How will your housing market hold up without the tax credit?

By Flickr.com user brookenovak

The good news on the housing front:  The expiring $8,000 home-buyer tax credit boosted April new-home sales to a 23-month high, according to the Census Bureau report released Wednesday.  Existing home sales, reported earlier in the week, weren’t too shabby either — up 23 percent from a year ago.

The bad news:  Mortgage applications already are waning following the deadline for the credit, which was April 30, according to data in this Marketwatch report.  And the just-released  S&P/Case-Shiller index of home prices in 20 cities fell 0.5% in March from the previous month, marking the  sixth-straight month of decline, according to The Wall Street Journal.

Overall economists are sober about the housing outlook for the rest of the year.  But outcomes will vary market-by-market, so you probably should consider a local story on how builders, real estate agents, sellers and lenders plan to keep the momentum going through the summer buying season.  Look for incentives and promotions by both home builders and existing-home sellers that aim to offset the loss of the tax credit.

An ongoing credit crunch isn’t helping.  Spooked underwriters are still picky about home loans; see this just-out release from credit-reporting firm Equifax offering help with a new Fannie Mae requirement:  After June 1, lenders will have to certify that borrowers haven’t gone out and run up lots of new debt since they got their initial mortgage-loan approval.  That’s a caveat you should let your home-shopping readers know about, and it also could be a blow to big-ticket sellers competing for the consumer dollar.  Will the new requirement forestall purchases of pools, appliance, furniture, cars and other durable goods in your region?  Obviously people still can buy after they close on their mortgage, but even a couple-month delay will hurt area merchants that depend on brisk seasonal sales.

One bright note for buyers and sellers:  Mortgage rates aren’t rising as much as expected.

Here’s a Wall Street Journal piece from earlier this week that expands on the dynamics of lower rates.  Reporter Nick Timiraos notes that European money seeking safe harbor is flowing into U.S. bonds, keeping rates low.

Be sure also to check out the financial and jobs market among builders and construction-related industries.  The latest National Association of Home Builders sentiment report was upbeat  – the highest since May 2007 – but concerns remain, according to the trade group’s economist.  See this release for a round-up of the group’s recent Webinar; it outlines specific challenges you should track in your area, from foreclosures (which are estimated to be dampening new-home construction by as much as 400,000 units this year) to jobs.

But 2010 still is rough.  Luxury-home builder Toll Bros. Thursday posted a far greater net loss (outside of one-time write-downs) for the second quarter of this year than for last year.  Deliveries were way down, too – but signed contracts are up, and the cancellation rate is way down.

Consider forming your own local “builder-sentiment” indicator.  It might not be scientific, but readers connected one way or another to housing – and who isn’t? – would be interested in periodic updates from home builders and remodelers in their backyard.  They might balk at sharing, but if you can get a handful of companies to report weekly or monthly on starts, permits pulled, contracts signed, price per square foot, cancellations and the like, you’ll be providing a useful tracking tool for your audience.

Other interesting ways to slice and dice real estate information can be found on the DataQuick site; this commercial-information firm posts examples of a number of interesting reports.  They range from delinquencies and foreclosure updates to sales of million-dollar homes.  In your market, it might be interesting to take a look at home sales under $100K, $100-150K, etc. to show readers which market segments are moving best.

Your multiple listing service may provide the information free of charge, or you might ask DataQuick or similar companies about affordable reports for your market.

Don’t forget about ancillary businesses.  A friend who runs a large lumber yard in my region says spec homes have pretty much dried up. Builders want deposit in hand before breaking ground.  That means they aren’t buying as many building materials.  And, he said, the houses that are getting built are smaller and more compact.

We had reported earlier this year about a spike in some forest-product prices. Perhaps the end of the home-buyer credit has rippled out to that industry as well, because prices are heading down sharply, as this Mississippi Business Journal piece describes.