WASHINGTON (AP) — Construction of single-family U.S. homes rose 1.7 percent in July, the fifth-straight monthly increase as builders poured foundations at the fastest pace since last October, the Commerce Department said Tuesday.

While single-family home construction is still 73 percent below the frenzied peak in January 2006, it is up 37 percent from the bottom hit last winter. Builders say they are seeing more homebuyers walk through the door, ready to sign contracts. The confidence level of builders is the highest this month than its been in more than a year, the National Association of Home Builders said Monday.

"It’s the general trend that matters and with housing, the direction is up." wrote Joel Naroff, president of Naroff Economic Advisors.

Construction of apartment buildings, however, tumbled 13 percent in July. That dragged the combined figure for homes and apartments down 1 percent to a seasonally adjusted annual rate of 581,000 units, from an upwardly revised rate of 587,000 in June. Economists polled by Thomson Reuters expected a pace of 600,000 units.

And though the worst of the housing market bust likely is over, builders are ramping up production cautiously because the market remains flooded with deeply discounted foreclosures.

Applications for building permits for homes and apartments — an indicator of future activity — fell almost 2 percent last month to an annual rate of 560,000 units. Economists expected an annual rate of 580,000 units.

The industry is seeing increased demand from consumers who want to take advantage of a new federal tax credit for first-time homebuyers. It covers 10 percent of a home price up to $8,000. It is set to expire at the end of November.

While numerous signs have emerged that the U.S. housing market has stabilized after the worst housing recession since the Great Depression, there are several threats to any recovery.

The unemployment rate, now 9.4 percent, is expected to surpass 10 percent, leaving more homeowners unable to pay their mortgages. Interest rates are still at attractive levels but they could rise, making buying a home less affordable. Foreclosures are still at record-high levels.

Home construction is on the rise but so is unemployment with a stabilization in the employment figures more and more people are going to need to short sale there house. Troubled Property Solution are experts in short sale, they are based in San Diego,CA.

Houses in San Diego may have stabilized for the time being in some neighborhoods and in fact some areas have seen some moderate price increases, there is no real evidence to suggest that this will be maintained. House prices are still dramatically down from previous years and if you need to sell your home the only way for many is a short sale. If you need to short sale in San Diego, Troubled Property Solutions are experts in Short Sales, Give us a call today 1-619-63104546.

Original Article  by Brett Arends
Monday, August 17, 2009

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So, is our long national nightmare over? Has the housing market finally hit bottom?

There has been some muted — albeit exhausted — cheering from homeowners in recent weeks. But before we break out the champagne, look out for further potential problems just down the road.

The good news? According to the closely watched Case-Shiller Home Price Index, which tracks home prices across 20 major cities nationwide, the three-year housing slump slowed sharply in April and May.

May’s decline was just 0.2%, the slowest in two years. And several cities actually saw prices rise — among them Denver, Washington, D.C., Chicago, Boston, Cleveland and Dallas.

Even Miami only fell about 1% in May. That’s a great month down there. Previously, prices had been falling 3% a month.

We’ll get an even better picture of the situation when the Case-Shiller figures for June are released on Aug. 25.

But these data aren’t the only hopeful signs.

Inventories of unsold homes have come down. According to the National Association of Realtors, there were about 3.8 million unsold homes on the market at the end of June. That’s down a long way from 4.5 million a year ago.

And yes, housing affordability is dramatically better. People, obviously, need to live somewhere. At some point, housing gets cheap enough that the fundamentals start to look good.

The average home is about a third cheaper than it was at the peak three years ago, a plunge unprecedented since the Great Depression. In the hardest-hit places, such as Phoenix, Las Vegas and Miami, average prices have been halved or better from their bubble peaks.

Cheap Mortgages, Too

Factor in falling mortgage rates as well, and housing starts to look cheap by many measures. Thirty-year mortgage rates, at around 5.5%, are still low by historic standards. A few months ago, when they fell below 5%, they were very cheap.

There’s some other good news for homeowners from the rest of the economy. July’s job losses were better than feared: The unemployment rate, which was heading vertical a few months ago, eased to 9.4% last month from 9.5%.

Some are saying the worst is behind us, for the economy and the housing market. No wonder the iShares Dow Jones U.S. Home Construction exchange-traded fund (ITB), which tracks shares of home-building stocks, has bounced sharply since early July.

So, is that it?

Scott Pollack

Not so fast.

Prices may — may — be nearing the bottom in many markets. But beyond the headlines, there are plenty of reasons to stay cautious. There may even be fresh dangers just ahead.

And even if prices have stopped falling, it may be years before they start rising sharply again.

First, late spring is traditionally the strongest season in the real-estate market.

And it’s hardly a surprise the market saw some green shoots this time around. It’s enjoying not one, but two, gigantic taxpayer subsidies — an $8,000 refundable tax credit, or gift, for first-time buyers, as well as those cheap mortgage rates. The Federal Reserve has been spending billions of dollars to keep interest rates down.

Both are only short-term fixes. Any sustained economic upturn would be expected to send long-term mortgage rates rising again, dousing the real-estate market with fresh cold water.

Glut of Empty Houses

The picture on inventories isn’t as good as it sounds, either. A lot of unsold homes have simply been put up for rent instead, especially in the most difficult markets like Miami. The result? A glut of empty rentals as well.

New waves of foreclosures and distressed sales may be coming, too. In states such as California, it can take many months for delinquencies to turn to foreclosures, which means last winter’s bad news may still be coming down the pike. Meanwhile, vast tranches of teaser-rate mortgages are due to reset later this year and in 2010.

As for the economy: Both unemployment and household debt levels remain at extremely high levels by the standards of postwar history. Either is bad news for housing. The combination is very bad.

Dean Baker, co-director of the Center for Economic and Policy Research, argued in a recent paper that the fundamentals still aren’t great. It still remains cheaper to rent than to own in many markets, he says.

The biggest bubbles usually produce the deepest busts. And the 2002-2006 bubble was a doozy. The bad news may have ended after three terrible years, but maybe not. Japanese housing prices still haven’t recovered from the late 1980s bubble. Western U.S. markets took six or seven years to recover after the last big bubble burst there in the early 1990s.

Yes, there are some hopeful signs, but don’t let them fool you into thinking it’s all clear. It might not be. As ever, anyone making a major financial decision needs to think more about his or her own situation than what "the market" is doing. A real-estate purchase needs to make sense on its own terms. And measure it on cash flow today, not the hope for capital gains tomorrow. When you factor in all the costs, is the purchase cheaper than renting?

If you get a cheap mortgage and you are aggressive on price, you may get a bargain. That’s especially true if the owner has to sell. Foreclosures and other distressed sales are selling for about 20% below the rest of the market. There are opportunities out there. But you can afford to take your time to shop around.