news-record.com

Stronger home sales growth remains dampened by declining consumer confidence and economic uncertainty, according to Freddie Mac in its recently released Economic and Housing Market Outlook for June.

However, during the first four months of 2011, average monthly sales of existing homes are up approximately 5 percent from the average pace of 2010. Some potential homebuyers are still waiting for clearer signs that home values have firmed, but the number of those on-the-fence buyers is diminishing.

Supply chain interruptions related to the earthquake and tsunami in Japan and severe weather-related disruptions reducing employment gains are likely to be reversed in the coming months. More robust economic growth is expected to return during the second half of the year — supported by the accommodative monetary policy pursued by the Federal Reserve Board, it was noted in the Freddie Mac report.

Pending home sales rose strongly in May, with all regions experiencing gains from a year ago. This points to higher housing activity in the second half of the year, according to the National Association of Realtors in a June 29 report.

Contract signings rose 8.2 percent in May and are 13.4 percent higher than in May 2010. The data reflect contracts but not closings, which normally occur with a lag time of one or two months.

Since April 2010, this is the first time that contract activity was above year-ago levels, and the monthly gain was the strongest increase since last November, when the index rose 10.6 percent.  Lawrence Yun, NAR chief economist, said the improvement bodes well for home prices.

“Absorption of inventory is the key to price improvement, and this solid gain in contract signings implies that home values in many localities are or will soon be stabilizing as inventories get absorbed at a faster pace,” Yun said. “Some markets have made a rapid turnaround, going from soft activity to contract signings rising by more than 30 percent from a year ago.”

Q: Will this year be the turning point in housing?

A: Indicators are pointing in that direction. Forecasters are predicting a 2011 turning point for the housing market, according to MacroMarkets, an investment and risk-management firm.

The company polled 108 economists and real estate experts this month to gauge their predictions. Nearly two-thirds believe the bottom for home prices arrived in the first quarter or will arrive sometime before the year’s end. The consensus, though, is that we should not be expecting a rebound in home values, but rather a level of price stability.

Q: Is the share of distressed home sales growing?

A: No, the share is diminishing. Distressed properties accounted for just 31 percent of existing-home sales in May, according to the National Association of Realtors.

The ratio of distressed homes — typically bank-owned or pre-foreclosure short sales — took a dive in May, compared to earlier in the year. May’s market share was down from 37 percent in April and from 40 percent in March. However, it’s right on target with May 2010, when distressed properties made up 31 percent of the month’s sales.

Q: Has the risk-retention comment period been extended?

A: Yes. Federal banking agencies issued an extension to a comment period on controversial proposed rules to implement credit risk-retention requirements required by the Dodd-Frank Act. The comment period now ends Aug. 1. The original deadline was June 10.

Several major industry trade groups and consumer-advocacy groups had pressed the agencies to extend the comment deadline. They pushed the point that additional time was necessary for lenders, servicers and other stakeholders to analyze the full scope and potential impact of the proposed rules.

Q: Why do bankers object to the proposed Mortgage Servicing Act?

A: The American Bankers Association has sent a letter to key lawmakers in the Senate that urges them to reject foreclosure legislation proposed by Sens. Jeff Merkley and Olympia Snowe. Tagged the Regulation of Mortgage Servicing Act, their bill has been introduced as an amendment to a larger economic development bill being considered.

It mandates an independent, third-party case review before foreclosure, among other things. The bankers group says it would prolong the market correction by slowing down legitimate foreclosures, it was reported by DS News.

Jim Woodard writes for Creators Syndicate, www.creators.com.