Housing remains stuck in the doldrums even with extremely low mortgage rates and despite some improvement in private payroll employment.  Part of the reason for this disconnect is the slew of foreclosures and bank-owned properties which are still flooding the housing market.  Defaults are expected to reach new record-highs this year which have buyers holding out for better deals and traditional home-sellers battling low-ball offers from banks.  The aggressive pricing on distressed properties is undercutting individual home sellers and new home builders alike, and wreaking havoc on local housing markets.  According to data from Housing IntelligencePro, both new home activity and regular resale activity made up a smaller portion of total closing activity compared to the first three months of last year (and every quarter since).

As the national economy continued to slowly come back to life residential permit issuance lost its footing in the first quarter of 2011.  According to the 1st Quarter 2011 Edition of the newly released Flash Report, activity in the single-family segment was 22% below the level seen during the same period last year.  The current pace of 90,400 detached homes permitted during the quarter was 26,000 permits below the year ago pace.  As the for-rent apartment market continues to heat up in response to steadying job growth, multifamily permit issuance has continued to trend upward. 

Last week, the Labor Department reported a larger than expected increase in U.S. non-farm employment which sparked optimism that the job market continues to slowly improve.  This was the third straight month that the economy has added a significant number of jobs despite continued losses in the public sector due to budget shortfalls.  But not all areas are experiencing improvement in the labor market equally.  A couple of weeks back, the Labor Department released metro area jobs data for March, so for this week’s data feature, courtesy of "HIP" (Housing IntelligencePro), we look at just how jobs are corresponding with new home prices.
 

Despite the continuing trend of new homes comprising a shrinking share of total home sales, builders have managed to strategically focus their efforts and firm up pricing on a price per square foot basis.  Our data feature this week, courtesy of Housing IntelligencePro, illustrates that after hitting a trough of $126 per square foot in 2009, new homes so far in 2011 are selling for $148 per square foot, a level not seen since 2007.  Meanwhile, the share of total home sales captured by new homes continues to shrink, falling to only 8.6% so far this year.  Typical resales have also declined from 63% in 2010 to 60% in 2011.  Both new and resales have been offset by the continual stream of distressed property sales,  with REOs growing from 27% of the market in 2010 to 31% so far this year, with pricing in the difficult-to-compete-with $90 per square foot range.
 

Based upon what we’ve seen of the March data come in, it looks like Oklahoma City is on track to see the largest year-over-year gain in new home closings for the first quarter of 2011.  Our data feature this week, courtesy of Housing IntelligencePro, provides an advance estimate of gain in new home closings during the initial three months of the year.  Following Oklahoma City’s 9% gain, St. Louis, Philadelphia, Orlando and Portland round out the top five in what is otherwise still a pretty rough housing market in most areas of the nation.  Markets needed at least 500 new home closings during the quarter to be considered.