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Aug. 21 (Bloomberg) -- Sales of existing U.S. homes jumped more than forecast in July to the highest level in almost two years, signaling the housing crisis that crippled the world’s largest economy is easing.

Purchases climbed 7.2 percent to a 5.24 million annual rate, the most since August 2007, the National Association of Realtors said today in Washington. The gain was the biggest since records began in 1999. The median price fell 15 percent.

Foreclosure-driven declines in prices, government credits for first-time buyers and near-record-low borrowing costs may keep stoking demand, helping the economy recover from the worst recession since the 1930s. Ongoing job losses are a reminder that more Americans will probably lose their homes, indicating a rebound will be slow to take hold.

“More and more buyers are becoming convinced that there is not a lot of downside left in the housing market,” said Ellen Zentner, a senior economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “We can count on housing no longer being a drag. The economic recovery is on track.”

Stocks jumped and Treasury securities dropped after the report added to evidence the housing market was turning. The Standard & Poor’s 500 index rose 1.6 percent to 1,023.67 at 10:24 a.m. in New York. The yield on the 10-year note jumped to 3.51 percent from 3.43 percent late yesterday.

Exceeds Forecast

Existing home sales were forecast to rise to a 5 million annual rate, according to the median forecast of 64 economists in a Bloomberg News survey. Estimates ranged from 4.8 million to 5.25 million. June’s pace was unrevised at 4.89 million.

Sales had reached a 4.49 million pace in January, their lowest level since comparable records began in 1999.

Purchases of existing homes increased 5 percent compared with a year earlier. The median price dropped to $178,400 from the $210,100 in July 2008.

The number of previously-owned unsold homes on the market jumped 7.3 percent to 4.09 million in July, a “notable” increase, according to Lawrence Yun, the Realtors’ chief economist. At the current sales pace, it would take 9.4 months to sell those houses, the same as in June.

A seven months’ supply is usually consistent with stabilization in prices, Yun said last month.

Distressed Sales

The share of homes sold as foreclosures or otherwise distressed properties held to 31 percent in July, he said.

Today’s report showed sales of existing single-family homes increased 6.5 percent to an annual rate of 4.61 million. Sales of condominiums and co-operatives climbed 13 percent to a 630,000 rate.

Purchases increased in three of four regions, led by a 13 percent jump in the Northeast.

The figures are compiled from contract closings and may reflect purchases agreed upon weeks or months earlier. Many economists consider new-home sales, recorded when a contract is signed, a more timely barometer of the market.

The Commerce Department may report next week that purchases of new houses rose in July to the highest level since November, according to the Bloomberg survey.

Home Depot Inc., the largest home-improvement retailer, is among businesses cutting costs to ride out the housing recession. The Atlanta-based company reported second-quarter profit that fell less than analysts estimated and raised its annual earnings forecast after trimming expenses, even as it projected a sales decline for the year.

‘Better’ Performance

“Performance across most of our regions is better,” Chief Executive Officer Frank Blake said on a conference call with analysts on Aug. 18. “But caution is still appropriate,” and “we remain concerned by the high level of foreclosure activity,” he said.

About $3.4 trillion worth of houses are at risk of default because the owners owe more than the property is worth, Santa Ana, California-based First American CoreLogic said last week. By putting more homes on the market, foreclosures are keeping inventory higher than levels consistent with stable prices.

Obama administration efforts to revive housing include an $8,000 federal tax credit for first-time buyers who complete the transaction before Dec. 1. The government also is offering lenders incentives to modify the terms of delinquent mortgages, and the Federal Reserve is buying mortgage-backed securities to help reduce borrowing costs.

The first-time buyers accounted for about 30 percent of sales last month and the government’s credit is having a “significant impact” on sales, the NAR’s Yun said.

For more information on this or any other real estate financial issue, contact:
JIM ASKINS (CO) 970-731-3100 (NM) 505-263-7466 (Toll Free) 800-326-2100
E-mail:  jaskins@colmortgage.com   Web Site: www.colmortgage.com

The Treasury Department encourages taxpayers to explore these options to maximize their credit and get their money back as fast as possible.

“The new credit can get money in the pockets of first-time homebuyers quickly,” said IRS Commissioner Doug Shulman. “For people who recently purchased a home or are considering buying in the next few months, there are several different ways that they can get this tax credit even if they’ve already filed their tax return.”

First-time homebuyers represent a significant portion of existing single-family home sales. The expansion in the first-time homebuyer credit will make it easier for first-time homebuyers to enter the housing market this year.

Under the American Recovery and Reinvestment Act of 2009, qualifying taxpayers who purchase a home before Dec. 1 receive up to $8,000, or $4,000 for married individuals filing separately. People can claim the credit either on their 2008 tax returns due April 15 or on their 2009 tax returns next year.

First-time homebuyers may be able to take advantage of a tax credit for homes purchased in 2008 or 2009. The credit:

• Applies to purchases that close after April 8, 2008, and before Dec. 1, 2009.
• Applies only to homes used as a taxpayer's principal residence.
• Reduces a taxpayer's tax bill or increases his or her refund, dollar for dollar.
• Is fully refundable, meaning the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed.

The credit is claimed using Form 5405.

For 2008 Home Purchases

The Housing and Economic Recovery Act of 2008 established a tax credit for first-time homebuyers that can be worth up to $7,500. For homes purchased in 2008, the credit is similar to a no-interest loan and must be repaid in 15 equal, annual installments beginning with the 2010 income tax year.

For 2009 Home Purchases

The American Recovery and Reinvestment Act of 2009 expanded the first-time homebuyer credit by increasing the credit amount to $8,000 for purchases made in 2009 before Dec. 1.

For home purchased in 2009, the credit does not have to be paid back unless the home ceases to be the taxpayer's main residence within a three-year period following the purchase.

First-time homebuyers who purchase a home in 2009 can claim the credit on either a 2008 tax return, due April 15, 2009, or a 2009 tax return, due April 15, 2010. The credit may not be claimed before the closing date. But, if the closing occurs after April 15, 2009, a taxpayer can still claim it on a 2008 tax return by requesting an extension of time to file or by filing an amended return.

For more information on this or any other real estate financing issue, contact:

JIM ASKINS (CO)970-731-3100 (NM)505-263-7466 (Toll Free)800-326-2100  On-Line:  www.colmortgage.com  E-mail: jaskins@colmortgage.com

Senior Economist Gary Thayer believes the US economy appears to be bottoming and may start to climb out of the deep hole that it is in during the next few months.  Job losses have diminished and inventories have reduced to more desirable levels.  If companies do not increase production back to the rate of sales, they may not have enough goods to sell if spending increases.  The housing market is also starting to firm, suggesting that this sector of the economy may begin to expand for the first time in several years.  Finally, the Fed is continuing to pump liquidity into the US financial system in order to boost ecomonic activity.  However, China may be scaling back its lending compared to earlier this year.  The US economic recovery could benefit if reduced Chinese stimulus allows commodity prices to pull back in coming months.

For more information on this or any other real estate financial issue, contact:
JIM ASKINS   (CO)970-731-3100    (NM)505-263-7466    800-326-2100
E-mail: jaskins@colmortgage.com  Home Page: www.colmortgage.com

American builders broke ground on more single-family homes in July for a fifth straight month as the real-estate industry stabilized further.

Work began on single-family dwellings at a 490,000 annual pace last month, up 1.7 percent from June and the most since October, the Commerce Department reported today in Washington. Total housing starts unexpectedly fell, depressed by a 13 percent decrease in multifamily units, including condominiums and apartment buildings.

Falling home values and government stimulus efforts such as the tax credit for first-time buyers are boosting sales and stemming the housing meltdown that triggered the financial crisis. Another report showed wholesale prices dropped more than forecast, giving the Federal Reserve more time to foster and sustain a recovery before concern over inflation surfaces.

For more information on this or any other Real Estate Fiancial issue, contact:
JIM ASKINS (CO) 970-731-3100 (NM) 505-263-7466 (Toll Free) 800-326-2100

More than 150 publicly traded U.S. lenders own nonperforming loans that equal 5 percent or more of their holdings, a level that former regulators say can wipe out a banks equity and threaten its survival.  The number of banks exceeding the threshold more than doubled in the year through June, according to data compiled by Bloomberg, as real estate and credit-card defaults surged.

Almost 300 reported 3 percent or more of their loans were nonperforming, a term for commercial and consumer debt that has stopped collecting interest or will no longer be paid in full.  The biggest banks with nonperforming loans of at least 5 percent include Wisconsins Marshall & Ilsley Corp. and Georgias Synovus Financial Corp., according to Bloomberg data.  Among those exceeding 10 percent, the biggest in the 50 U.S. states was Michigans Flagstar Bancorp. All said in second-quarter filings theyre well-capitalized by regulatory standards, which means theyre considered financially sound.

At a 3 percent level, Id be concerned that theres some underlying issue, and if theyre at 5 percent, chances are regulators have them classified as being in unsafe and unsound condition, said Walter Mix, former commissioner of the California Department of Financial Institutions, and now a managing director of consulting firm LECG in Los Angeles. He wasnt commenting on any specific banks.  Missed payments by consumers, builders and small businesses pushed 72 lenders into failure this year, the most since 1992.  More collapses may lie ahead as the recession causes increased defaults and swells the confidential U.S. list of problem banks, which stood at 305 in the first quarter.

(By Ari Levy Aug. 14 - Bloomberg)

FOR MORE INFORMATION ON THIS OR ANY OTHER REAL ESTATE FINANCIAL ISSUE, CONTACT:  JIM ASKINS  (CO)970-731-3100  (NM)505-263-7466 OR
(TOLL FREE) 800-326-2100  jaskins@colmortgage.com  www.colmortgage.com

The Federal Reserve said it will slow the pace of its $300 billion program to buy U.S.  Treasuries as the recession eases and anticipates that the full amount will be purchased by the end of October.  To promote a smooth transition in markets as these purchases of Treasury securities are completed, the committee has decided to gradually slow the pace of these transactions and anticipates that the full amount will be purchased by the end of October, the Federal Open Market Committee said in a statement after a two-day meeting in Washington. The buying was previously scheduled to end in September.

The Fed has bought $252.8 billion of longer-term Treasuries since beginning its program. The effort hasnt stopped a jump in yields as investors began to anticipate a recovery. Yields on benchmark 10-year notes were at 3.71 percent at 1 p.m. in New York, from as low as 2.46 percent after the March 18 announcement of the plan.

For more information on this or any other real estate financial issue, contact JIM ASKINS   jaskins@colmortgage.com   www.colmortgage.com    (Nationwide) 800-326-2100 (CO) 970-731-3100 (NM) 505-263-7466

The number of contracts to buy previously owned homes in the U.S. rose in June for a fifth straight month and exceeded economists forecasts, as lowerprices and mortgage rates attracted buyers. The 3.6 percent gain in the index of signed purchase agreements, or pending home resales, followed a 0.8 percent gain the prior month that was larger than previously estimated, the National Association of Realtors said today in Washington.

Foreclosure-driven declines in home values and tax incentives are putting houses within reach of first-time buyers, helping to stabilize the real-estate market, which has been the biggest drag on economic growth. At the same time, with mortgage rates no longer dropping and unemployment still rising, it may be months before a sustained recovery in housing takes hold.

The housing market seems to definitely be finding its legs, Maxwell Clarke, chief U.S. economist at IDEAglobal in New York, said before the report. Both for new and existing home sales, as prices continue to come down and the tax credit is in effect, the prospect of moving into a new house or buying a new house is much more appealing. Economists forecast the index would increase 0.7 percent, after an originally reported 0.1 percent gain in May, according to the median of 35 projections in a Bloomberg News survey.  Estimates ranged from a 1.2 percent drop to a 3 percent gain.

For more information on purchasing a home, call JIM ASKINS today!(Nationwide) 800-326-2100 (CO) 970-731-3100 (NM) 505-263-7466