On an unadjusted basis, the purchase index declined 12.7 percent compared to the previous week and was down 43 percent compared to the week of July 4th in 2009.

Interest rates were up slightly, though they remain very low:

* 30-year fixed-rate mortgages increased to 4.69 percent from 4.68 percent.

* 15-year fixed-rate mortgages increased to 4.12 percent from 4.11 percent.

* 1-year ARMs remained unchanged at 7.20 percent.

July 12, 2010 – WASHINGTON, DC – With the Obama Administration and Federal Reserve this week sponsoring events that focus on how to ease regulatory burdens on the small business community that are constricting job growth, the National Association of Home Builders (NAHB) today urged policymakers to address the lack of financing for housing production that is impeding the housing and economic recovery.

“In normal times, housing accounts for about 17 percent of GDP,” said NAHB Chairman Bob Jones, a home builder from Bloomfield Hills, Mich. “However, in the current economic climate, lenders have basically stopped making acquisition, development and construction (AD&C) loans and are calling in existing loans, even when the borrower’s payments are current. Policymakers must act now to restore credit availability for viable home building projects; otherwise countless construction jobs will be lost, further jeopardizing the fragile economic recovery.”

Federal Reserve Chairman Ben Bernanke said that the objective of a conference today at the Federal Reserve is to develop policies that will support the flow of loans to creditworthy small businesses. Meanwhile, the White House has asked business leaders and lawmakers to attend a jobs summit at the U.S. Chamber of Commerce on Wednesday to help identify regulatory obstacles that are hampering job and economic growth.

NAHB is reaching out to regulators, banks, Administration officials and members of Congress to seek action to reduce regulatory restrictions on AD&C credit and rein in overzealous bank examiners.

The vast majority of NAHB builder members are small businesses situated in communities across the nation who employ workers that contribute to the local economic base. NAHB estimates the one-year local impacts of building 100 single-family homes in a typical metro area result in the creation of 324 local jobs and an additional $21.1 million in local income and $2.2 million in taxes and other revenue for local governments.

Beyond its negative effect on home builders, the lack of AD&C lending has major implications for the economy and the nation, said Jones.

“Over the next decade, population growth will trigger demand for an average of at least 1.7 million additional homes per year,” he said. “This translates into five million jobs and significant economic activity, including tax revenue. But without increased AD&C lending, this demand will not be met, jobs will be lost and job creation will suffer.”

The National Association of Home Builders is a Washington-based trade association representing more than 175,000 members involved in home building, remodeling, multifamily construction, property management, subcontracting, design, housing finance, building product manufacturing and other aspects of residential and light commercial construction. NAHB is affiliated with 800 state and local home builders associations around the country. NAHB’s builder members will construct about 80 percent of the new housing units projected for 2010.

July 12, 2010 - The Economic Cycle Research Institute, a New York-based economic forecasting organization, said on Friday that its Weekly Leading Index (WLI) dropped to 121.5 for the week ended July 2, compared with 122.3 during the week before. That was the lowest point for the index, which is a measure of future U.S. growth, since almost a year ago.

On the face of it, that sounds like a portent of the dreaded double-dip, but the ECRI asserts that this slide in the index (and other recent WLI downturns) doesn’t mean the the U.S. economy is headed in that direction, but merely a experiencing slowdown in the speed of the recovery. “Neither the ‘experts’ predicting that the sky is falling based on the WLI, nor the other ‘experts’ indulging in misinformed WLI-bashing in an effort to discredit the super-bears, have a real clue to what the WLI is all about,” the ECRI said in a statement recently.

“We created the WLI not to be an infallible, stand-alone recession-forecasting machine, but as one small part of a much larger array of leading indexes…” the organization continued. “The WLI is designed to be interpreted in this broader context, and its message today is quite simple: a slowdown in U.S. economic growth is imminent, but a new recession is not.”

Million-Dollar Mortgage Dropouts

The New York Times reported late last week that about one in seven mortgages that exceed a cool $1 million are seriously delinquent, according to data supplied to the newspaper by the real estate analytics firm CoreLogic. That compares with delinquency for one in 12 sub-million-dollar mortgages nationwide.

That gives? “CoreLogic data suggest that many of the well-to-do are purposely dumping their financially draining properties,” posited the paper, though it acknowledged that it’s hard to prove motives in such delinquencies.

For those with jumbo mortgages who are able (and willing) and keep paying their mortgages, however, now turns out to be good time to refinance. Bankrate.com reported last week that the average rate on a 30-year jumbo (over $729,750 these days) is now 5.48 percent, compared with 6.86 percent this time last year. Jumbo loans are back, for those who can still afford them.

Apple Plays Retail Catch-up in China

Apple Inc. has renewed its drive to plant retail locations in China with the opening of a 16,000-square-foot flagship store in Shanghai. It’s the company’s second location in China, after the opening of another flagship in Beijing two years ago.

According to the company, it plans “many” more stores in China. Apple computer and communication products reportedly have panache among the Chinese nouveau riche, but the company is behind other gizmo-makers in penetrating the Middle Kingdom. Fewer than 1 percent of computers sold in China are Macs, compared with over 6 percent in the United States, according to market research firm IDC.

Wall Street ended the week with an up day on Friday, with the Dow Jones Industrial Average up 59.04 points, or 0.58 percent. The S&P 500 gained 0.72 percent and the Nasdaq advanced 0.97 percent.

The Lead: Renovation, Repair and Painting rule (LRRP) applies to homes constructed before 1978 when lead paint was banned. Its opt-out provision, which expired July 6, let consumers allow contractors to bypass extra preparation, clean-up and recordkeeping requirements in homes where there were no children under 6 or pregnant women, thus avoiding additional costs.

“Removing the opt-out provision more than doubles the number of homes subject to the regulation,” said NAHB Chairman Bob Jones, a home builder and developer in Bloomfield Hills, Mich. “About 79 million homes are affected, even though EPA estimates that only 38 million homes contain lead-based paint. Removing the opt-out provision extends the rule to consumers who need no protection.”

The Hearth, Patio & Barbecue Association, the National Lumber and Building Material Dealers Association and the Window and Door Manufacturers Association joined NAHB in filing the petition for review in the U.S. Court of Appeals for the D.C. Circuit.

The group will challenge EPA’s action on the grounds that the agency substantially amended its LRRP regulation without any new scientific data and before the regulation was even put into place on April 22, 2010.

“Even under the original rule, the opt-out provision was not available in homes where small children or pregnant women live,” Jones said. “That shows that this change provides no additional protection to the people who are most vulnerable to lead-based paint hazards.”

Remodelers’ and other contractors’ estimates of the additional costs associated with the lead-safe work practices average about $2,400, but vary according to the size and type of job. For example, a complete window replacement requires the contractor to install thick vinyl sheeting to surround the work area both inside the home and outdoors – with prep time and material costs adding an estimated $60 to $170 for each window.

“Consumers trying to use rebates and incentive programs to make their homes more energy efficient will likely find those savings eaten up by the costs of the rule’s requirements. Worse, these costs may drive many consumers – even those with small children – to seek uncertified remodelers and other contractors. Others will likely choose to do the work themselves – or not do it at all – to save money. That does nothing to protect the population this rule was designed to safeguard,” Jones said.

As per the report–based on data analysis provided by the Furman Center for Real Estate and Urban Policy at New York University and independent consultants–the economic benefits of affordable housing, beyond the provision of much-needed low-cost apartment residences, is threefold. The study, which involved an aggregate 660 new and redeveloped properties financed through Low-Income Housing Tax Credits (LIHTC), concludes that affordable housing promotes family financial stability, allowing households to more than double their discretionary income, which makes funds available for such concerns as healthcare, debt repayment and savings. Additionally, the study found that affordable housing also increases business for local merchants, as lower rent obligations allow area residents to live within their means and spend more discretionary income on services.

And, perhaps most surprising, LIHTC-funded affordable housing enhances local property values and helps boost property tax revenue. Real estate located near the properties that were analyzed immediately increased in value by 6 percentage points, and the figure continued to rise as time progressed. The main key is quite simple: appearance. “Because LIHTC-financed projects are so well designed and well built, it increases the values of surrounding properties,” Abby Jo Sigal, vice president and New York City Office director with Enterprise, tells MHN. The notion runs contrary to commonly held perceptions about government-funded multi-family developments.

“We’re dealing with a legacy issue surrounding affordable housing,” she notes. “Decades ago, most affordable housing projects didn’t involve private developers, but now, with LIHTC, there are public-private partnerships developing properties and there’s been much more emphasis on design and quality, especially over the last ten years. It’s very different from what was done with the U.S. Department of Housing and Urban Development in the 1970s.” The architectural community, adds Sigal, is becoming increasingly devoted to “giving back” by getting involved with the design of affordable housing.

While the study covered New York City properties only, Sigal believes the concept of affordable housing serving as an economic stimulus would be the same in various metropolitan areas nationwide. “The numbers would vary from city to city, but particularly in high-cost cities where families are paying closer to 50 percent of their income for rent, affordable housing gives more financial stability,” she says. “We hope more developers will find that building tax credit projects and building non-assisted projects in neighborhoods can be successful, and encourage mixed-income residential developments and additional services, which will bring vitality to neighborhoods. Housing is the underpinning to a neighborhood’s success.”

New-home sales tumbled 33 percent last month, the biggest drop on record, according to the U.S. Commerce Department.

“If there is a sharp decline not only in housing sales but in housing prices, that could threaten a recovery,” says Susan Wachter, a real estate professor at the University of Pennsylvania’s Wharton School in Philadelphia.

“A tepid economic recovery — that’s what we’re going to get, because housing is only very slowly going to return to normal,” says Edward Leamer, an economist at the University of California, Los Angeles, and director of the UCLA/Anderson Business Forecast. “We’ve had a medicated market because of the tax credit and the meds have been removed, so it’s going to be difficult to sell homes in the next few months.”

“This is a recession that was induced by housing, and housing is not going to carry us out like it has done in the past,” says Diane Swonk, chief economist of Chicago-based Mesirow Financial Holdings Inc.

Mortgage finance company Freddie Mac says the average rate rose to 4.75 percent, up from 4.72 percent last week. The rate hit 4.71 percent in December, the lowest since Freddie Mac began keeping records in 1971.

The average rate on a 15-year fixed-rate mortgage edged up to 4.2 percent, up from its all-time low of 4.17 percent set last week.

A Federal Reserve program to reduce borrowing costs for consumers pushed rates down to extraordinarily low levels last year. Rates were expected to rise after the campaign ended this spring, but have declined instead over the past two months as investors shifted money into the safety of U.S. Treasury bonds.

Concerns over the European debt crisis and the volatile stock market have made U.S. Treasury debt more attractive. And mortgage rates tend to follow the yield on U.S. Treasury debt.

Low mortgage rates could help buoy housing demand after the expiration of federal tax credits. First-time buyers could get a credit of up to $8,000, while current owners who bought and moved into another home could qualify for a credit of up to $6,500. Buyers had until April 30 to get a signed sales contract and until June 30 to complete the sale.

Home sales started to lag after the credits’ deadline. But a recent report offered a sign that buyers are finally taking advantage of low rates. The number of customers applying for refinance and purchase mortgages climbed 18 percent last week after falling sharply the month before, the Mortgage Bankers Association said Wednesday.

Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.

Rates on five-year, adjustable-rate mortgages averaged 3.89 percent, down from 3.92 percent a week earlier. Rates on one-year, adjustable-rate mortgages fell to 3.82 percent from 3.91 percent. That was the lowest average since May 2004.

The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount.

 The nationwide fee for loans in Freddie Mac’s survey averaged 0.7 a point for 30-year, 15-year and 5-year loans. The average fee for 1-year loans was 0.6 of a point.

“The decline of the early 1980s turned out to be temporary, but this time the decline is related to phenomena such as an increased share of first-time home buyers, a desire to keep energy costs down, smaller amounts of equity in existing homes to roll into the next home, tighter credit standards and less focus on the investment component of buying a home,” says National Association of Home Builders chief economist David Crowe. “Many of these tendencies are likely to persist and continue affecting the new home market for an extended period.”

The data indicates that 34 percent of new single-family homes had four or more bedrooms in 2009, down from 39 percent in 2005, but the number with three bedrooms rose to 53 percent from 49 percent over the same time span. Additionally, 37 percent of new single-family homes had two bathrooms in 2009, up from 35 percent in 2008; and the number with just one story rose to 47 percent last year from 43 percent in 2007.

Regionally, the data shows that 99 percent of homes in the South had air conditioning, versus 88 percent nationwide; 30 percent of homes had three-car garages in the Midwest, versus 17 percent nationally; and 74 percent of homes in the Northeast had vinyl siding, versus 34 percent nationwide.

June 16, 2010 – WASHINGTON – The number of customers applying for mortgages jumped last week, a sign that the market could be stabilizing after dropping off sharply last month.

Overall applications were up nearly 18 percent from a week earlier, the Mortgage Bankers Association said Wednesday. Applications to refinance home loans were up 21 percent to the highest level since May 2009. That’s because buyers have been taking advantage of near-record-low mortgage rates.

Refinances made up nearly 75 percent of all mortgage activity. That’s up from 72 percent a week earlier.

New mortgages taken out to purchase homes increased for the first time in six weeks, rising 7 percent. That’s an encouraging sign for the housing market, as applications had dropped off sharply when federal tax credits expired.

First-time buyers were eligible for a tax credit of up to $8,000. Current owners who bought and moved into another home could qualify for a credit of up to $6,500. Buyers had until April 30 to get a signed sales contract and until June 30 to complete the sale.

Since the tax credit expired, “we’ve flattened out, but I would not expect a real robust rebound,” said Michael Fratantoni, vice president of research and economics at the trade group.

He expects home sales to fall about 10 percent from the second quarter to the third. He forecasts buyers will purchase about 5.2 million previously occupied homes this year, up slightly from a year earlier.