New Homes

This good news is beginning to resound for homebuilders. D.R. Horton and Beazer both report they are seeing higher numbers of orders together with a lower contract cancellation rate.

Horton reports that last quarter’s orders for new homes were 45 percent above year-ago levels, and a cancellation rate drop from 38 percent to 26 percent.

Existing Home Values

According to the National PMI Risk Index, the movement of housing value movement “overall risk has decreased” in the movement of housing value movements in the 384 metro markets they survey.

The survey examines household income, economic growth, local employment, demographic changes to predict where home values are heading.

Some Economists credit the leveling of home prices to economic policies including the first-time homebuyer’s credit, government purchases of MBS and the Fed holding down interest rates. There is good reason to be cautious with the passing of these policies and the release of the “shadow” inventory of homes onto the market.

At no surprise, the “sand states” of Arizona, California, Florida and Arizona were pegged at an “elevated risk.”

A contra indicator has come from Zillow, whose index of home owner negative equity found that the national average rate dropped to 21.4 percent in Q409. This is still an improvement from 23 percent in Q209.

Home Equity Rising

The Federal Reserve’s quarterly “flow of funds” report found that home equity is increasing for the first time in three years.

In the first three quarters of last year home equity increased by $1 trillion, by a combination of principal paydowns on mortgages and rising home values.