Homebuilding Sees Healthy Uptick; Fewer Homeowners Underwater; Cyprus Rejects Bailout Terms

New home sales are still on an upward trajectory, as housing starts were up 0.8 percent in February, compared to January. There is an improvement in the equity position of households. And the Cypriot parliament said "no thanks" to the EU bailout.

Although the HAHB reported on Monday that homebuilders were a bit more pessimistic about their industry last month than in January, new home sales are still on an upward trajectory. The Census Bureau reported on Tuesday that housing starts were at an annualized rate of 917,000 units in February, up 0.8 percent from January, and 27.7 percent more than a year ago.

The increase for the month and the year was more-or-less evenly distributed between single-family and multi-family starts, which isn’t always the case, because multi-family starts gyrate from month to month. Single-family starts were up 0.5 percent for the month and 31.5 percent for the year, while multi-family starts were up 0.7 percent for the month and 18.8 percent for the year.

Residential building permits, which offer a hint of things to come in the housing market, were up 4.6 percent month over month in February. Compared with the same month last year, the increase was 33.8 percent. 

Fewer Homeowners Are Underwater 

CoreLogic reported on Tuesday that the bane of household finance during the aftermath of the Great Recession, namely homeowners’ negative equity, disappeared for about 200,000 more U.S. mortgage holders during the fourth quarter of 2012. That was mainly due to rising home prices in most markets. 

The total number of properties moving from negative to positive equity in 2012, according to CoreLogic, was 1.7 million. About 38.1 million residential properties enjoyed some equity at the end of 2012, while 10.4 million – or about 21.5 percent – did not. At the end of fourth quarter 2012, 2.3 million residential properties had less than 5 percent equity, or near-negative equity. Properties that close to negative equity are at risk should home prices fall. 

“In the fourth quarter we again saw an improvement in the equity position of households,” Mark Fleming, chief economist for CoreLogic, said in a statement. “Housing market improvements, particularly in the hardest hit states, are the catalyst for households to regain equity and become participants in 2013’s housing market.” 

Cyprus Rejects Bailout Terms 

The Cypriot parliament said “no thanks” (actually, that’s an overly polite way to put it) to the EU bailout and its now-notorious demand that part of the bailout be paid with Cypriot savings. The vote was 36 against, 19 abstaining, and exactly no parliamentarians voting to approve depositor haircut.

 

The crisis promises to reverberate well beyond the shores of the island nation, whose GDP in 2011 was about $24.7 billion, or only $1.7 billion more than the economy of Vermont for that year, though it isn’t precisely clear what happens next. One side note: reportedly all flights from Moscow to Cyprus are booked solid, possibly as Russians rush to the country to withdraw from their offshore bank accounts.

 

Wall Street barely budged on Tuesday, with the Dow Jones Industrial Average gaining 3.76 points, or a scant 0.03 percent. The S&P 500 lost 0.24 percent and the Nasdaq was down 0.26 percent.