Sales of new single-family homes increased 4.4 percent in November to a seasonally adjusted annual rate of 377,000 units, according to figures released today by HUD and the U.S. Census Bureau. It was the highest monthly total since April 2010 when the federal home buyer tax credit expired.

“New-home sales are gradually picking up momentum as the economy improves,” says Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla. “Prospective home buyers who have been sitting on the fence for years are moving back into the market due to continuing low mortgage interest rates, attractive pricing and the improving economy,” he said.

“This increase is consistent with NAHB’s member surveys, which show increasing confidence in the market,” says NAHB Chief Economist David Crowe. “We’re projecting a total of about 365,000 new-home sales in 2012, an increase of almost 20 percent over the previous year. The year ahead will see a similar gain as more people who have been sitting on the sidelines decide that it is time to purchase a new home.”

Crowe cautioned, however, that failure to address the “fiscal cliff” could set the housing market back. “Continued uncertainty about the fiscal cliff has the potential to affect new home sales and other aspects of the housing market,” he said. “Some people will definitely hold off on making major financial decisions until the situation is resolved.”

Regionally, new-home sales numbers were mixed in November. Rebounding from declines the previous month, both the South and the Northeast showed improvement, with respective increases of 21.1 percent and 12.5 percent. New-home sales in the Midwest dropped by 12.5 percent, and the West posted a decline of 17.8 percent.

The inventory of new homes for sale increased slightly to 149,000 units in November, which is a 4.7-month supply at the current sales pace.

For more information, visit www.nahb.org.

(MCT)—The race is on to finalize short sales and seal the deal on mortgage reductions as the Dec. 31 expiration of a massive tax break for struggling homeowners looms.

Since 2007, homeowners whose banks have forgiven unpaid mortgage debt after a short sale, principal reduction or foreclosure have not been required to count that money as income on their tax returns.

But the sunset of the federal Mortgage Forgiveness Debt Relief Act means borrowers, who have been spared tens of thousands of dollars depending on the amount forgiven and their tax bracket, may be faced with whopping IRS bills after losing their home.

Florida Attorney General Pam Bondi is leading a group of attorneys general from around the country in lobbying for an extension of the act. In a Nov. 20 letter to lawmakers, Bondi and Connecticut Attorney General George Jepsen said allowing the tax break to expire would dilute the $25 billion mortgage settlement made with the nation’s five largest banks in March.

“Unless Congress acts, all of the remaining debt relief to be provided in 2013 under the National Mortgage Settlement will likely be considered taxable income,” the letter said.

Settlement monitor Joseph Smith, who oversees bank compliance with the agreement, is staying out of the fray. He says the extension is “under the purview of elected officials.”

At the same time, the Congressional Budget Office estimates extending the relief could cost $1.3 billion in lost revenue to the federal government during a period when it is “desperate for money,” says Anthony Sanders, a George Mason University real estate finance professor who is in favor of an extension.

“People are already suffering enough who go through default and foreclosure, and to suddenly give them a tax bill is incredibly cold-hearted,” Sanders says. “The government was a major contributor to the housing bubble and burst, so it’s only fair that it extend the act to help households that have been absolutely crushed by the market.”

In August, language that would extend the mortgage debt relief act was rolled into the Family and Business Tax Cut Certainty Act of 2012 (S.3521). The act includes about 50 tax-cutting provisions and was approved by the Senate Finance Committee in August.

An aide to finance committee Chairman Max Baucus, D-Mont., says the act is awaiting a vote by the full Senate but has not been given a calendar date.

While many economists, REALTORS® and accountants believe the mortgage debt relief will be extended, they can’t say how or when.

Sanders says it’s caught up in party politics and a debate that now includes whether to amend the mortgage-interest deduction tax break, a decades-old law that annually costs the government about $100 billion. Even if an extension to the debt relief act isn’t approved by Dec. 31, it could be voted on in 2013 and made retroactive, Sanders says.

Accountant Karyl Neal of the firm Moore, Ellrich & Neal in Palm Beach Gardens, Fla., says settling mortgage debt relief is important but may be less of a priority for lawmakers than averting the fiscal cliff.

Tell that to the owners of the home at 8 Sunningdale Circle in West Palm Beach’s President Country Club, who are trying to finish a short sale before the debt relief act expires. If they don’t, they face an estimated $340,000 in forgiven debt on which they will have to pay taxes, says Shannon Brink, their REALTOR®.

“We’re scrambling like maniacs to get it closed,” Brink says. “I have some anxiety, but I’ve pulled off miracles before.”

Jeff Shingledecker listed his Palm Beach Gardens, Fla., home as a short sale in April. He considered a loan modification that would increase the term of his mortgage to 40 years but decided to do a short sale after learning about the debt relief act.

After several offers, he says he was “fortunate enough” to close the deal in October and expects to have about $108,000 of debt forgiven.

Considering Shingledecker’s tax bracket, he would have owed about $27,000 in taxes.

“If the act expires, you will be asking people to pay cash on an income they never received and with cash they don’t have,” says John DiBiase, communications director for the National Association of REALTORS®’ government affairs office. “I think that is well-understood, especially by members of the Florida delegation.”

Not everyone can benefit from the debt relief act. It covers only forgiven debt on principal residences and amounts up to $2 million, or $1 million if married but filing separately. The act also does not apply to second mortgages where the money was used for non-household expenses.

Joanne Epstein, a South Florida REALTOR®, has 18 short sales scheduled to close by Dec. 31 and she’s “breathing down the banks’ necks” to get them finalized.

“They say, ‘We have a stack of files. We’re very busy. We’ll get back to you,’ ” Epstein says. “Well, I’m sorry — that doesn’t work. These people need to get this over with so they can move on with their lives.”

DEBT RELIEF ACT Q&A:
QUESTION: What’s happening?
ANSWER: The Mortgage Forgiveness Debt Relief Act of 2007 is scheduled to expire Dec. 31.

Q: Who’s affected?
A: If no extension is granted, homeowners will have to pay taxes on any unpaid balance forgiven by a lender after a short sale, modification or foreclosure. The Mortgage Forgiveness Debt Relief Act excludes that income from being taxed through Dec. 31.

Q: What’s happening?
A: Congress is considering extending the act, but it could cost the federal government $1.3 billion in lost revenue.

Q: What’s next?
A: A bill called the Family and Business Tax Cut Certainty Act of 2012 has been approved by the U.S. Senate Finance Committee and is slated for a vote in the full Senate.

©2012 The Palm Beach Post (West Palm Beach, Fla.)
Distributed by MCT Information Services

Private residential construction spending surged 3 percent on a month-to-month basis in October 2012. The initial estimate for September was revised downward from a 2.8 percent gain down to a 1.1 percent rate of growth; however, this was more than offset by an upward bump in the previously reported estimate for August from 1.2 percent to 2.8 percent. Following increases in 14 of the last 15 months, nominal spending on private residential construction activity is at its highest dollar value since late 2008. In addition, spending has risen 32 percent above the trough registered during the third quarter of 2010.

New single-family homes continued to post solid rates of growth, increasing 3.6 percent on a month-to-month basis for the second month in a row. Spending is also 29 percent above its year-ago level and has climbed 55 percent since bottoming out in mid-2009. This latest print on construction spending merely confirms the firming recovery for new single-family home construction that has been observed via housing starts and the HMI. With permit authorizations climbing rapidly and hitting their highest levels since the summer months of 2008, we anticipate this robust pace of growth in construction activity to continue over the near term.

The positive momentum continued for the multifamily sector, notching its 13th consecutive monthly increase with a 6.2 percent gain over September 2012. Overall, the dollar value of multifamily construction activity has surged more than 82 percent from its cyclical low observed just two years ago, due in part to strong growth in renter demand. Multifamily starts have averaged better than 230,000 units over the duration of 2012 and given that permits have averaged approximately 280,000 units during the same time period, multifamily construction spending will likely rise further in the coming months.

Home improvement activity expanded 1.8 percent during October 2012, offsetting the downward revision of a 1.2 percent decline posted for September. Using the 3-month moving average to iron out some of the volatility in this metric, nominal remodeling spending has reached its highest point in five years. NAHB’s own Remodeling Market Index (RMI) has pointed to an even stronger assessment of current market conditions by professional remodelers as the RMI reached 50 for the first time since 2005.

View this original post on the NAHB blog, Eye on Housing.

The National Association of Home Builders (NAHB) has announced the finalists for NAHB’s 2013 Best of 50+ Housing Awards, the premier design and marketing competition for the 50+ housing industry. A total of 83 entries were chosen as finalists and are eligible for either a Gold or Silver Award from NAHB’s 50+ Housing Council.

“This year’s finalists showed us how important it is to incorporate features and amenities that fit the lifestyle of the buyers and residents of their properties, “says NAHB 50+ Housing Council Chairman W. Don Whyte. “The entrants supplied competitive and attractive projects for the 50+ market, and we are excited to announce those award-winning projects at IBS.”

Finalists were selected from entries in 36 categories representing active adult housing, service-enriched housing, lifestyle and marketing activity. The judges also singled out several entries for innovation awards.

From this group of finalists, Gold Award winners will be named at the Best of 50+ Housing Awards presentation on Jan. 23, 2013, during the NAHB International Builders’ Show (IBS) in Las Vegas.

NAHB’s 50+ Housing Council launched the Best of 50+ Housing Awards to encourage quality and innovation in the 50+ housing market. The Council provides information, education and networking opportunities for its members and provides advocacy support to NAHB on key 50+ housing issues. The awards program is sponsored by Lowe’s Commercial Services.

For a complete list of this year’s finalists, visit www.nahb.org/50PlusAwardsHonorees.

For more information on the NAHB International Builders’ Show, visit http://www.buildersshow.com/.

Mortgage rates hit new record lows last week with the benchmark 30-year fixed mortgage rate dropping to 3.50 percent, according to Bankrate.com's weekly national survey. The average 30-year fixed mortgage has an average of 0.40 discount and origination points.

The average 15-year fixed mortgage rate slipped to 2.84 percent and the larger jumbo 30-year mortgage inched lower to 3.98 percent, resetting a record low for the 6th week in a row. The 3-year ARM dipped to 2.84 percent and the popular 5-year ARM remained unchanged at 2.74 percent.

The last time mortgage rates were above 6 percent was Nov. 2008. At the time, the average 30-year fixed rate was 6.33 percent, meaning a $200,000 loan would have carried a monthly payment of $1,241.86. With the average rate now 3.50 percent, the monthly payment for the same size loan would be $898.09, a difference of $344 per month for anyone refinancing now.

Survey Results
30-year fixed: 3.50 percent -- down from 3.52 percent the previous week (avg. points: 0.40)
15-year fixed: 2.85 percent -- down from 2.86 the previous week (avg. points: 0.27)
5/1 ARM: 2.74 percent -- unchanged from the previous week (avg. points: 0.40)

Bankrate's national weekly mortgage survey is conducted each Wednesday from data provided by the top 10 banks and thrifts in the top 10 markets.

For a full analysis of this week's move in mortgage rates, go to http://www.bankrate.com.

With just a month left in 2012, the number of days to benefit from year-end home buying tax benefits is dwindling quickly. We consulted real estate experts from across the country to share what you need to know when preparing to close before December 31, 2012.

1.) End of year tax benefits: If you are considering buying a home in the near future, capitalize on the remaining weeks of 2012. Purchasing your home before year-end will make you eligible for the following 2012 tax benefits:

• Mortgage interest deduction: If you itemize your tax return (which you should do if your itemized deductions are greater than the standard deduction), then you can deduct the interest payments made during 2012 on your mortgage. Interest is deductible on the first one million dollars of debt, according to Ryan Himmel, CEO, BIDaWIZ. Please note: If you purchase at the end of the year, your deduction won’t be as large as it will be in 2013, since you’ll only have a month or two of mortgage interest payments paid.

• Mortgage insurance premium: If your down payment is less than 20 percent and requires private mortgage insurance (PMI), the interest on those payments may be eligible for a deduction. This deduction only applies if your adjusted gross income is less than $100,000 (if your income exceeds $100,000, 10 percent of the PMI deduction is reduced for every $1,000 over the adjusted gross income limit. This means that the tax deduction completely phases out at $109,000), said Himmel.

• Mortgage points: If you decide to pay points on your loan (typically 1 percent of the loan for each point) it is fully deductible in the year it is paid. This can be a significant deduction on homes with loans over $500,000, according to Himmel.

“Even though we typically see fewer inventories at the end of the year, many homeowners are more motivated to sell in order to take advantage of these end-of-year tax breaks. Low rates, a still-recovering market and seller motivation make it a great time to buy a home for those who are able to do so,” says Patrick Ruffner, vice president of mortgage lending, Guaranteed Rate . “At this point in the year, sellers generally have an understanding of how their tax bills will be affected and they tend to be motivated to sell before year-end so as not to face tax uncertainty, such as future rates potentially increasing or current deductions being eliminated.”

2.) Record low interest rates: The elephant in the room right now is of course, interest rates. At record levels for months now, the question is….will they go up in 2013? While we don’t know how the recent election or the “Fiscal Cliff” might impact interest rates, according to Ruffner, we do know that, “For those in a position to buy a home, rates are at historic lows and they have been for much of this year. Buying now ensures against future rates potentially increasing or current deductions being eliminated.”

3.) Down payment funding: When considering where to get down payment cash, stocks and mutual funds may be a good answer. Cashing those out before the end of the year is key, as capital gains taxes are anticipated to rise from 15 percent to 20 percent in 2013. The Tax Relief, Unemployment Insurance Reauthorization and Jobs Creation Act of 2010 extends the Bush-era tax cuts until the end of 2012. Beginning January 1, 2013, the tax rate will revert from the current 15 percent rate back to the former 20 percent capital gain tax rate that was in effect prior to 2003.

4.) Looking ahead – the 2013 housing industry forecast: If buying a home before the end of the year is not feasible for you, the 2013 housing outlook may still offer some exciting opportunities:

Andrew Schrage, CEO, MoneyCrashers.com doesn’t expect the industry to see a “rebirth,” he anticipates the industry to continue to recover, albeit not rapidly. It will take much longer to escape the housing market debacle than it did to get in it. The recovery will take place at different levels in different regions of the country. Although home values decreased across the board when the housing market collapsed, certain areas were hit harder than others, so these markets may face an even longer road to full recovery.

Schrage also says, “The housing market is set to stay on track, with modest progress in most regions. Inventories are down in many markets, which drives up home values. Until there are a larger number of homes available on the market, these values should remain fairly consistent, and may improve. Projections indicate an increase of home values in the 2 percent range next year.”

So that means, there will still be good homes at good prices available, but may cost you a little more to get them. So if you can, buy now!

Source: www.homefinder.com.

FHA has announced a major change to its loan program which allows borrowers to cancel the mortgage insurance premium (MIP) when their unpaid balance reaches 78% of the original purchase price. While no specific date has been set for the change, sometime in 2013, new FHA loans will require the mortgage insurance for the life of the loan.

At existing rates, the monthly MIP on a $168,875 mortgage is $178.99 per month. Under the current rule with normal amortization, the MIP would no longer be required in 9 years and 9 months. However, under the new rule, it would last for the entire 30 year term.

They also announced that the annual MIP will also be increased from 1.25% to 1.35% at some point in the near future. HUD, the parent agency for FHA, is making the changes to restore the capital reserves of the program that are needed to fund failed loans.

People that can close a FHA loan before the change takes place will fall under the old rules for canceling MIP and the lower rates. Since no date was announced, it is not known exactly when the changes will take effect.

While this information will probably not make the evening news, it will have a big impact on borrowers planning to use an FHA loan. Please pass it on to anyone you know who might be considering purchasing or refinancing with a FHA loan.

Conserving water to be green while lowering your monthly bill to save green is a beneficial combination. Little things can contribute significantly to a large water bill.

• Leaky faucets can waste over 1,000 gallons a year
• Leaky toilets can waste 7,000 gallons a month
• A five-minute shower saves more water than a tub bath
• Water running while you brush your teeth or shave
• Sprinkler heads need to be adjusted to spray on the yard only
• Install a rain sensor on sprinkler system
• Pool equipment can be a hidden source of wasted water

A larger than normal water bill can be your first indication you have a leak. Then, you'll need to track it down.

1. Turn off all the water faucets and appliances; don't forget the ice maker.
2. Open the water meter, usually located near the sidewalk in the front of the house. You may need a water key that can be purchased from a home improvement store or possibly borrowed from a neighbor.
3. Locate the dial indicating water usage. It should not be moving since all of the water is off. If it is still moving, verify that you have turned off anything that might be using water.
4. If it appears to be still, make a mark with a Sharpie and wait 15 minutes. If the flow indicator has moved, you probably have a leak.
5. Now that you've confirmed that you have a leak, you may need help in locating it. A plumber or leak specialist may be able to help you track it down and repair it.

The nation’s largest mortgage servicers have distributed $26.1 billion in direct relief to nearly 310,000 homeowners, or roughly $84,385 per homeowner as part of the National Mortgage Settlement, according to a progress report released today by independent settlement monitor Joseph A. Smith of the Office of Mortgage Settlement Oversight. Earlier this year, the Department of Justice, Department of Housing Urban Development (HUD) and 49 state attorneys general reached a landmark agreement with the nation's five largest mortgage servicers to address mortgage loan servicing and foreclosure abuses.

“At a moment when Americans have been looking for Washington to put partisanship aside to deliver results, Monitor Smith’s report indicates that families and struggling homeowners can get what they are promised when we work together,” says HUD Secretary Shaun Donovan.

The report demonstrates significant progress on the broadest and most robust principal reduction program in the nation’s history. More than $19.4 billion of the overall completed consumer relief has come in the form of debt forgiveness. Because of the settlement, banks have provided over $10.5 billion in principal reduction that helps borrowers stay in their homes, lowering monthly payments on over 118,000 loans and actually reducing struggling homeowners’ loan balances by more than $88,000 on average.

In addition, to date, States have allocated more than $1 billion of state settlement funds for housing-related purposes, including nearly $250 million to housing counseling and another $50 million to legal aid.

Adding to the benefits for consumers, as of October the five largest mortgage servicers—representing 60 percent of the mortgage market—were required to comply with tough customer service standards that are designed to put an end to the lost paperwork, dropped calls and runaround that harmed so many families.

“With servicers on track to fulfill much of their consumer relief commitments in the first year of this agreement, homeowners are finally beginning to see the light at the end of the tunnel,” says Donovan. “That’s encouraging news – for families, for neighborhoods, for our housing market and for the country.”

Read the full report and the Monitor’s state-by-state data map.

Nationwide housing production rose 3.6 percent in October to a seasonally adjusted annual rate of 894,000 units, according to the U.S. Commerce Department. This is the highest pace of new-home construction since July of 2008.

“This report is in line with our latest builder surveys, which show improving confidence and optimism in the marketplace as buyers take advantage of low mortgage rates and very attractive prices,” says Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla. “Builders are acting to meet rising demand while continuing to exercise caution by pulling a modest increase in the number of single family permits as the market continues to gradually gain its footing.”

“Today’s report bears out similar changes in other economic indicators that housing continues to recover at a slow but steady place, and is right in line with our expectations of modest month-to-month growth,” says NAHB Chief Economist David Crowe. “However, we still have a long way to go to get back to normal production as inaccurate appraisals, tight lending conditions for home buyers and policy uncertainties continue to impede the recovery.”

Single-family housing starts in October were virtually unchanged at 594,000 units while multifamily production posted an 11.9 percent gain to 300,000 units – the best pace since July of 2008.

On a regional basis, overall housing starts rose 17.2 percent in the West and 8.9 percent in the Midwest while posting a storm-related decline of 6.5 percent in the Northeast and 2.5 percent in the South.

Permit issuance, which can be a harbinger of future building activity, fell 2.7 percent to a seasonally adjusted annual rate of 866,000 units in October. The drop in permits was focused in the apartment sector as multifamily permits fell 10.6 percent from an unusually high September level to 304,000 units. Meanwhile single-family permits rose 2.2 percent to 562,000 units.

For more information, visit www.nahb.com.