasonally adjusted annual rate of 4.79 million. That's up from 4.69 million in September, which was revised lower.

The sales pace is roughly 11 percent higher than a year ago. But it remains below the more than 5.5 million that economists consider consistent with a healthy market.

As the economy slowly recovers, more people have started looking to buy homes or rent apartments. Prices are steadily climbing, while mortgage rates have been low all year. At the same time, rents are rising, making the purchase of a single-family home or condominium more attractive.

"Altogether, the report is encouraging," said Michael Gapen, an economist at Barclays Capital. "Our view is that housing is in a recovery phase," he added, though it will be restrained by limited credit and modest job gains.

A separate report Monday showed confidence among homebuilders rose this month to its highest level in six and a half years. The increase was driven by strong demand for newly built homes and growing optimism about conditions next year.

The National Association of Home Builders/Wells Fargo builder sentiment index increased to 46, up from 41 in October. Readings below 50 suggest negative sentiment about the housing market. The index last reached that level in April 2006. Still, the index has been trending higher since October 2011, when it stood at 17.

The Realtors' group said Superstorm Sandy delayed some sales of previously occupied homes in the Northeast. Sales fell 1.7 percent there, the only region to show a decline. Those sales will likely be completed in future months, the group said.

The median price for previously occupied homes increased 11.1 percent from a year ago to $178,600, the Realtors' said.

A decline in the number of homes available for sale is helping push prices higher. There were only 2.14 million homes available for sale at the end of the month, the lowest supply in 10 years. It would take only 5.4 months to exhaust that supply at the current sales pace. That's the lowest sales-to-inventory ratio since February 2006.

Prices are also benefiting from the mix of homes being sold. Sales of homes priced at $500,000 and above have jumped more than 40 percent in the past year. Sales of homes and condominiums that cost less than $100,000 fell 0.6 percent.

There have been other positive signals from the housing market. Applications for mortgage loans to buy homes jumped 11 percent in the week ended Nov. 9, compared with a week earlier, the Mortgage Bankers' Association said last week. Purchase applications are up 22 percent in the past year.

Foreclosures are slowing. The number of properties that began the foreclosure process in the first 10 months of the year fell 8 percent compared with the same period last year, RealtyTrac said last week.

And builders broke ground on new homes and apartments at the fastest pace in more than four years in September. The jump could help boost the economy and hiring.

Still, the market has a long way back to full health. Many potential home buyers cannot meet stricter lending standards or produce larger down payments required by banks.

That can be a particular problem for first-time homebuyers. They accounted for 31 percent of sales in October, down slightly from September and below the 40 percent that is common in a healthy market.

Federal Reserve Chairman Ben Bernanke said Thursday that banks' overly tight lending standards may be preventing sales and holding back the U.S. economy.

Read More..

US mortgage rates for past 52 weeks at a glance

Average U.S. mortgage rates were little changed this week, staying near their record lows.

Here's a look at rates for fixed and adjustable mortgages over the past 52 weeks:

Read More..

US rate on 30-year mortgage rises to 3.41 pct.

WASHINGTON (AP) — Average U.S. mortgage rates rose only slightly this week and continued to hover near record lows, a trend that has helped boost home sales and refinancing.

Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year fixed mortgage edged up to 3.41 percent, from 3.37 last week. Three weeks ago, the rate touched 3.36 percent. That's the lowest level on records dating to 1971.

The average rate on the 15-year fixed mortgage, often used for refinancing, rose to 2.72 percent. That's up from last week's record low of 2.66 percent.

The rate on the 30-year loan has remained below 4 percent all year, helping drive a modest housing recovery. And rates have fallen even further since the Federal Reserve started buying mortgage bonds in September to try to encourage more borrowing and spending.

Home sales have increased from last year, and prices are rising more consistently in most areas. Builders are more confident and starting more homes. Lower rates have also persuaded more people to refinance. That typically leads to lower monthly mortgage payments and more spending.

This week brought more positive news on the housing front. U.S. sales of new homes jumped last month to the highest level in more than two years, the Commerce Department said Wednesday. And slightly more Americans signed contracts last month to buy homes, the National Association of Realtors reported Thursday.

Still, the housing market has a long way to a full recovery. And many people are unable to take advantage of the low rates, either because they can't qualify for stricter lending rules or they lack the money to meet larger down payment requirements.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country on Monday through Wednesday of each week.

The average doesn't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for 30-year loans was 0.7 point, unchanged from last week. The fee for 15-year loans also held steady, at 0.6 point.

The average rate on a one-year adjustable-rate mortgage slipped to 2.59 percent from 2.60 percent. The fee for one-year adjustable rate loans remained at 0.4 point.

The average rate on a five-year adjustable-rate mortgage was unchanged at 2.75 percent. The fee also was unchanged, at 0.6 point.

Read More..

Analysis: Mortgage demand too much for U.S. banks, who respond slowly

(Reuters) - Big U.S. banks are hiring mortgage bankers to meet a surge in demand for home loans and refinancings, but they are still struggling to process applications, which could undermine the Federal Reserve's attempts to stimulate the economy.

Since the Fed announced its plan in September to buy up to $40 billion of mortgages a month, consumer mortgage rates have fallen more slowly and by less than they would have done in more normal times.

On average, 30-year home loan rates are down just 0.18 of a percentage point this week from September 13, when the Fed announced its latest stimulus program. Some analysts estimate that in more normal markets, rates would have fallen by roughly 0.31 of a percentage point or more. That could save a home buyer thousands of dollars over the lifetime of a mortgage.

The dysfunction in the mortgage market, which has yet to fully recover after its battering in the U.S. housing bust and subsequent financial crisis, means most benefits from the Fed's new stimulus plan may be accruing to banks instead of consumers.

Banks still committed to the home loan business are hiring to meet increased demand, but fewer banks are committed to the business after the 2007-2009 mortgage crisis pulverized some of the biggest lenders in the United States and wounded many others.

Capacity constraints work in the banks' favor. Profit margins for home lending are more than double their usual level, JPMorgan Chief Executive Jamie Dimon told investors last Friday. The major U.S. banks, including JPMorgan Chase & Co, Wells Fargo & Co and Citigroup Inc, all said mortgage operations boosted third-quarter profits.

Lenders making mortgages say they do not want to hire too many staffers only to lay them off when volume declines. The Mortgage Bankers Association estimates that banks will make $1.47 trillion of home loans this year for home purchases and refinancings, but then just $1.04 trillion in 2013, a decline of nearly a third.

"We are trying to ... not over hire," Andy Cecere, chief financial officer at U.S. Bancorp, said in an interview on Wednesday.

Top U.S. mortgage lender Wells Fargo added about 2,000 people in the third quarter as volume surged. Chief Financial Officer Tim Sloan said in an interview the bank is responding to the impact of the Fed's plan. Chase has increased its number of loan officers by 23 percent over the last year, and expects to keep hiring aggressively, said Kevin Watters, head of mortgage originations at JP Morgan Chase.

But mortgage applications are also jumping, rising nearly 17 percent in the week ended September 28. With demand that strong and no staffers to handle extra business, banks have little reason to cut rates much. In a speech on Monday, New York Federal Reserve President William Dudley acknowledged that difficulty, noting the Fed's efforts to stimulate the economy in recent years would have had a bigger economic impact if consumer mortgage rates were falling more.

Bank staffing issues are a headache for mortgage applicants already struggling with tough appraisals and wary lenders. Many borrowers tell Kafka-esque stories of bureaucracy, where what used to be a 30- to 60-day process has stretched to 90 days or more.

PROFIT BONANZA

The mortgage business has grown much more concentrated. The top two mortgage lenders made 14 percent of mortgage loans in 2000, 29 percent of mortgages in 2006, and 44 percent in the first half of 2012, according to Inside Mortgage Finance data.

Wells Fargo and JPMorgan Chase are the top two lenders now, and their predecessor companies were the top in 2000.

In 2006, Countrywide Financial Corp - now owned by Bank of America Corp - and Wells were the top. Bank of America last year stopped buying loans from other banks after suffering billions of dollars of losses from its exposure to home loans, which has cut its volume in half and limited smaller banks' capacity to lend.

Bankers are unsure how long the refinancing bonanza will last.

JPMorgan Chase CEO Dimon told investors the mortgage boom will continue "next quarter, maybe for a couple of quarters after that but it won't last for that much longer."

Citigroup Chief Financial Officer John Gerspach told investors on Monday that figuring out how long the refinancing boom will last is "one of the big questions facing a lot of institutions at this point in time."

Smaller banks are struggling with the same questions.

Matt Williams, president of Gothenburg State Bank in Gothenburg, Nebraska, and incoming chairman of the American Bankers Association, said his bank was not adding staff even though its 28 employees were "stressed to the max right now."

Williams said his bank, with $125 million in assets, expects rates eventually will go up, cutting demand for refinancing.

Mortgage demand was rising even before the Fed announced its latest plan to buy home loans, but that announcement immediately lowered bank funding costs. The effect on bank revenues will take longer to show up, because it takes months to process and close mortgage applications.

For consumers, capacity constraints among mortgage lenders mean rates are not falling as much as they theoretically could.

The average 30-year consumer mortgage rate was 3.37 percent, Freddie Mac said on Thursday - about 1.13 percentage points higher than rates investors in mortgage bonds would accept, as measured by the "secondary rate" for mortgages guaranteed by Fannie Mae.

In the second half of 2011, the gap between consumer mortgage rates and the secondary rate averaged closer to about 0.9 percentage point, suggesting lenders could cut rates another 0.23 point. However, Freddie Mac and Fannie Mae boosted fees for guarantees by 0.1 of a percentage point in August, meaning the difference may be only about 0.13 of a percentage point.

Read More..

New exhibition explores our love and hate of money

NEW YORK (Reuters) - How does money make you feel? Fearful, stressed, happy?

U.S. financial guru Suze Orman has teamed with the producer of the popular Body Worlds exhibits for a new traveling show to look at how we relate to and understand money.

Orman, media star and author of best-selling books on personal finance, described the finance-themed exhibit as "an extension of my life's work as a financial educator, and an innovative way to teach people about money".

The interactive, multi-media exhibit, "Economia: Money Matters," will begin a five-year, nationwide tour in the fall of next year, starting in Chicago. The admission-charging show will move on to other venues that include science and natural history museums.

Gail Vida Hamburg, who designed and developed the exhibition, said she hit on the idea several years ago.

"I found a study about worry, stress and depression and their links to money or rather the lack of money ... I realized that I could synthesize all of this information into a designed exhibition with multimedia and interactives (displays)," said Hamburg, who designed the Body Worlds traveling exhibition of preserved human corpses that has toured Europe, North America and Asia.

The Money Matters exhibit spans 7,000 square feet with galleries on phases of life ranging from College Road to Third Phase, or retirement. It aims to meet national and state financial literacy goals for children and adults.

Hamburg, who founded museum exhibit firm Rainworks Omnimedia in 2010, believes the show's appeal is universal because money is something that everyone has a relationship with throughout life.

Orman has described the show as a walk through the life of money, and the effect it can have on you.

"It will be entertaining," she said in a statement, "and when you're having fun learning, the lessons stay with you."

Hamburg said she addressed finance's fear factor by engaging people with various exhibits and displays.

"How do you make it easy for visitors to understand the power of compounding?" she asked, adding that it has traditionally been taught with graphs or charts or calculators.

She decided to approach it differently using visitor prompts, and entry into a computer terminal and to show the results through the growth of actual physical objects.

"We should all be so smart with money and channel our inner Suze Orman. But we're not and we don't. Unless you're an MBA or an economist or a freak, you don't want to read about SEP-IRA or social security or student loan interest rates."

The goal of the exhibition "is to give visitors the tools and resources for financial self actualization," she added.

Read More..