New homes starts and property loan applications fall in US

More gloom is emerging for sellers and buyers in the US as the numbers of new homes being built falls and finance becomes harder to secure. 

Housing starts fell 11.7% in October to an 18 month low, the latest figures from the US Commerce Department shows. The annualized rate of new housing starts was 519,000, well below estimates of 600,000.
While October housing starts fell to a level not seen since April of 2009, September’s housing start figures were revised downward as well, from an annualized pace of 600,000 to 588,000.
Single family housing starts were only slightly better in October, coming in at a 436,000 annualized rate, down 1.1% from a revised September figure of 441,000 and off 8.2% from a year ago.
Meanwhile, the Mortgage Bankers Association said that home loan application also fell, down 14.4%. Although the number of people defaulting on their mortgages is easing.
The delinquency rate in October was 9.29% for loans that were 30 or more days overdue, much the same as September at 9.27%. And compared with a year ago, defaults are down 8.4%.
However, foreclosures are making up more of the real estate inventory market, some 3.92% of the housing market in October, up 2.1% over September and up 5.2% compared with October 2009.
Nearly 2.1 million homes are in pre-sale foreclosure inventory, while the total number of properties that are 30 or more days delinquent or in foreclosure stands at more than 7.04 million, similar to last month’s figures.
States with highest percentage of noncurrent loans were Florida, Nevada, Mississippi, Georgia, Louisiana and New Jersey. States with the lowest percentage of noncurrent loans were Montana, Wyoming, Alaska, South Dakota and North Dakota. Noncurrent totals combine foreclosures and delinquencies as a percent of active loans in that state.
Mortgage applications appear to have decreased last week as interest rates moved away from historic lows and demand for refinancing fell to the lowest level since July.
 ‘Rates increased sharply last week due to stronger economic data and lingering uncertainty regarding the structure and impact of the Fed’s QE2 programme. Mortgage applications, particularly for refinances, dropped in response,’ explained Michael Fratantoni, MBA vice president of research and economics.
The MBA said the average interest rate for 30 year and 15 year fixed mortgages rose to the highest level in two months, climbing to 4.46% from 4.28% and to 3.87% from 3.64%.
Mortgage provider Fannie Mae is fairly up beat with its latest prediction indicating that total property sales in 2010 will be down about 8% from last year and will mark the bottom of the downturn.
The economic outlook from Fannie Mae’s Economics and Mortgage Market Analysis Group says that foreclosures will keep housing sales subdued in the final quarter of this year, but sales will see gradual improvement in 2011.
‘We expect home sales to increase by about 3% in 2011. However, the pace of the recovery will be largely determined by labour conditions. If hiring improves at a faster pace than expected, home sales will likely see a stronger gain in 2011 and visa versa,’ said chief economist Doug Duncan.