Market Studies

Builder confidence surged eight points in June to 52, its highest reading since March 2006, the National Association of Home Builders (NAHB) reported Monday. It was the first positive (above 50) reading for the association’s Housing Market Index (HMI) since April 2006. Two of the three components of the index--builder assessment of current sales and of sales six months in the future--were also positive. The current sales index rose eight points to 56, and the future sales index jumped nine points to 61.

In a newly published paper posted on the New York Federal Reserve website, Robert Hockett, a Cornell University professor of financial and monetary law, proposes using government's eminent domain authority as a solution to underwater mortgage debt. In reviewing Hockett's suggestion, the Wall Street Journal concentrated not on the idea itself, but on the fact that Hockett ""turns out to have been on the payroll of none other than Mortgage Resolution Partners."" There may be a lot of good reasons to discard Hockett's suggestion, but his past relationships are not among them. His idea deserves a fair hearing, not a digression.

In May, the median price for a home in California rose year-over-year for the 15th straight month, climbing to highest level since April 2008, DataQuick reported. At $340,000, the median price was up 4.9 percent from April and up 25.9 percent from May 2012.

The recent rise in mortgage rates is not enough to pose any real threat to the housing recovery, but that's not to say the increase doesn't come with any risk, according to a recent analysis from Capital Economics. To put things into perspective, Ed Stansfield, chief property economist at Capital Economics, noted that on a long-term view, rates are still ""exceptionally low"" as they return to levels seen in late 2011 and early 2012. However, 18 months ago, when mortgage rates hovered around the levels seen today, ""house prices were at best flat, if not still edging lower, while the recovery in housing sales was very much in its infancy,"" Capital Economics stated.

Foreclosure sales decreased in all five Western states tracked by PropertyRadar--Arizona, California, Nevada, Oregon, and Washington--over the month of May. PropertyRadar attributes the decreases in foreclosure sales to new guidance from the Office of the Comptroller of the Currency. The guidance established minimum standards for handling borrower files subject to a foreclosure sale within 60 days. In California, foreclosure sales from Citi were down 50 percent, and foreclosure sales from Wells Fargo were down 75 percent over the month of May in California, according to PropertyRadar.

The recovery should pick up the pace as it heads into the year's second half, according to Fannie Mae's Economic & Strategic Research Group. Based on data for Q1 and predicted numbers for Q2, Fannie Mae expects gross domestic product (GDP) to grow at an average 1.8 percent for the first half of the year. GDP growth is then expected to push past 2.5 percent in 2014, ""boosted largely by tailwinds from the strengthening housing market,"" said Doug Duncan, chief economist for Fannie Mae.

While the number of for-sale listings nationwide remains down from last year, June saw a promising lift compared to the start of this year, Zillow revealed in a new report. The overall number of listings on Zillow was down 12.2 percent year-over-year at the start of June, an improvement from the 17.5 percent shortfall recorded in January--in other words, Zillow explained, the inventory of for-sale homes has improved 5.3 percentage points year-to-date. Overall, annual inventory levels improved in June compared to January in 70 metros.

Mortgage rates continued to climb this week, but the near-term future is going to depend on how the Federal Reserve reacts. According to Freddie Mac's Primary Mortgage Market Survey, the 30-year fixed-rate mortgage (FRM) averaged 3.98 percent (0.7 point) for the week ending June 13, up from 3.91 percent last week. Last year at this time, the 30-year FRM averaged 3.71 percent. The 15-year FRM this week averaged 3.10 percent (0.7 point), up from 3.03 percent in the last survey.

As long as short sales remain a common strategy to handle distressed properties, related fraudulent activity should also be expected. To help lenders, servicers, and investors develop tactics to combat the more common occurrence of short sale fraud, DataQuick outlined five solutions as starting points. The first is to understand activity levels to pinpoint markets with the greatest potential for fraud. Over the past two years, DataQuick identified 205,177 short sales in 14 of the largest counties.

Driven by stronger auto sales but held back by falling gasoline sales, total retail sales increased 0.6 percent in May, the Census Bureau reported Thursday. Economists had expected sales to increase 0.5 percent. In April, retail sales rose 0.1 percent.