Housing Starts Probably Rose in May as U.S. Expansion Gets Boost

http://www.bloomberg.com/news/2013-06-18/housing-starts-probably-rose-in-may-as-u-s-expansion-gets-boost.html

Housing starts probably rose in May, extending a rebound that is helping shore up the U.S. expansion, economists said before a report today.

Builders broke ground on 950,000 houses at an annualized rate, up 11.4 percent from April’s 853,000 pace, according to the median estimate of 82 economists surveyed by Bloomberg. Another report may show the cost of living increased in May for the first time in three months.

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June 17 (Bloomberg) -- Jerry Howard, chief executive officer of the National Association of Home Builders, talks about the U.S. housing and mortgage markets. He speaks with Sara Eisen and Erik Schatzker on Bloomberg Television's "Market Makers." (Source: Bloomberg)

Historically low mortgage rates, improvement in the labor market and pent-up demand are spurring optimism among builders such as Hovnanian Enterprises Inc. (HOV) The recovery in residential real estate shows how record monetary stimulus from Federal Reserve policy makers, who meet today and tomorrow, is bolstering economic growth.

“The underlying demand is improving on strength in the job market and stronger consumer confidence,” said Mark Vitner, an economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “The key for the Fed is seeing a sustainable recovery. As far as housing goes, I think they’re feeling pretty good about that.”

The Commerce Department will issue its housing starts data at 8:30 a.m. in Washington. Estimates in the Bloomberg survey ranged from rates of 875,000 to 1.02 million.

The number of building permits, a proxy for future construction, fell to 975,000 last month from an almost five-year high of 1.01 million in April, according to the median estimate in the Bloomberg survey. The pace of applications exceeds projected starts and points to further gains in homebuilding.

Mortgage Rates

Improving property values and cheaper borrowing costs have encouraged some Americans to buy homes before mortgage rates head even higher. The average rate on a 30-year fixed loan jumped to a 14-month high of almost 4 percent last week from a four-month low of 3.35 percent in early May, according to Freddie Mac data.

Mortgage rates are climbing because of heightened consumer demand for loans, Neil Dutta, an economist at Renaissance Macro Research LLC in New York, said in a note to clients yesterday.

“Interest rates have risen, but they’re still at historic lows,” Robert Niblock, chief executive officer of Lowe’s Cos., the second-largest U.S. home improvement retailer, said yesterday in an interview. The Mooresville, North Carolina-based company’s sales in the second quarter have recovered from March and April when rainy, colder-than-normal weather limited demand, he said.

Builder Optimism

Builders are also gaining confidence. A measure of builder sentiment climbed in June to its highest level since March 2006, according to a report yesterday. The National Association of Home Builders/Wells Fargo’ gauge rose to 52 from 44 in May, according to the Washington-based group.

“A lot of us are expecting that we need 1.6 million to 1.9 million housing starts to keep up withpopulation growth,” Brad G. O’Connor, chief accounting officer at Red Bank, New Jersey-based builder Hovnanian Enterprises, said in a June 13 presentation. “Housing creation shows that we should still have a fair amount of pent-up demand and an ongoing recovery to the housing market, that we’re just in the beginning of that recovery.”

Homebuilder shares have outperformed the broader market. The Standard & Poor’s Supercomposite Homebuilding Index has surged 62 percent in the past 12 months, compared with a 22.1 percent gain in the S&P 500.

The improvement in housing is extending beyond builders, to companies such as Lumber Liquidators Holdings Inc. (LL), a hardwood floor retailer based in Toano, Virginia.

‘Nice Growth’

“We’ve seen some nice growth in our comp stores sales and there is no question that a more positive backdrop is in place,” Daniel E. Terrell, chief financial officer, said in a June 12 presentation. “I think we’re only beginning to see a recovery now.”

Another report today will show the consumer-price index rose 0.2 percent in May after a 0.4 percent decline a month earlier, according the median estimate in a Bloomberg survey. The Labor Department will also release figures at 8:30 a.m. in Washington.

Compared with May 2012, consumer prices may have climbed 1.4 percent after a 1.1 percent year-over-year gain in April that was the smallest since November 2010.

Maui Real Property Taxes - Fiscal Year July 1, 2013 to June 30, 2014

No, The Housing Market Is Not Stalling - business insider.com

http://www.businessinsider.com/housing-recovery-is-real-2013-6

by Steven Perlberg

Back in April, there were signs suggesting that the U.S. housing recovery was stalling.

However, all of the latest data has Deutsche Bank economist Torsten Slok concluding the "housing recovery is real and getting stronger."

Among other things, Slok points to the clear upswing in the home price indicators and the rally in household net worth.

But one of the most stunning trends has been the decline in housing inventory as measured by the number of available single family homes available for sale.  In other words, the market is much leaner.

Read more: http://www.businessinsider.com/housing-recovery-is-real-2013-6#ixzz2VNow5Z2Q

Governor: Hawaiʻi's Economy Strong and Improving | Maui Now

Governor: Hawaiʻi's Economy Strong and Improving | Maui Now

The state Council on Revenues revised its forecast, reaffirming its previous General Fund tax revenue projection for the current fiscal year, and increasing its projections for the next three fiscal years, officials from the Governor’s office said.

State officials say the compounded increases would mean $86 million more in revenue over the upcoming biennium.

Over the next two years, tax revenue is projected to grow 8% in 2014, and then 7% in 2015, according to officials with the Governor’s office.

Gov. Neil Abercrombie responded to news saying he expects to see continued improvement in the construction and hospitality industries, the real estate market, and agricultural and business sectors.  “All of our local industries will benefit from our improving economy,” he said in a press release.

The Governor issued a statement upon hearing the positive forecast saying, “Our economy is strong and appears to be getting stronger. Hawaii continues to lead the US amongst states with significant revenue growth possibilities. We must remember that the Council predictions relate to tax revenue growth.”

He continued saying, “I am very optimistic about the prospects for our local economy. My Administration has fostered increased activity in our economy and that translates into increased tax revenue due to that activity.”

The Governor called the forecast a “good sign” saying  he believes the Council forecast “supports the proposition that economic activity is strong and improving.”

Foreclosure Activity Drops to 6-Year Low - Daily Real Estate News

Foreclosure Activity Drops to 6-Year Low

Foreclosure filings dropped 5 percent in April from March, with foreclosure filings down 23 percent in April from year ago levels, RealtyTrac reports. Nationwide foreclosure activity has reached a 74-month low or the lowest point since February 2007. 

"The April numbers indicate that the pig is moving through the python when it comes to deferred foreclosures in judicial foreclosure states," said Daren Blomquist, vice president at RealtyTrac. "Foreclosure starts have been increasing for several months in many of the judicial states, and now that increased volume is showing up in the second stage of the process: the public foreclosure auction."

Judicial foreclosure auctions rose 22 percent from March to April and were up 31 percent from year-ago levels, RealtyTrac reports. On the other hand, scheduled, non-judicial foreclosure auctions dropped 7 percent in March and are down 43 percent from last year. 

Foreclosure starts are rising in several non-judicial states, Blomquist notes. While foreclosure starts have fallen nationwide, 22 states are still seeing a rise in foreclosures over the previous month, RealtyTrac reports. Some of those states include: New Jersey (138 percent increase), Connecticut (46 percent increase), Texas (37 percent increase), Georgia (35 percent increase), Oregon (16 percent increase), and California (13 percent increase). 

Hawaii’s Economic Growth Forecast To Outpace Rest Of U.S. - Pacific Business News

http://www.bizjournals.com/pacific/news/2013/05/10/hawaiis-economic-growth-forecast-to.html

Hawaii’s economy is forecast to grow faster than the U.S. economy this year, a trend that is expected to continue into 2014, according to a second-quarter report by the state Department of Business, Economic Development and Tourism.

Hawaii’s real gross domestic product is forecast to grow by 2.4 percent this year, and by another 2.3 percent in 2014, according to the latest report, which was slightly less optimistic than the last economic report.

“We continue to see strength in the overall economy — near previous estimates,” DBEDT Director Richard C. Lim said in a statement. “From our perspective, we believe Hawaii is poised for steady, positive economic growth.”

The state’s unemployment rate, which was 5.8 percent for all of 2012, is projected to decline by a full percentage point to 4.8 percent in 2013, and drop to 4.5 percent in 2014.

While the forecasts for most indicators remained unchanged from the last report. DBEDT lowered its forecast for total visitor arrival growth by 1.1 percentage points to 4.3 percent, which still puts arrivals at a record 8.3 million for the year. The forecast for visitor spending growth also was revised downward, by 1.5 percentage points to 5.6 percent.

Home Building Rises To Key Milestone - CNN Money

http://money.cnn.com/2013/04/16/news/economy/home-building/index.html

The annual pace of housing starts topped 1 million for the first time in nearly five years in March, another sign of the rebound in the sector.

The pace of housing starts came in at an annual rate of 1.04 million in the month, up 7% from February and 47% from a year earlier. It marked the first time since June 2008 that the pace of building crossed the 1 million benchmark.

Even with the recent gains in the sector, the reading was much stronger than forecasts.

But much of the spike in housing starts was due to a surge in building apartment and condominium complexes with five or more homes in them. Those units jumped by 27% from February and 82% compared to a year earlier.

The number of traditional single-family homes started actually fell by 6% from February. The multi-family numbers can be very volatile as each unit in a complex is counted.

But there is strong demand for rental housing, due to a number of factors. Younger workers who were stuck living with parents during the recession are moving out on their own in large numbers. And former homeowners who went through foreclosures or bankruptcies are often unable or unwilling to buy again, forcing them to rent.

Kevin Finkel, executive vice president of Resource Real Estate, which owns 24,000 rental apartments across 18 states, said that even with a surge of multifamily construction, there is likely to be a shortage for years to come.

"We have had a very weak supply of apartments for almost 20 years now," he said.

After years of depressed activity, single-family home building and real estate have turned around in recent months. They have been helped by a combination of near-record low mortgage rates, lower unemployment and a drop in foreclosures that has lifted home prices.

As a result, sales of both previously owned homes and new homes are both up. The rebound in building, sales and home values has helped to lift overall economic growth. 

But there have been some concerns about growing problems in the sector, as rising prices for raw materials and some shortages of construction workers have put a crimp in some builders' results.

Even as they rushed to start homes, builders filed for fewer building permits in March, with the annual rate slowing 4% to 902,000.

"The trajectory for the single-family market continues upward, but builders appear to be struggling with credit issues for lot development and rising construction costs," said Mark Vitner, senior economist at Wells Fargo Securities. He said the pullback in permits could lead to lower housing starts in April.

David Crowe, chief economist for the National Association of Home Builders, estimates that the raw materials costs are up about 10% overall, and some key items are up much more than that.

"Plywood and [particle board] are twice as expensive as a year ago. Lumber is up 50 to 60%. Drywall, up 40%," he said.

Crowe said the combination of higher costs and labor shortages are one of the reason single family starts are down. He estimates if builders weren't facing those constraints, the annual rate of single-family starts would be about 100,000 higher.

"It's not a downturn in building as much as it is a slower recovery than we would otherwise expect," he said.

Stocks in the sector have been mixed so far this year. While shares of some builders, such as KB Home (KBH) and D.R. Horton (DHI), have outpaced gains in the broader market, shares of others -- including Toll Brothers (TOL), Lennar (LEN) andPulteGroup (PHM) -- are down year-to-date. But shares were up across the sector in early trading Tuesday after the report.