Existing-home sales show improvement
Data released today from the National Association of Realtors (NAR) show sales of existing homes increased 5.6% to a pace of 4.68 million in November.
The seasonally adjusted annual rate of 4.68 million is the highest since June 2010, which saw a pace of 5.26 million. Compared with November of last year, however, sales are 27.9% down from a 6.49-million pace.
A month ago, officials from the NAR talked about an "uneven recovery" and optimistic projections of sales at the 5-million pace by spring of 2011. That optimistic analysis continued with the release of this morning’s figures. Lawrence Yun, NAR chief economist said: “Continuing gains in home sales are encouraging, and the positive impact of steady job creation will more than trump some negative impact from a modest rise in mortgage interest rates, which remain historically favorable."
The national median existing-home price for all housing types was $170,600 in November, up 0.4% from November 2009. Distressed homes have been a fairly stable market share, accounting for 33% of sales in November; they were 34% in October and 33% in November 2009.
Today’s figures were in line with analyst expectations.
Yun added that home buyers are responding to improved affordability conditions. “The relationship recently between mortgage interest rates, home prices and family income has been the most favorable on record for buying a home since we started measuring in 1970,” he said. “Therefore, the market is recovering and we should trend up to a healthy, sustainable level in 2011.”
The NLBMDA breaks down the Tax Relief Act
President Obama signed into law the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act last week. Below is a brief summary of key provisions in the act, as analyzed by the National Lumber and Building Material Dealers Association (NLBMDA).
Estate Tax: The law institutes a $5 million exemption (indexed beginning in 2012) and 35% rate on estates for 2011 and 2012. While not permanent, this is based on the Lincoln-Kyl compromise previously endorsed by the NLBMDA. The proposal is effective Jan. 1, 2010, but allows an election to choose no estate tax and modified carryover basis for estates arising on or after Jan. 1, 2010 and before Jan. 1, 2011. The proposal sets a $5 million generation-skipping transfer tax exemption and 0% rate for the 2010 year.
Individual Tax Rates: Extends the 35% tax bracket for an additional two years.
Payroll Tax: A temporary 2% reduction in employee-paid Social Security payroll taxes for 2011.
Capital Gains & Dividends: Extends the current capital gains and dividends rates (15% for those in the 25% bracket and above) through 2012.
New Energy-Efficient Home Credit (45L): Extended through 2011 (lapsed after 2009).
Energy Efficiency Home Remodeling Credit (25C): Extended through 2011 at pre-ARRA levels, 10% up to $500, with a $200 cap on window purchases. Changes product criteria to Energy Star for windows, doors and skylights. (This was previously 30% up to $1,500 for 2009-2010).
Bonus Depreciation: The law extends and temporarily increases the bonus depreciation provision for investments in new business equipment. For investments placed in service after Sept. 8, 2010, and through Dec. 31, 2011, the act provides for 100% bonus depreciation. For investments placed in service after Dec. 31, 2011, and through Dec. 31, 2012, the act provides for 50% bonus depreciation.
Section 179 Expensing: In 2007, tax cuts temporarily increased section 179 thresholds to $125,000 and $500,000 respectively, indexed for inflation. These amounts have been further increased and extended several times on a temporary basis, including most recently as part of the Small Business Jobs Act, which increased the thresholds to $500,000 and $2,000,000 for the taxable years beginning in 2010 and 2011. This proposal extends the 2007 maximum amount and phase-out thresholds for taxable years beginning in 2012, at $125,000 and $500,000 respectively, indexed for inflation. The proposal is effective for taxable years beginning after Dec. 31, 2011.
Alternative fuels credit: The act extends through 2011 the $0.50 per gallon alternative fuel tax credit.
Tax benefits for certain retail improvements: The act extends for two years (through 2011) the special 15-year cost recovery period for certain leasehold improvements, restaurant buildings and improvements, and retail improvements.
Hovnanian narrows loss in Q4, shows gains for year
Red Bank, N.J.-based home builder Hovnanian reported a fourth-quarter net loss of $132.1 million, compared with a loss of $250.7 million for the same period last year.
Revenues for the quarter ended Oct. 31 were $353 million, down 19.2% from $437.3 million.
During the quarter, the company delivered 1,204 homes, compared with 1,444 homes delivered during the prior year’s fourth quarter. Net contracts for the quarter decreased 13% to 1,078 homes compared with last year.
For the year, the company reported net income of $2.5 million compared with a loss of $716.7 million for 2009.
Revenues for the year were $1.37 billion, down 14% from $1.59 billion reported for 2009.
Deliveries for the year declined 12% to 4,729 compared with 5,362 home deliveries in 2009. Net contracts for the year decreased 20% to 4,206 compared with 5,227 net contracts in the prior year.
"In spite of strong long-term demographics, the current housing market remains quite challenging. The combination of a lackluster job market and high foreclosure activity is clearly having a dampening effect on the housing market. The only silver lining is that we continue to find land acquisition opportunities, which we believe will yield appropriate returns at today’s home prices and sales paces," commented Ara K. Hovnanian, chairman, president and CEO. "Even without a general housing recovery, we are optimistic that as the percentage of deliveries from newly identified communities increases, our overall performance should continue to improve."