Home sales up

The National Association of Realtors (NAR) says that existing home sales increased nearly 10% from August to September, and that sales activity is at its highest level since July 2007. September is the fifth month to post a month-over-month gain out of the last six months. September’s 9.4% increase brings existing sales to a seasonally adjusted annual rate of 5.57 million units, up from 5.1m in August. September 2009’s rate is 9.2% higher than the same month a year ago. July 2007’s rate was 5.73 million. NAR’s chief economist Lawrence Yun said the increase in market movement is due to low prices and mortgage rates and a surge in first-time homebuyers. “Much of the momentum is from people responding to the first-time buyer tax credit, which is freeing many sellers to make a trade and buy another home.” But Yun warned that the market is still underperforming, and while there are indications of price stabilization, there is a need for more buyers in the market.

Hafa confirmed

Herb Allison, the assistant secretary for Financial Stability, in testimony before the Congressional Oversight Panel (COP), confirmed the US Treasury Department’s plans to develop a foreclosure alternatives program with funds from the Troubled Asset Relief Program (TARP). Under the Home Affordable Modification Program (HAMP), the Treasury allocates capped incentives to servicers that modify qualifying loans on the verge of foreclosure, but the new program will provide incentives for short sales and deeds-in lieu of foreclosure when borrowers are unable or unwilling to complete the HAMP process. “We are aware that there are many borrowers whose modifications under HAMP will not be sufficient to keep them out of foreclosure,” Allison said. The Foreclosure Alternatives Program can help prevent foreclosures and minimize the damage on borrowers, financial institutions and communities, Allison said. Laurie Maggiano, the chief of the Homeowner Preservation Office at the Tre asury, released information on the forthcoming initiative, which she called the Home Affordable Foreclosure Alternatives (HAFA) program.

Debt ceiling approaching

By Friday, after another week of massive debt sales by the Treasury Department, Roughly $211 billion will separate what the country owes from its self-imposed credit limit. The $12.104 trillion debt ceiling could be breached by the end of November, and it is also expected that lawmakers will raise the ceiling, as they have done more than 90 times since 1940. If they don't, the government could be forced to shut down. But that's not the worst that could happen -- the reason lawmakers will eventually approve an increase is because without one ultimately the value of U.S. bonds would sink, jeopardizing the portfolios of countries and investors around the world who invest in U.S. debt.

But if they don't do it before the ceiling is reached, "the U.S. Treasury must engage in some legerdemain to create additional headroom," wrote Standard & Poor's managing director John Chambers. And that option is bad all round, since the government will have to draw from either government securities currently held in a 401(k)-type plan for federal employees, a Civil Service Retirement and Disability Fund, or by selling $16 billion worth of the government's dollar holdings in a special currency stabilization fund.

Jobs looking better than atrocious

The National Association for Business Economics (NABE) says the number of employers planning to hire workers over the next six months exceeded the number expecting job cuts for the first time since the recession began in December 2007. The survey of 78 NABE members also showed more companies increased capital spending during the third quarter of 2009 than cut spending. It was the first time that happened since October 2008. NABE said job losses "appear to be slowly abating" with the percentage of firms cutting payrolls falling to 31% in the quarter from 36%. The percentage of firms adding jobs doubled from an all-time low of 6% to 12% in October. Unemployment stands at a 26-year high of 9.8% in the United States. Economists surveyed by Briefing.com expect another 175,000 jobs were lost in October after employers shed 263,000 jobs in September.

Home prices up

According to Radar Logic’s Residential Property Index (RPX) housing market report, home prices and home sales in 25 metropolitan statistical areas (MSAs) increased 1% and 1.9%, respectively, from July to August. The average price change from July to August for the past 10 years is 0.1%, but Radar Logic said the first-time homebuyer tax credit, which nears expiration, is adding demand in the market. The real estate data and statistic firm applied the same explanation to an increase in home sales volume, which for the past 10 years averaged a 2.4% decline between July and August. Radar Logic president and CEO Michael Feder said, “Pending sales and mortgage applications for purchase suggest that strength in the RPX could continue for the next few months, though given the expected seasonal decline in activity in the fall, that strength could take the form of a modest price gain or a milder-than-average price decline through the winter. The threat of pending foreclosures to the housing market is, in our view, overstated and we believe there is strong evidence that housing supply and demand are returning to more normal levels.”
 

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