Daily Real Estate News | Tuesday, May 22, 2012

Home sales are expected to rise 7 percent this year as the housing market continues to make strides toward recovery, according to Fannie Mae’s latest housing market outlook.

"Our outlook is bolstered by improvements in consumer sentiment seen in our National Housing Survey results, which show that consumer views of housing market conditions have become more supportive of home purchases and their outlook on home prices," says Doug Duncan, Fannie Mae’s chief economist. "Interestingly, we’re seeing a pickup from depressed levels in the good-time-to-sell category, suggesting rising optimism about the housing market."

According to Fannie Mae’s research, Americans expect home prices to rise 1.3 percent over the next 12 months, which is the highest value ever recorded within the survey.

Still, Duncan says the housing market still has a long way to go toward recovery. After showing strong signs of a turnaround with winter home sales, the spring housing market hasn’t performed quite as strong as expected in the later part of the first quarter, Duncan says. The recovery will most likely be a tepid one, Duncan notes.

Source: “Fannie Mae: Housing Activity Cools After Warm Winter,” HousingWire (May 17, 2012) and Fannie Mae

Daily Real Estate News | Tuesday, May 22, 2012

The Federal Housing Administration is reportedly considering revising rules that many in the real estate industry have called overly strict and that have left many condo units ineligible for FHA’s low-downpayment mortgages.

For example, one sticking point under the FHA’s rules has been that “individual condo units cannot be sold to buyers using FHA-insured mortgages unless the property as a whole has been approved for financing,” The Wall Street Journal reports. However, condo association boards are increasingly opting not to obtain recertification of their buildings for FHA loans due to its tightened regulations against condo units.

FHA’s regulations “have had an enormous impact on individuals,” says Moe Veissi, president of the National Association of REALTORS®. More condo unit residents are finding they are unable to sell their unit because the condo board hasn’t obtained approval from FHA, Veissi told The Wall Street Journal. This then can have a roll-over affect that negatively impacts the price of condo units in the buildings then.

Half of all condo buyers tend to use FHA mortgages, and it’s an important source of lending for first-time and minority home buyers, Christopher L. Gardner, managing member of FHA Pros, a consulting firm that helps condo boards obtain FHA approvals, told The Wall Street Journal.

FHA officials say they are willing to reconsider some of their rules that have raised such an outcry among condo owners, lenders, and real estate professionals. For example, one rule the FHA is reportedly reconsidering is its stance on non-owner occupancy. As of now, FHA requires that no more than 50 percent of the units in a condo building be non-owner occupies. “This rule alone has made large numbers of condominiums in hard-hit markets ineligible for FHA financing, where investors have purchased units for cash to turn into rentals,” The Wall Street Journal reports.

FHA also is reportedly revisiting its condo rules on how many owners in a building can be delinquent on their fees. As of now, FHA refuses to approve a project if more than 15 percent of the condo units are 30 days or more late on their condo association fees, The Wall Street Journal reports.

Daily Real Estate News | Tuesday, May 22, 2012

One of the biggest obstacles home buyers are facing is qualifying for financing, and a new report by the Federal Reserve shows exactly how big of struggle potential borrowers face.

According to a new Federal Reserve report surveying banks, the report found that most banks say they are a lot less likely to issue a mortgage to borrowers with a FICO credit of 620 and a 10 percent down payment than they were in 2006 during the housing boom.

“A moderate net fraction of banks were less likely to originate loans to borrowers with a FICO score of 680, regardless of down payment size,” the report also said. “A modest net fraction of banks were less likely to originate loans to borrowers with a FICO score of 720 and a 10 percent down payment, although survey respondents indicated that they were about as likely to originate loans now as they were in 2006 if such borrowers had a down payment of 20 percent.”

So while mortgage rates continue to sink to new record lows, many home buyers are finding they can’t always qualify for the low rates.

As a recent New York Times article about the Federal Reserve’s report illustrates: “A borrower with a credit score of 720 can expect a rate of 3.70 percent on a 30-year, $300,000 fixed-rate mortgage ... while someone with a score of 620 to 639 can expect a 5.07 percent rate — or an extra $242 per monthly payment.”

Existing-home sales rose in April and remain above a year ago, while home prices continued to rise, according to the National Association of REALTORS®. The improvements in sales and prices were broad based across all regions.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 3.4 percent to a seasonally adjusted annual rate of 4.62 million in April from a downwardly revised 4.47 million in March, and are 10.0 percent higher than the 4.20 million-unit level in April 2011.

Lawrence Yun, NAR chief economist, said the housing recovery is underway. “It is no longer just the investors who are taking advantage of high affordability conditions. A return of normal home buying for occupancy is helping home sales across all price points, and now the recovery appears to be extending to home prices,” he said. “The general downtrend in both listed and shadow inventory has shifted from a buyers’ market to one that is much more balanced, but in some areas it has become a seller’s market.”
Supply and Demand

Total housing inventory at the end of April rose 9.5 percent to 2.54 million existing homes available for sale, a seasonal increase which represents a 6.6-month supply at the current sales pace, up from a 6.2-month supply in March. Listed inventory is 20.6 percent below a year ago when there was a 9.1-month supply; the record for unsold inventory was 4.04 million in July 2007.

“A diminishing share of foreclosed property sales is helping home values. Moreover, an acute shortage of inventory in certain markets is leading to multiple biddings and escalating price conditions,” Yun said.He notes some areas with tight supply include the Washington, D.C., area; Miami; Naples, Fla.; North Dakota; Phoenix; Orange County, Calif.; and Seattle. “We expect stronger price increases in most of these areas.”

The national median existing-home price for all housing types jumped 10.1 percent to $177,400 in April from a year ago; the March price showed an upwardly revised 3.1 percent annual improvement. “This is the first time we’ve had back-to-back price increases from a year earlier since June and July of 2010 when the gains were less than one percent,” Yun said. “For the year we’re looking for a modest overall price gain of 1.0 to 2.0 percent, with stronger improvement in 2013.”

Distressed homes — foreclosures and short sales sold at deep discounts – accounted for 28 percent of April sales (17 percent were foreclosures and 11 percent were short sales), down from 29 percent in March and 37 percent in April 2011. Foreclosures sold for an average discount of 21 percent below market value in April, while short sales were discounted 14 percent.

NAR President Moe Veissisaid home buyers should look into financing in the early stages of their search process. “With the tight lending environment it’s a good idea to consult with a REALTOR® about mortgages and program options in your area, and tips for boosting your credit score well in advance of making an offer on a home,” he said. “It helps to go into the process knowing what it takes to succeed.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage declined to 3.91 percent in April from 3.95 percent in March; the rate was 4.84 percent in April 2011. Last week the 30-year fixed rate dropped to a record weekly low of 3.79 percent; recordkeeping began in 1971.

First-time buyers rose to 35 percent of purchasers in April from 33 percent in March; they were 36 percent in April 2011.

All-cash sales fell to 29 percent of transactions in April from 32 percent in March; they were 31 percent in April 2011. Investors, who account for the bulk of cash sales, purchased 20 percent of homes in April, compared with 21 percent in March and 20 percent in April 2011.

Single-family home sales rose 3.0 percent to a seasonally adjusted annual rate of 4.09 million in April from 3.97 million in March, and are 9.9 percent higher than the 3.72 million-unit pace a year ago. The median existing single-family home price was $178,000 in April, up 10.4 percent from April 2011.

Existing condominium and co-op sales increased 6.0 percent to a seasonally adjusted annual rate of 530,000 in April from 500,000 in March, and are 10.4 percent above the 480,000-unit level in April 2011. The median existing condo price was $172,900 inApril, which is 8.1 percent above a year ago.
Performance by Region

Existing-home sales in the Northeast rose 5.1 percent to an annual level of 620,000 in April and are 19.2 percent higher than a year ago. The median price in the Northeast was $256,600, up 8.8 percent from April 2011.

Existing-home sales in the Midwest increased 1.0 percent in April to a pace of 1.03 million and are 14.4 percent above April 2011. The median price in the Midwest was $141,400, up 7.4 percent from a year ago.

In the South, existing-home sales rose 3.5 percent to an annual level of 1.79 million in April andare 6.5 percent higher than a year ago. The median price in the South was $153,400, up 8.0 percent from April 2011.

Existing-home sales in the West increased 4.4 percent to an annual pace of 1.18 million in April and are 7.3 percent above April 2011. The median price in the West was $221,700, a surge of 15.9 percent from a year ago.

Source: NAR

Housing affordability is the best it has been in decades.

Nationwide, average home prices are approximately one-third lower today than at their peak in 2006.

The cost to buy is very often less than the cost to rent a comparable property. In fact, buying is cheaper than renting in 98 out of America’s 100 major markets.

Interest rates are at an historic low, and today’s low rates can be locked in for the next 30 years.

The general economy appears to be improving, with employment increasing, median wages rising, and little indication of possible inflation.

Shadow Inventory: 46 Months to Clear Distressed Housing Supply

05/14/2012 By: Carrie Bay

A new development is catching home buyers off guard as the spring sales season gets under way: Bidding wars are back.

From California to Florida, many buyers are increasingly competing for the same house. Unlike the bidding wars that typified the go-go years and largely reflected surging sales, today's are a result of supply shortages.
 
Peter Earl McCollough for The Wall Street Journal

Debbie and Bill Wetherell received multiple offers for their home.

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"It's a little surprising because we thought bidding wars were done with," said Andy Aley, who is looking to buy his first home in Seattle's Beacon Hill neighborhood. The 31-year-old attorney was outbid this year when he offered up to $23,000 above the $357,000 listing price and agreed to waive inspections and other closing conditions.

Competitive bidding in the current environment isn't producing huge price increases or leaving sellers with hefty profits, as occurred during the housing boom. Still, the bidding wars caused by tight inventory provide the latest evidence that housing demand is starting to pick up after a six-year-long slump.

An index that measures the number of contracts signed to purchase previously owned homes rose in March to its highest level in nearly two years, up 12.8% from a year ago and 4.1% from February, the National Association of Realtors reported on Thursday.

"We very much believe we've hit bottom," said Ivy Zelman, chief executive of a research firm, who was among the first to warn of a downturn seven years ago. Earlier this week, she raised her home-price forecast for the year, calling for a 1% annual gain, up from a 1% decline.

View Interactive

The Wall Street Journal's quarterly survey found that the inventory of homes listed for sale declined sharply in all 28 markets tracked. Real-estate agents consider a market balanced when there is a six-month supply of homes for sale. At the height of the housing crisis, in 2008, there was an 11.1-months' supply. In March, there was a 6.3-months' supply.

Inventory levels in many markets were at the lowest level in years. At the current pace of sales, it would take just 1.5 months to sell all the homes listed in Sacramento, Calif., and 2.4 months to sell all the homes listed in Phoenix. San Francisco and Washington, D.C., each have 3.4 months of supply, while Miami has 4.1 months of supply.

Other markets have plenty of homes. Chicago, for example, has 9.4 months of supply, while New York's Long Island has 16.1 months of supply. Even in those markets, the number of houses for sale is edging down.

Increased competition is frustrating buyers and their agents. "We're writing a record number of offers, but we're not seeing a record number of closings and that's because it's so competitive," said Glenn Kelman, chief executive of real-estate brokerage Redfin Corp. in Seattle with offices in 14 states.

Nearly 83% of offers that Redfin agents have made on behalf of clients in the San Francisco Bay area this year and 71% in Southern California have had competing bids. Redfin represented a buyer that made the winning bid on a Gaithersburg, Md., home earlier this month after agreeing to adopt the dog of the seller, who was relocating and looking to find a new home for "Buddy," a white toy poodle.

Inventories are declining for a number of reasons. Some sellers, unwilling to accept prices that are still down from their peak by one-third, are taking their homes off the market in anticipation of higher prices down the road. Meanwhile, investors have been outmaneuvering consumers for the best properties, often making cash offers that are quickly accepted by sellers.

In addition, some economists say that inventory levels are being held artificially low because Fannie Mae, Freddie Mac and the nation's biggest banks have been slow to list for sale hundreds of thousands of foreclosed homes they currently own. The lenders slowed down foreclosure sales and repossessions after record-keeping abuses surfaced 18 months ago.

Banks and other mortgage investors owned nearly 450,000 foreclosed properties at the end of March, and another two million mortgages were in some stage of foreclosure.

Inventories could rise, putting more pressure on prices, if the banks and other lenders step up their efforts to sell their properties. Real-estate agents say they aren't concerned. "There's an enormous appetite for foreclosures. Release the inventory. It will sell," said Richard Smith, chief executive of Realogy Corp., which owns the Coldwell Banker and Century 21 real-estate brands.
 

The declining inventory of older homes is spurring sales of new homes. New home sales are up 16% so far this year, compared with a year ago, while inventories of new homes fell in March to their lowest level since record keeping began in 1963.

Meritage Homes Corp., a builder based in Scottsdale, Ariz., reported Thursday a 36% increase in orders for the quarter ending in March versus the previous-year period.

Even though bidding wars are pushing prices higher, many homes are still selling for prices far lower than a few years ago. Increased demand is "entirely affordability driven, which tells me there will be strong resistance to price increases" by buyers, says Jeffrey Otteau, president of Otteau Valuation Group, an East Brunswick, N.J., appraisal firm.

Rents are rising at a time when mortgage rates have fallen to very low levels. The result is that the monthly mortgage payment on a median-priced home is lower than any time since the 1990s. Freddie Mac reported on Thursday that mortgage rates fell to 3.88% for the average 30-year fixed rate mortgage, near its lowest recorded level.

Enlarge Image

Rates are "so low that we can afford a house that was out of our price range before," said Aarthi Srinivasan, who is looking with her husband for a home around Palo Alto, Calif., one of the country's hottest real-estate markets.

Ms. Srinivasan says she fears that prices are being bid up too quickly. She says she had her "aha moment" earlier this year while touring a 50-year-old house that needed extensive remodeling. The home, listed at $1.1 million, received nearly 10 offers and eventually went under contract for more than $1.3 million to a buyer who hadn't even viewed the property.

"There are only so many buyers who are going to be in such a hurry, so we're hoping it'll top off soon," she says. On Monday, they offered to pay more than the $1.2 million list price for a four-bedroom, bank-owned foreclosure. They haven't found out if they made the top bid.

On the other side of those transactions are sellers like Debbie and Bill Wetherell, who had 17 offers in four days for their four-bedroom home in Danville, Calif. "I was floored. It was so fast, it was surreal," says Ms. Wetherell. The home sold on Wednesday for $796,000, more than $50,000 above the asking price.

Still, the sale is for nearly $180,000 less than what they paid for the house in 2005. Ms. Wetherell's husband has commuted to Reno, Nev., for five years and they have decided to relocate.

Housing markets face other headwinds. More than 11 million homeowners owe more than their home is worth. It is a big reason that the "trade-up" market has been stalled. These homeowners can't sell their current homes, let alone come up with the down payment for their next home.

Mortgage-lending standards remain tough. Real-estate agents say an unusually high share of deals are falling apart because homes won't appraise at the price that buyers have agreed to pay sellers.

Still, borrowers with stable jobs are looking to make deals. Kelly Pajela-Fu and her husband offered to pay the asking price of $600,000 for a four-bedroom home in Marblehead, Mass., within a day of the property hitting the market.

"We just knew this house would go quickly," says Ms. Pajela-Fu, a 31-year-old doctor who had lost out on an earlier offer. Their strategy to avoid a bidding war paid off: The sellers accepted their offer before having an open house.

April 26 (Bloomberg) -- Signed contracts to buy U.S. homes rose more than forecast in March as low interest rates drew buyers back into the market.

The index of pending home purchases rose 4.1 percent to 101.4, the highest level since April 2010, after a 0.4 percent gain in February that was revised from a previously estimated 0.5 percent drop, the National Association of Realtors reported today in Washington. The median forecast of 43 economists surveyed by Bloomberg News called for a 1 percent rise in the measure, which tracks contracts on previously owned homes.

An improved labor market and mortgage rates near historic lows are helping to stabilize housing. At the same time, the industry remains the economy's weakest link, depressed by the threat of more foreclosures, stricter lending standards, and lower property values.

"It's good news," said Sean Incremona, senior economist at 4Cast Inc. in New York. "It does suggest that improvement in the housing market is continuing."

Estimates for March pending sales ranged from a drop of 3.7 percent to an increase of 4 percent in the Bloomberg survey.

Stocks climbed after the figure, with the Standard & Poor's 500 Index rising 0.1 percent to 1,392.57 at 11:33 a.m. in New York. The S&P Supercomposite Homebuilders Index increased 2.1 percent. PulteGroup Inc. rallied 5.1 percent after the homebuilder's loss was less than forecast.

Leading Indicator

Pending home sales are considered a leading indicator of progress in real estate because they track contract signings. Purchases of existing homes are tabulated when a contract closes, typically a month or two later, and made up about 93 percent of the housing market last year.

Compared with a year earlier, March pending home sales climbed 10.8 percent after a 14.9 percent surge in February.

Two of four regions saw an increase in pending home sales from the prior month, led by an 8.7 percent jump in the West, today's report showed, while the South posted a 5.9 percent gain.

Housing is showing uneven signs of progress. This week, the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, reported a February increase in home prices, up 0.4 percent from a year earlier, the first annual gain since July 2007.

Home Prices

The S&P/Case-Shiller index of property values fell 3.5 percent for the year ended in February.

Sales of previously owned houses in March fell for the third time in four months, from a 4.6 million annual rate to 4.48 million, the National Association of Realtors reported earlier this month.

Demand for new homes also dipped in March. Homes sold at a 328,000 annual rate, down from an upwardly revised 353,000 in February, which was the highest in almost two years, the Commerce Department reported.

To hold down borrowing costs, Federal Reserve policy makers say they will continue to swap $400 billion in short-term securities with long-term debt to lengthen the average maturity of the central bank's holdings, a move dubbed Operation Twist.

'Depressed'

"Despite some signs of improvement, the housing sector remains depressed," Federal Reserve officials said in a policy statement yesterday.

Underlying the uneven housing numbers is an overall improvement in consumer confidence, said Farooq Kathwari, chief executive officer of Ethan Allen Interiors Inc.

"I would go mad, crazy," looking at housing data every day, Kathwari said in an April 24 earnings call. "So I don't look at them every day because I've got to plan three, six months, a year from now,"

The home furnishings company, based in Danbury, Connecticut, reported an 8 percent year-over-year increase in net sales for the quarter ended March 31, to $175.9 million. "Three, four years back we decided to build a 240,000 square foot plant in Mexico. If we had not done it, we would not be able to deliver the products we have," Kathwari said.

Realtor.com's latest top 10 investment markets report shows metros just off the beaten path leading the way.

Built from Realtor.com data updated through February 2012, the report put Tucson, Ariz.; Austin, Texas; and Kansas City, Mo., as the top current real estate markets to invest in. The top 10 list was built by analyzing the housing inventories, price trends and unemployment rates from the Bureau of Labor Statistics for 146 markets Realtor.com tracks.

Thanks to the jobs boom surrounding the University of Arizona and the Davis-Monthan Air Force Base, and an 8.19 percent drop in real estate owned (REO) properties along with a 3.03 percent median house list-price increase from a year ago February, Tucson, Ariz., tops the list. A median price of $170,000 anchors the market.

Austin, Texas, the "live music capital of the world," with a median list price of $229,500, representing a 12 percent year-over-year increase, and low relative unemployment (6.3 percent as of December 2011), is a close No. 2 on Realtor.com's top 10 markets to invest in. It's usually a good idea to bet on breakfast tacos, live music and that laid-back Southwest charm that fuels the hip, beautiful capital of Texas.

Kansas City, Mo., too, features relatively low unemployment at 7.3 percent and a strong year-over-year median list price increase (4 percent) to bring the largest city in Missouri, and its renowned barbecue, into the top three housing markets to invest in, according to Realtor.com. Its cross-state cousin, St. Louis, caps the list at No. 10, with its strong job market, 7.5 percent year-over-year median list-price increase and 11.29 percent uptick in rate of speed a house sells compared to a year ago.

Rounding out the top 10, in order, are: Baltimore, Md.; Fort Worth, Texas; Salt Lake City, Utah; San Jose, Calif.; Raleigh, N.C.; Milwaukee; and St. Lo

Realtor.com recently released its picks for top investment markets, based on February 2012 data of 146 markets on housing inventories, price trends, and unemployment rates. The following are the six housing markets that came out on top as best investments: 

1. Tucson, Ariz.

Median list price: $170,000

2. Austin, Texas

Median list price: $229,500

3. Kansas City, Mo.

Median list price: $134,950

4. Baltimore, Md.

Median list price: $239,500

5. Fort Worth, Texas

Median list price: $160,000

6. Salt Lake City, Utah

Median list price: $195,000

Daily Real Estate News | Tuesday, March 27, 2012

The Federal Housing Administration announced that starting April 1 it will not insure mortgages to borrowers who have an ongoing credit dispute of $1,000 or more on their file.

To be considered for an FHA-backed loan, borrowers will either have to pay the remaining balance on the credit dispute or enter into a payment plan, making at least three payments on it. Any payment plans will need to be documented and submitted to FHA, which will then figure it into the debt-to-income ratio for the new mortgage.

FHA’s new rule does not include disputed credit accounts from more than two years ago or any related to reported identity theft.

Still, the new rule has some in the housing industry worried that it’s going to keep more potential home buyers from securing a mortgage.

"We expect this revision will certainly kick some buyers out of the marketplace, and we’re in ongoing efforts to quantify how extreme the impact will be," Lisa Jackson, senior vice president of research at John Burns Real Estate Consulting, told HousingWire.

Jeremy Radack, a real estate attorney in Houston who assists with financing, estimated FHA originations may be reduced by 33 percent to 50 percent this year due to the new rule.

FHA says the rule is aimed at protecting the FHA’s emergency fund, which has fallen below the mandated amount Congress requires.

"We found that many borrowers with mortgage payment delinquencies had prior credit deficiencies including unpaid collections and unresolved disputed accounts prior to the approval of their loan," the spokesman said. "This change was made to eliminate this layer of risk to FHA-insured loans and help protect our insurance fund."

Also in reimbursing the emergency fund*, FHA announced it would raise its insurance premiums starting April 1 too.

New-home sales fell in February, declining 1.6 percent compared to the previous month, the Census Bureau reported Friday.

Still, new-home sales were 11.4 percent above February 2011 numbers, reaching an annualized pace of 313,000 in February 2012 compared to 2011’s 281,000.

But at a time when the new-home market was just starting to gain momentum, the decrease in sales may have some in the industry wondering if the sector is really heading toward recovery mode. The Census report closely followed another report released by the Commerce Department last week, which shows that housing starts also dropped in February by 1.1 percent. 

Home builder sentiment, however, remains high as builders look at several key indicators that may be signaling a gradual turnaround. For one, the median price of new homes increased in February to $233,700 from $217,000 in January.

Also, inventory has been dropping, reaching 150,000 — a 5.8-month supply, the Census Bureau reports. And permits for future construction rose 5.1 percent, its highest level in more than three years, the Commerce Department reported last week.

The industry faces hurdles, particularly with home buyers continuing to face problems with qualifying for financing, builders say.

"Many people come in pre-approved for mortgages, but, ultimately, can't pass the underwriting process," said David Crowe, chief economist at the National Association of Home Builders. "They're qualified but they can't get a high-enough appraisal on a house."

Daily Real Estate News | Monday, March 26, 2012

With competition high, sellers may be intervening more when it comes to selling their home, and it can cause personalities to clash.

Because it might take a little longer to find a buyer nowadays, some sellers are getting very “hands on,” proofreading every line carefully on the MLS and brochures, and questioning your every step, according to a recent article at The Philadelphia Inquirer.

“Sellers get particularly ‘brainy’ in terms of the value of their home, but the reality is that they may not be aware of all recent comparable sales, or been inside those comparables, to really pinpoint value,” Mark Wade, a Philadelphia real estate sales associate, told The Philadelphia Inquirer. 

Real estate professionals say it’s important for agents to keep their seller-clients informed every step along the way and educate them about the market.

“Our job as their agents is to advise and to educate them as to the present climate and conditions,” says Marilou Buffum, a Philadelphia agent. “We cannot make decisions for our clients. We only advise and represent.”

The Internet has provided abundant housing information to sellers so they may have access to a lot, but it require some explanation.

“We are dealing with more informed involvement on the part of both the buyers and sellers, it still requires the REALTORS® to analyze all the data and summarize it in a way that provides useful information that can be utilized,” Paul Leiser, a real estate professional from the New Jersey shore, told The Philadelphia Inquirer.

Housing starts fell 1.1 percent in February to 698,000, compared with market expectations for a smaller decline, the Census Bureau and Department of Housing and Urban Development reported jointly Tuesday. Single family starts plunged 9.9 percent to 457,000, the steepest decline in a year.

The starts data suggest January’s unexpectedly strong report was influenced by unseasonably warm weather, which pulled starts forward.

Single-family starts have been basically flat for the past three years at a weak level. Only a surge in multi-family activity has kept residential construction from falling off the table.

Home sales and housing construction continue to struggle with high unemployment and relatively weak income growth compounded by tighter mortgage lending standards. The report offered little encouragement for a quick turnaround in the housing sector.

Housing permits, unaffected by weather, rose 5.1 percent in February to 717,000, compared to market expectations, which projected an increase to 700,000. Single-family permits increased in February to 472,000 from 450,000 in January.

The largest decline in single family starts came in the tornado-ravaged South, falling to 238,000 from 288,000 one month ago, on net accounting for the entire drop in starts nationwide. Single family starts rose 5,000 in the Northeast and 11,000 in the Midwest, offsetting a 16,000 drop in the West, which was “wetter than average,” according to the National Weather Service.

Housing completions rose 6.2 percent in February as single family completions rose 8.2 percent to 421,000 – about 100,000 more than the reported 321,000 new home sale for January. New home sales for February will be reported Friday.

Multi-family starts rose to 233,000 in February from 181,000 in January while multi-family permits increased to 219,000 from 212,000

Existing-home sales fell in February from an upwardly revised January sales pace, the National Association of Realtors (NAR) reported Wednesday.

February sales – completed transactions – were down 0.9 percent from January to a seasonally adjusted annual rate of 4.59 million. January’s total was revised up to 4.63 million from 4.57 million. The February 2012 sales pace was up 8.8 percent from February 2011.

The median price of an existing home in February was $156,600, up 0.1 percent from the previous month and up 0.3 percent from February 2011. The month-over-month price increase was the first since last June. After appearing to stabilize at low levels in the first half of 2011, prices are dipping again.

The slip in sales came despite an increase in the pending home sales index which as improved 9.5 percent in the last quarter of 2011and another 2 percent in January while homes sales have not improved at the same pace.

According to the NAR, distressed homes – foreclosures and short sales sold at deep discounts – accounted for 34 percent of February sales (20 percent were foreclosures and 14 percent were short sales), down from 35 percent in January and 39 percent in February 2011.

 Total housing inventory at the end of February rose 4.3 percent to 2.43 million existing homes available for sale, a 6.4-month supply at the current sales pace, up from a 6.0-month supply in January, but down from an 8.6-month supply a year ago and still well below the July 2010 cyclical peak of 12.4 which had been the highest level since 1982. Inventories are 19.3 below their year ago level. Anecdotal evidence though suggests there is still a large “shadow” inventory of homes available for sale, especially bank-owned properties.

Although inventories seem to have declined to close to their “normal” level, the large number of distressed properties combined with a substantial shadow inventory of unsold homes continues downward pressure on home prices. Though the data seems to imply that there is a relative balance between buyers and sellers, the level distressed properties remains a stumbling block.

Regionally, existing-home sales fell in February in the Northeast and the West, 20,000 and 40,000 (seasonally adjusted annual rate) respectively, while improving in the Midwest (10,000) and South (10,000). The sales pace in all four regions though is ahead of the pace a year ago.

The median price of an existing home rose in three of the four regions month-month, falling only in the Midwest. Prices are down year-over-year in the Northeast and Midwest, but up year-over-year in the South and West, according to NAR data.

“The market is trending up unevenly, with record high consumer buying power and sustained job gains giving buyers the confidence they need to get into the market,” offered Lawrence Yun, the NAR’s chief economist. “Although relatively unusual, there will be rising demand for both rental space and homeownership this year. The great suppression in household formation during the past four years was unsustainable, and a pent-up demand could burst forth from the improving econom