Fire Hydrant of Freedom

Why Scott Walker will not go anywhere.....build a wall to stop Canadians from coming here for

1. Health care

2. Starbucks

3. Vegetable and fruit harvesting


http://host.madison.com/news/local/govt-and-politics/election-matters/canadian-border-wall-idea-draws-attention-to-scott-walker-s/article_babe634e-adda-5b07-97ef-27661c50b101.html

Canadian border wall idea draws attention to Scott Walker's 'Meet the Press' interview

In a wide-ranging, 30-minute interview with "Meet the Press" host Chuck Todd in Washington on Saturday, Gov. Scott Walker tried to explain his sagging job-approval numbers, pushed back on negative comparisons between Wisconsin and Minnesota and continued to hammer on the nuclear deal with Iran.

Some of the most-cited comments in early headlines after portions of the interview were broadcast on Sunday morning's show, however, were about a border wall.

No, not that one. A Canadian border wall.

Referencing a Walker foreign policy speech Friday in which the Republican presidential candidate said securing the borders was a top priority, Todd asked why no one's talking about building a wall on the United States' northern border to protect from terrorists gaining entry.

Walker said he recently heard just such an idea from law enforcement officials during a town-hall meeting in New Hampshire, which shares a 58-mile border with Canada and has one border crossing.

"So that is a legitimate issue for us to look at," Walker said.

The more popular idea among some Republican candidates, however, is a wall at the Mexican border, something Walker earlier this month followed frontrunner Donald Trump in calling for.

"If we're spending millions of dollars on TSA at our airports, if we're spending all sorts of money on port security, it only makes sense to me that if part of what we're trying to do is protect ourselves — and set aside immigration for a minute — and protect ourselves from risk out there, we should make sure we have a secure border," Walker said on "Meet the Press."

Todd opened the interview by asking about comments made by Walker ally and Milwaukee County Sheriff David Clarke, who told the Milwaukee Journal Sentinel that the governor's campaign was "stuck in neutral" and needed a spark.

"I think the biggest spark for us is getting the message out that now's not the time to put in place someone who hasn't been tested before," said Walker, who fell to third behind Trump and Ben Carson in a Des Moines Register/Bloomberg Politics poll conducted last week. "We saw what a mistake that was under Barack Obama. What we need is someone who's been tested. I've been tested unlike anybody else in this race on the Republican side."

Speaking of Obama, why does the president have a higher job-approval rating than Walker in Wisconsin, Todd asked. In a Marquette Law School Poll conducted Aug. 13-16, 48.5 percent of Wisconsin registered voters approved of Obama's performance while just 39.4 percent approved of Walker's.

It's nothing new, Walker said.

"Four years ago, I was so low in the polls they called me 'Dead Man Walker,'" Walker said. "Because back then we were pushing big, bold reforms, kind of like the big, bold reforms again we pushed in this latest budget. A year later, I won the recall with a higher percentage of the vote and a higher number of votes. Why? Because our reforms worked.

"For all the hype and hysteria of the 100,000 protestors, our schools are better. In fact, ACT scores again are second-best in the country. Our graduation rates are up. Our third-grade reading scores are up. The same thing will hold true here when people see that for students like my son, who's a junior at the University of Wisconsin, the reforms are going to work there as well. Property taxes continue to go down. When people see the benefits of our reforms, just like they did four years ago, I think our numbers will go up again."

Here's what Walker said on some of the other topics:



Read more: http://host.madison.com/news/local/govt-and-politics/election-matters/canadian-border-wall-idea-draws-attention-to-scott-walker-s/article_babe634e-adda-5b07-97ef-27661c50b101.html#ixzz3kLDyxQcg

Trump nailed the CNN reporter tonight. Thousands of people for Trump and CNN wanted to ask him about a couple of protesters present.

Cantor endorses Bush.....Bush should have said "don't do me any favors".

Let's see. Will has condemned all who would support Trump as vulgar, uneducated and much more. He is a damned elitist who has lived in the Beltway far too long. BTW, his wife is on the Walker team.

As for me, I am a  "Vulgarian" and proud of it.  Thank you very much, George Will.

CD,

My only remark to inflation is this....

Does anyone really know how to calculate inflation? The government uses an  inflation measure designed to show low inflation so as to keep down Cost in Living raises, SS increases and much else.

Ask any middle class person who has to work for a living and worries about where the money will come from to meet costs and expenses monthly whether they believe that inflation is under 2%. Ask them about food costs, utility costs, health care and all the other things that they have to buy. They certainly have another viewpoint that is NEVER considered by anyone.

CD,

Here is one thing to consider about Trump revealing full details of programs.

If you are fighting against an opponent, are you going to reveal what moves you will make in detail so that your opponent can be prepared to counter?

If you are Eisenhower and prepping for D-Day, are you going to reveal that you are using Patton as a deception so that you can attack elsewhere?

You only provide enough details to win the nominee. Too reveal too much opens you to more aggressive attacks.

Agreed CD. But if not for the massive manipulation of Interest Rate, QE and other Fed programs, where would we be?

Sure, the Stock Market is up, but only because of the Fed actions. Yet, the middle class is not getting better.

The Housing Market is "up" only after massive amounts of QE buying MBS, both Private Label pre-existing toxic loans, and then most of the new GSE originations. Add in the low interest rates and this is all it got?

Home values have "increased" but this is only the result of a housing market that is on life support. Values have increased solely because of the lack of inventory and "hot money" buying up inventory. Now that the hot money has gone, values are increasing at a much lower rate. (Hmmm, something else to add to the "recovery" chapter. That money is replaced by private investors, often engaging in occupancy fraud.

What happens when Interest Rates increase? Home values fall. Loans become more expensive. The ARMs being taken out now and the legacy ARMs will go nuts and drive more foreclosures. Home Sales will fall because of the higher payments needed.

BTW, why is inventory so low in many of the hardest hit foreclosure states? It is because lenders are still not foreclosing. Loans are being modified with terms that will cause re-default within a year or two. Lenders are not listing their foreclosure inventory because it would be like China dumping products in the US. Lower prices, hence more losses.

Sorry, but I don't "buy" artificial manipulation of market factors as being a "meaningful" recovery of either Housing, the Market, or other parts of the economy.

Like Jeb Bush?   

CD,

What makes you think that he would not get the best for each area? That is what he says he would do, and I believe him there.

As another point to DMG,

People are looking at Trump not for his "detailed" positions, they are looking at him for a reason that escapes most. They are looking for leadership. For so long, we have had no leadership. Politicians have taken a position of getting along or or just acting, often out of spite. None show true leadership capabilities like Reagan, and even JFK for a period of time.

As well, I don't know how old you and others are, but there is something else going on that should be considered. For those who are old enough and worked though this period of time, go back to 1975 through 1980 and think of the economy and what we were go though. Some points about that time:

1. Ford presents his program for reducing inflation. WIN. Whip inflation now. A slogan which meant nothing. ( I don't remember the inflation rate, but it was poor.)

2. 1975 with Ford, the Tax Rebate of $200 (maybe $300 but my memory is not so good). I remember being in a meeting with Senator Tunney, Dem from CA. He was touting how great an idea this was. It would help the middle class. I got up and challenged him about it, stating that the money meant nothing. it would not help the middle class and it would only be spent on food or bills. Needless to say, he had no response. (His brother was the fighter. May he got it too many times fighting his brother and it addled his brains.)

3. 1973, Gas rationing. We had to buy gas on alternative days and you waited in line for an hour or more. If you ran out of gas on the no buy day, you were SOL.

4. Jimmy Carter, a President who had no leadership ability. Control freak who actually filled out the White House Tennis Court Usage schedule. He was voted in simply as a reaction to Nixon and an incompetent Ford who stated in a debate that Poland was not a satellite of the USSR.

5. Under Jimmy Carter, the Misery Index of 19.72%

6. The Iranian Hostage situation. 

(BTW, here is an interesting factoid. When the hostages were taken in Nov 2008, I was stationed at RAF Bentwaters. There, we had 67th Air Rescue which had evacuated US personnel from Iran in the year before. When the hostages were taken, my squadron was recalled for possible action in hostage recovery. At the same time, Airborne and other Army troops were in Germany for the Reforger exercises. We could have sent Airborne from Germany and our own squadron from Bentwaters with C 141 and C 130 aircraft, supported by 5 Bentwater A10 squadrons, F-15s out of Bitburg, F111s from Mildenhall and other support aircraft  to get the hostages within the first few days. Even in April of 1980, we could still have gone, but Carter wanted to use Navy choppers which it was well known would have had problems with the sand getting in their engines. But Carter did not have the guts to do what was needed.)

7. A National Election in 1980 where the GOP tried for the second time to keep Reagan from being the nominee. Instead, they want the Senior Bush to be the nominee. Yet the 'commoners" wanted Reagan.

The conditions of 1980 match what is occurring today in all too many ways. We have a populace looking for leadership and a bunch of politicians that offer no leadership. Even worse, they continuously ignore or insult those who disagree, calling us vulgar, low information votes, idiots, and who knows what else. They are the Elitists who know what is best for us and they are not to be challenged.

To hell with them all. As far as I am concerned, the professional politicians can go to hell. BURN IT DOWN!!!!!

DougMacG,

Yes, I am hard on the other mortals, but why should I not be? They are all professional politicians except for Carly and Carson. And look what professional politicians get us. Nothing good.

There is a deliberate GOPe strategy going on with this election. They are all in the tank for Bush and will do anything to get him elected, but they know that he is not well liked by the "commoners" in the party. So they have engaged in a deliberate strategy to get him nominated. That strategy involves getting enough candidates in the key states to dilute the vote against Bush so that no one will have a majority, and therefore the delegates go to Bush. And this plan was going to work except for one problem.......no one counted on Trump.

Now the GOPe is trying ways to stop Trump. One is in Virginia, North and South Carolina. The potential candidate must take a "loyalty oath" to not run as a third party if they lose, or they do not get on the primary ballot. Now, the RNC is talking about any candidate who does not win at least 8 primaries cannot be nominated at the Convention. What this does is ensure that if anyone not meeting this criteria but has won states, those delegates are now freed up to go where "they" want.

Now people are picking on Trump on the immigration plan. He cannot deport 11m people. Doesn't anyone realize that Trump is a "negotiator"? He throws this out, but you can bet he has "fall back" positions for when he wins. Never give out your bottom line position at this stage.

Kelo is an issue, but if eminent domain is available and there is benefit, why not?

FYI, I was originally completely against ED, but the housing crisis changed my opinion. In cities like Richmond CA, Camden NJ, and many others, there can be no housing recovery because the homes are underwater still and the people cannot afford the mortgages. Lenders are not working with the people. Why not use ED to take the homes, pay the Investors fair market value, and then get someone in to rework the loans for the people? It is possible and I know it is because I have been involved in discussions among a major investor who would rework the loans, a servicer willing to go along with it, and a local government ready to engage the ED. But guess what? The damned Congress and Obama enacted legislation that if a city did ED to help the crisis locally, the homes involved could never again be eligible for GSE or FHA funding. Wells Fargo and the other banks win again.

What Trump is doing is bringing all these issues to the light, but that is exactly what the GOPe and the Dems do not want. it threatens their own interests and that is heresy.

We are at a crossroads in the US. This election is likely the most critical election since 1860. The fate of the US hinges on it, but if we have a GOPe candidate, it matters not whether the new President and Congress is controlled by either party. They will all do the same as now. So we have to consider all alternatives.



 

HOPE NOW is the government program for "stopping" foreclosures. Every month, they put out the current "statistics" of Home Retention.  Key points:

1. Since 2007, 24m workout plans and 6m proprietary mods. Another 6m in foreclosures occurred.  Here is the problem with this.  In 2007, there were 51m homes in the US with 1st mortgages. That would be 70% of all homes with mortgages in the country.  Being really conservative, lets assume that 50% of the plans were on 2nd mortgages. That is still 35% of all homes with mortgages. Oops.......

2. There have been about 1.5m HAMP mods. Add this to the 6m proprietary mods, that is 7.5m.  Already, HAMP has had about half of all mods re-default, and this is before the Mod Interest Rates begin to increase after 5 years. So of the almost 900k HAMP mods still in effect, how many are going to re-default?  Most expect that more than 75% will do so.  Another oops...

3.  The proprietary mods, 6m, have already had at least 40% to re-default. The rest are going to fail when Interest Rates increase also.

4.  Non-foreclosure solutions of 411k v 89k in foreclosures. 137k were short sales or mods. The rest, except for a handful of "repayment plans" were homes that were "lost" and the homeowners ended up losing the home.  Most distortion.

(BTW, repayment plans are a joke. I have two that are going to litigation done by WF. The first plan required that the homeowner pay $78k the first month, and then $5k for the 2nd and 3rd month of which both were equal to the regular monthly payment. The borrower had only $26k in his business account, most of which would cover business expenses. There was $500 in personal accounts. He had no ability to make the $78k first payment since he did not have the income or savings, yet Wells made this offer. What a joke. And this is typical of repayment plans.)

I could go on and on about all the issues involved in the full report, but this gives you an idea of how the government HOPE data is manipulated to make things look better than what is actual. Just like what the NAR and Census Bureau do in reporting Sales and Start numbers.

HOPE NOW: Mortgage industry achieves 24M solutions and 6M loan mods
411,000 non-foreclosure solutions for homeowners during 2Q

In the second quarter of 2015, approximately 411,000 homeowners received non-foreclosure solutions from mortgage servicers, according to HOPE NOW, the voluntary, private sector alliance of mortgage servicers, investors, mortgage insurers and non-profit counselors.

Since 2007 the mortgage industry has completed a total of 24 million workout plans and six million proprietary loan modifications for homeowners — reaching another milestone in its efforts to assist families with troubled mortgages.

This compares to just over six million foreclosure sales completed in the same time period.

From April through June 2015, non-foreclosure solutions outpaced completed foreclosure sales by a margin of more than four to one (411,000 solutions, vs. 89,000 foreclosure sales). For every one foreclosure sale, mortgage servicers offered 4.6 solutions.

This is due to the fact that there are several long term and short term solutions available to at-risk homeowners when facing delinquency or foreclosure.

Permanent loan modifications in the second quarter of 2015 totaled approximately 113,000 and short sales totaled 24,000. Other non-foreclosure solutions (including repayment plans, deeds in lieu, other retention plans and liquidation plans) made up the rest of the total number. When homeowners do not qualify for long term permanent loan modifications, mortgage servicers continue to look for short term options that, in many cases, lead to a permanent solution.

Of the 113,000 loan modifications completed for the second quarter of 2015, about 78,000 homeowners received proprietary loan modifications and 35,738 homeowners received loan modifications completed under the Home Affordable Modification Program.

      Q2 2015 vs. Q1 2015 – Loan Mods Decrease 2%, Serious Delinquencies Decrease 6%, Foreclosure Sales Decrease 7%
 
      During the second quarter of 2015, there were an estimated 113,000 loan modifications completed, compared to 116,000 during the previous quarter – a slight decrease of   
      2%.
 
      Serious delinquencies of 60 days or more declined from 1.85 million in Q1 2015 to 1.74 million in Q2 2015 – a 6% decline. (Delinquency data is extrapolated from data
      received by the Mortgage Bankers Association for the Q2 2015)
 
      Foreclosure sales also decreased from the previous quarter – 89,000 in Q2 2015 vs. 96,000 in Q1 2015, a decrease of 7%.

Comparing the second quarter to the first quarter of 2015:

      Total non-foreclosure solutions were approximately 411,000 in Q2 2015, compared to 444,000 in Q1 2015 – a decrease of 7%.
 
      Foreclosure starts were approximately 176,000 in Q2 2015, compared to 212,000 in Q1 2015, a decrease of approximately 17%. ?Q2 2015 vs. Q2 2014.

The 89,000 foreclosure sales in the second quarter of 2015 compares to an estimated 117,000 completed during the second quarter of 2014, representing a significant decline
year over year.?Here are some other key metrics for Q2 2015 vs. Q2 2014:

     Total solutions for Q2 2015 were approximately 411,000 vs. 456,000 for Q2 2014 - a decline of 10%. ?
 
     Loan mods for Q2 2015 were approximately 113,000 vs. 125,000 for Q2 2014 – a decline of 10%. ?
 
     Foreclosure starts for Q2 2015 were approximately 176,000 vs. 203,000 for Q2 2014 – a decrease of 13%. ?
 
     Short sales completed for Q2 2015 were approximately 24,000 vs. 35,000 for Q2 2014 – a decrease of 31%. ?
 
     Deeds in lieu for Q2 2015 were approximately 5,400 – a decrease of 28% from Q2 2014 (7,500). ?
 
     Delinquencies of 60+ days were approximately 1.74 million for Q2 2015, compared to 1.98 million for Q2 2014 – a decline of 12%. ?

Before anyone posts Wesbury and Pending Home Sales, I thought that I would get this in.

 Seasonally Adjusted Index                     Non Seasonally Adjusted Index

Jun 2015   110.04                                               136.8

Jul 2015    110.09                                               121.0

Increase         0.5%                                            -11.5%

Let's manipulate the data with Seasonal Adjustments so that it looks better than what it is.

It will be "fun" to see what Existing Sales for Aug & Sep show. Pending for Jul will show up in those months.

FYI,

I spend most days doing consulting work for attorneys. The work mostly involves developing arguments on foreclosure and lending law, but it frequently crosses over into the realm of fraud and other subjects. To do this work, I have had to develop a firm understanding of how to read and understand statutes, regulations, and case law. This has been especially important since I am often retained to be an Expert Witness in various cases.

Since the subject of Anchor Babies arose, I have been reviewing the Constitution, 14th Amendment, the Intent of the legislation and of course, SCOTUS case law. Based upon my own non-professional observations and readings, I believe:

1. As has been represented by Levin and others, the 14th did only address the issue of Slavery. It did not expand further rights to other parties.

2. The fact that in 1924, Congress passed additional legislation giving all Indians the right of citizenship that did not exist prior thanks to SCOTUS rulings is further proof of the 14th Amendment intent.

3. The 14th Amendment does not need to be repealed. From the wording,  Congress can enact laws to either expend or shrink the scope of the Amendment.

Now, talking with friends who are legal immigrants currently, some Green Card and others who have been awarded Citizenship, I have yet to hear any say that illegals and anchor babies deserve Citizenship. More over, most like the idea of Trump sending them back, and this includes two who have their own businesses and who actually employ illegals.

On a more personal level:

1. My wife is first generation from El Salvador. Her mother and father came over in the 1930's legally. 7 sisters also immigrated legally.  All support Trump and his policies.

2. My son-in-law is first generation from Italy. His father, mother and grandparents all came over during WW2, legally. They support Trump.

3. My son married a Canadian. She came into the US and went through all citizenship requirements. The cost was incredible for them but she did it. They support Trump.

I can go on ad on, but you get the idea.......

See the GREAT NEWS about New Home Sales?  Up 5.4% over Jun and 25.8% Year over Year!!!!

507k yearly vs 480k in Jun.  And 507k vs 403k Year over year!!!!

These are Seasonally Adjusted Numbers. Let's see what the non-manipulated numbers say.


43k Sales in Jul 15 vs 45k in Jun 15.  (Can't be right!  If so, then there were less sales in Jul than in Jun. Where did the 5.4% increase come from?  Common Core Math?)

43k in Jul 15 vs 35k in Jul 2014.  (That is "better". 23% up.)


Fun with Seasonally Adjusted Numbers. But let's take a look at a couple of graphs from Calculated Risk......





Doesn't look like much of a recovery to me.  Now let's look at the Non Seasonally Adjusted Monthly numbers from 2005 on.




This did not impress me either.  Maybe I don't know how to read graphs..........

Let's see...........Existing Home Sales were the "highest" since Feb 2007. Up 2% at an annualized rate of 5.59m. Am I supposed to be impressed by this?

For cripes sake...........interest rates are still the lowest on record and sales cannot get above 5.59m or cannot get higher prior to the Crash?  (The Crash actually began in 2007 with the collapse of subprime lending in Jan 2007 and then with Alt A in Mar 2007.)  Also, most of the contracts for Jul were written in May, a high month for pending sales, with the NAR reporting that the "Index" was at 112.3, up from Apr at 111.6.  Since the Jun Index was 110.3, think that Aug will show a significant decline? I do......


U.S. Existing Home Sales Hit Prerecession Pace
Sales rose 2% in July, highest since February 2007, National Association of Realtors says

WASHINGTON—Existing home sales in July climbed for the third straight month to hit their highest pace since before the recession, buoyed by strong sales in single-family properties.

The pace of existing home sales increased 2% last month from June to a seasonally adjusted rate of 5.59 million, the National Association of Realtors said Thursday. Last month’s sales pace was the highest since February 2007, and 10.3% higher than a year earlier.

Sales for June were slightly revised down to 5.48 million from an initially reported 5.49 million.

Economists surveyed by The Wall Street Journal had expected July sales would dip 0.7% to a pace of 5.45 million.

Tight inventories have driven prices up, keeping some buyers out of the market. Lawrence Yun, NAR’s chief economist, noted that first-time buyers declined to 28% of all buyers, the lowest share since January. Rising rents across the country are also eating into the savings that people might put toward a down payment.

“We have to recognize that we have a broad-based housing shortage,” said Mr. Yun. “Home builders have been essentially out of the game or underproducing for the past decade.”

According to mortgage company Freddie Mac, the average rate for a 30-year fixed-rate mortgage rose in July to 4.05% from 3.98% in June.

Mortgage rates are still low by historical standards, but could rise in the fall if the Federal Reserve raises interest rates.

Sales of existing homes account for roughly 90% of all purchases in the U.S. At the current pace of sales it would take 4.8 months to exhaust the supply of homes on the market, down from 5.6 months a year ago, the NAR said Thursday. Total housing inventory fell 0.4% at the end of July to 2.24 million existing homes available for sale, 4.7% lower than a year ago.

The median sale price for a previously owned home slipped slightly to $234,000 from June’s $236,300, but it is still 5.6% higher than a year earlier. July’s prices mark the 41st straight month of year-over-year price gains.

Distressed property sales fell to their lowest share of the market since October 2008, when the NAR started tracking them. They comprised 7% of the market, a fall from 8% in June.

Hi GM,

Finally “dropping by”. Been engaged in several projects of late that are taking considerable time, not including the normal attorney consulting business on foreclosures that I do.
I can’t tell you just how “tired” I have grown of trying to correct the idiots like Wesbury. I just cannot believe that they write the crap that they do and in fact believe what they write.

For Wesbury, his comments on the Jun Existing Sales is just plain taken out of context. To cite that Existing Sales are up without consideration of what the May and Jun markets have done in Pending Sales is just plain irresponsible.

Existing sales are home resales that have closed for the month cited, in this case Jun. Yes, they were up 3.2% over the previous month and 9.6% year over year, but that is not representative of the issue.

Existing Sales is a lagging indicator of Pending Sales. Pending Sales are when the contracts are written and Existing Sales are when they close. So in this case, Existing Sales reflect contracts written in Apr and May, with most being in Apr and fewer in May. (A few Feb or Mar contracts might be included and some Jun contract cash sales as well.) Since Apr & May Pending Sales were up, then Jun Existing Sales were going to be up. But to see the trend, we have to look at Pending Sales for Jun.

After 5 months of increases during the hottest part of the selling season, Jun Pending Sales dropped 1.2% over May. And the drop can be expected to continue in Jul and Aug, then really falling off in the autumn and winter months.

Additionally, the rate of Existing Sales is at 5.49 million per year, seasonally adjusted. Pray tell, how is it possible that with such improvements, we are still under 6 million Existing Sales per year when the normal prior to the crash was over 1 m, and at times 1.5m? These numbers continue with interest rates at record lows, and sales have not reached a breakout point.  So if the Fed increases rates, then sales will again drop. (BTW, an increase in interest rates will cause less affordability issues, leading to more potential buyers being priced out of the market. Then values will again fall, from 10 to 15% after about a 1% to 1.25% interest rate increase. That means more negative equity and less sellers.)
We having been hearing regularly from Wesbury and others about how the market continues to improve with new home starts. Why are Housing Starts still stumbling along with most of the increases in multi-unit and apartments and not Single Family homes? Why haven’t they reached a breakout point as well? They remain at historical lows like Existing Sales do. (When there are “rapid” increases in monthly Housing Starts, you have to look at the area where the increases have occurred. Each time, you find that the month before has shown some type of event and reduction in starts that has then caused the following month to be greater than normal which caused the “increased”.

Here is something that is very telling and is occurring with Home Sales each month, yet no one is bringing it up:

21% of all home sales are vacation/second home sales.   These are levels last seen in 2006. And during that period of time, the vacation homes were largely fraudulent. They were investment property purchases which were claimed to be second homes for the lower interest rates and add ons. (The percentage growth over the past three years is 21%, 57%, and 140%, unheard of before.) In other words, occupancy fraud has returned again.

To understand this, one looks at two criteria. The first is the all cash sales in vacation homes. It has dropped from 50% to 30% in just 4 years. Why pay cash when you can finance, just like from 2002 to 2007?

By itself, an argument can be made that this is not relevant, but then one must look at the mileage difference in vacation homes from the owner occupied property. With this, we see that the Median Distance in 2014 has plunged in three years from 435 miles to 200 miles. (In 2006, median distance was 200 miles, down from 390 miles in 2003.)
Next, we look at the Median Price of vacation homes. In 2014, it was $150,000, down from $168,700 in 2013. This was at a time when home prices were rising 5% or greater nationally.

The NAR is making excuses for these numbers and the drop in prices of vacation homes, but they are the same excuses as in 2006, and we saw what happened there.
I could get into the real technicals at this point, but the bottom line is that once again, the small time homeowner is buying investment properties cloaked as second homes. This will not end well for them.

Wesbury and others fail to look at the inside numbers to make a true evaluation of what is going on in the industry. Maybe they don’t have the time to spend in truly evaluating the situation, or they just don’t understand housing with its many components that affect its.  When one dwells down into the many factors, all is not well and no improvement is really going on.

One of the projects that I have been working on is the writing of a book on the Housing Crash and what caused it. I am trying to take into account the significant factors that contributed to the Crash, not just blaming it on lenders, sub-prime borrowers or the Community Reinvestment Act. Someone must tell the story of why things occurred as it did, and why it was inevitable that such would occur.

Also, I am trying to present the causes of why the Foreclosure Crisis remains, the failure of HAMP and other programs, and why Housing is not recovering and why it won’t for another decade at the very least and likely two decades. (A major reason is that the move up buyers no longer exists. With HARP and the low interest rates, the majority of people now have loans from 3 to 4% and are happy to remain in the homes that they currently own. Who the hell would buy a home with the inflated prices again occurring and expecting another fall in values, and if the Fed increases rates, with interest rates that will be substantially higher than what they have now?)

Finally, I will end with what needs to be done to revitalize the housing and lending industry, beginning with the repeal or reform of Dodd Frank.

Just more fun and more things to do........

Absolutely Bubble Mentality at work.

BTW, see the Housing Starts for Jan and also the Existing Home Sales.  Certainly there is no Housing Recovery ongoing, contrary to what people think.  Looks like a downward trend from Jun on. And looks like levels are equal to 1999 activity.  (Don't forget, these are seasonally adjusted.)

DougMacG,

I have problems with this analysis.  Here is why:

1. The authors cite Debt to Income being a 2 and use the formula of Gross Debt to Gross Income. This alone shows that they know not what they speak. Debt to Income is Monthly Debt Payments to Monthly Gross Income. This is the standard calculation for mortgages. Under traditional guidelines DTI would be no more than 28%  for housing and for total 36%. During the Housing Boom, it became 45% and then up to 55% or more.

2. There was another method that was always considered optimal and was similar to what the authors said, and that was a 3.5 ratio, Price to Income. Using that formula, everyone under bought in their scenario.

3. They write that "First, mortgage lending wasn't aimed mainly at the poor". True, but it was aimed at non qualified borrowers after 2003. By late 03, qualified borrowers no longer existed that loans could be sold to. So lenders dropped standards, issued state income loans, and if you had a detectable breath in the last 24 hours, you were qualified.

4. Borrowers were assumed to reflect the average characteristics of residents in these neighborhoods. But the new study examined the actual borrowers and found this wasn't true. Comparing borrowers to residents.....did they account for the fact that in poorer neighborhoods investors were heavily buying?

5. Third, the bulk of mortgage lending and losses — measured by dollar volume — occurred among middle-class and high-income borrowers. True, but they are looking at people buying much more expensive homes. The reality is that homes in the Midwest, South and most areas were far less expensive than in the Sand States. So this would distort things measurably.

6. Specifically, they question the notion that the main engine of the bubble was the abusive peddling of mortgages to the uninformed poor. In 2006, the poorest 30 percent of borrowers accounted for only 17 percent of new mortgage debt.  At this point, I get totally pissed off. The reason is that the homes they bought were far less expensive than in Ca and elsewhere.

I have reviewed over 5000 defaulted mortgages in depth. I have also done statistical analysis on over 10 million GSE loans. I can tell you that lower middle and lower income people bore the brunt of the damage (think $50k or less). They were targeted with products that they did not understand, and could not afford.

As I learned in the past two years with people I was working with, statistical analysis is only as good as the assumptions you make. And when you go into a project with preconceived ideas, the work you do will have a bias towards the conclusions that you are trying to determine.

Damned academics should go back to their ivory towers and hide. They should not be seen or heard.




 

Ed Pinto is a sharp guy. He nails it with this article.  For a timeline of events with the GSEs leading to their fall, check out the following link to a pdf.

http://www.aei.org/wp-content/uploads/2013/08/-pinto-bailout-america-timeline-government-mortgage-complex_1305029805.pdf

Pinto also does a Monthly National Mortgage Risk Index where he evaluates the Risk of loans defaulting. The methodology was similar to what I have developed in Phase 1 of my work, using FICO, LTV and DTI to determine default but he used 180 days late as the default measure. Using these measures, he finds that default risk for GSE 2014 originations is at 11%, and for FHA, about 23%.

http://www.housingrisk.org/wp-content/uploads/2015/01/Housing-Risk-NMRI-methodology-1-8-15.pdf  (This is the pdf link to describe how he does it.

This is the link to the current report. http://www.housingrisk.org/wp-content/uploads/2015/01/01.26.15-NMRI-data-download.xlsx

I do have problems with his methodology.

1. He uses 180 day delinquency for his measure, a Basel 3 designation. I would use 90 days. The reason is that 90 days is the standard for a loan being considered and in default. Once a loan goes 90 days late, the cure rate without any type of modification is less than 5%. So, using 180 days results in rates that are much less severe than 90 days, and in my opinion, are misleading.

2.  He used DTI for the income portion of the risk measurement. I used it initially and found problems with DTI when I started to consider actual cash flow and ability to pay/residual income measures.

What happens with DTI is that borrowers who have larger loan amounts have a greater residual income that lessens default risk. For example, a $400k loan, 43% DTI,  would feature a guy with much greater income and ultimately larger residual income after all debt service and living expenses, than those who have a 43% DTI on a loan amount of $200k or less. In fact, the guy who has the $200k loan amount or less, dependent upon family size, could have a negative residual income. And if your are talking about a family of 4, with 43% DTI and a loan amount of $150k or less, negative cash flow becomes an almost certainty.

The problem for Pinto calculating Residual Income is that the  available data did not have the data needed, so assumptions on income, debt and living expenses had to be calculated. I did so, and then ran the statistical analysis and found that the use of Residual Income for default was much more effective as a default indicator than using DTI.
Of course as I mentioned previously, lenders would have to deny loans using my methodology, so they did not want it.

The great part is that the new QM loans have ability to pay determination requirements. They can use either DTI or ability to pay, and will jump on using DTI so they do not have to deny doing loans and earning that profit. Meanwhile, I sit waiting for the defaults to mount, especially with FHA. Then I hit them hard.

New home sales are so great per Wesbury and others .............this really shows the truth.

Thought I would post the Pending Home Sales for Sept.  Once again, we see it falling.  Some key points:

Approximately 35-40% of the Pending Sales will be cancelled due to either Appraisal Issues or else loan denials, etc.

Yan states: “Fewer distressed homes at bargain prices and the acknowledgement we’re entering a rising interest rate environment likely caused hesitation among investors last month,” he said. “With investors pulling back, the market is shifting more towards traditional and first-time buyers who rely on mortgages to purchase a home.”

Distressed homes are down only because of government modification programs that are only temporary fixes for up to 5 years, at which time when payments increase the problems begin anew for those homeowners which number about 7 million loans. Plus 4 million loans are currently delinquent or in default. 2.5 million 2nd Lines of Equity are beginning to reset with payments hundreds of dollars higher, and when interest rates increase, this gets even worse. 2 million plus adjustable rate mortgages left over from the crisis which when rates increase, those loans will begin to re-default.

Add to home conditions that higher interest rates will depress home prices which creates more Neg Equity loans and which increases likelihood of default. Add in the fact that incomes have fallen for people with mortgages, (though Yan says otherwise) the financial stresses will lead to more defaults.

First time borrowers have been falling to about 22%. Increased interest rates will cause further decline in the ability to qualify until values begin to drop. Even then, this will not significantly impact purchases except to drive investors back into to market.

It is being reported that among first time buyers, over 50% are having down payment help from family members. Over 30% of down payment assistance loans default. FHA is the haven for first time home buyers with and without down payment assistance. Expect defaults to increase.

The major lenders are pulling back on FHA due to the risk of defaults and buybacks, even with QM standards. Many lenders are running from QM loans as well for the same reason, as well they should. There is an "unseen" trap with QM that is waiting to nail lenders doing QM on defaulting loans.

BTW, how does Yan expect first time buyers, or others for that matter, to be able to afford 5% yearly increases in home values if they can't afford homes now?  Also, how can he ignore the current delinquency conditions of homeowners, the re-default risk on modifications, and the 2nds and Adjustable Rate loans that will default?

It is nice that one can live in a "tunnel vision world" where you can ignore any negative factors that do not support the perspective that you want to sell. For this, Yan earns the idiot of the day award, which will then go to Wesbury when he comments on this.

BTW, when I mentioned above about the banks walking away from QM and FHA loans, the shift is to Mortgage Bankers doing the loans instead. Their goal is to do the loans as long as they have QM approval. They do not care about the Ability to Repay provision. As defaults occur with the riskier loans, many of the MB will fail because they do not have the asset base to repurchase defaulted loans.  (When a loan defaults, it loses approximately 50% of its face value minimum, unless it is severely modified. Add in the legal costs and borrower damages, and it is not going to be "pretty".)

Pat



Pending Home Sales Fall Slightly in August

WASHINGTON (September 29, 2014) – Pending home sales slowed modestly in August but contract signings remain at their second-highest level over the past year, according to the National Association of Realtors®. All major regions experienced declines except for the West, which rose for the fourth consecutive month.

The Pending Home Sales Index,* a forward-looking indicator based on contract signings, fell 1.0 percent to 104.7 in August from 105.8 in July, and is now 2.2 percent below August 2013 (107.1). Despite the slight decline, the index is above 100 – considered an average level of contract activity – for the fourth consecutive month and is at the second-highest level since last August.

Lawrence Yun, NAR chief economist, says contract signings are holding steady and fewer distressed sales and less investor activity is likely behind August’s modest decline. “Fewer distressed homes at bargain prices and the acknowledgement we’re entering a rising interest rate environment likely caused hesitation among investors last month,” he said. “With investors pulling back, the market is shifting more towards traditional and first-time buyers who rely on mortgages to purchase a home.”

According to NAR’s Profile of Home Buyers and Sellers, 81 percent of first-time buyers in 2013 who financed their purchase obtained a conventional or FHA loan. Overall, first-time homebuyers have been less prevalent from the housing recovery, representing less than a third of all buyers each month for the past two years.

Yun says first-time buyer participation should gradually improve despite tight credit conditions and the inevitable rise in rates. “The employment outlook for young adults is brightening and their incomes finally appear to be rising,” he said. “Jobs and income gains will help repay student debt and better position first-time buyers, setting the stage for improved sales growth in upcoming years.” 

The PHSI in the Northeast slipped 3.0 percent to 86.5 in August, but is still 1.6 percent above a year ago. In the Midwest the index fell 2.1 percent to 102.4 in August, and is 7.6 percent below August 2013. 

Pending home sales in the South decreased 1.4 percent to an index of 117.0 in August, unchanged from a year ago. The index in the West rose for the fourth consecutive month (2.6 percent) in August to 102.1, but still remains 2.6 percent below August 2013.

Existing-home sales are expected to be stronger in the second half of the year behind improved inventory conditions, continuously low interest rates and slower price growth. Overall, Yun forecasts existing-homes sales to be down 3.0 percent this year to 4.94 million, compared to 5.09 million sales of existing homes in 2013. The national median existing-home price is projected to grow between 5 and 6 percent this year and 4 and 5 percent next year.

Now, for the comments on housing from a guy I am starting a joint venture with.....for much better understanding of reality, you read this guy and not Wesbury.....

http://mandelman.ml-implode.com/

http://mandelman.ml-implode.com/2014/08/i-dont-care-what-the-media-says-housing-market-is-horrible-and-homeowners-still-suffering-through-the-loan-mod-process/

I Don’t Care What the Media Says, Housing Market is Horrible, and Homeowners Still Suffering through the Loan Mod Process



I know what sorts of headlines run rampant through the media these days. It’s nothing new… it’s been going on non-stop since at least 2008. It’s also utter and complete nonsense.

Housing market horrors…

Now, I said this would happen so many times last year, that it’s annoying to have to repeat myself, but the housing market has been hit by yet another foreseeable perfect storm. To begin with, ever since the president’s Making Home Affordable program was announced, we’ve been refinancing the same people over and over again, this last time around at rates as low as 3.5 percent fixed.

So, that ended last July and won’t return because even the almost-all-powerful Fed can’t get rates low enough to pull the same trick again, so although there will always be some that refinance, any sort of refi boom is DOA.

And then there’s all them new-fangled rules, supposedly put in place to right the wrongs that caused the mortgage and housing meltdown… Dodd Frank, the CFPB, TILA, RESPA… and anyone who thought these new rules wouldn’t suppress home sales was simply delusional.

Of course, all of these things are on top of the rest of the problems we’ve neglected to fix for the last six years. Underwater homes are still a huge problem.
The national average is only 20 percent, but no one sells their home to break even, so when you factor in sales commissions, moving expenses and the need for a 20 percent down payment, the percentage of homes underwater is… I don’t know… HIGH. Like, it wouldn’t surprise me to find out it’s over 70 or 80 percent, not that anyone has any incentive to find out. And most of whoever is left probably likes their home and doesn’t want to move.

The evidence is abundant…

During the fourth quarter of 2013, Black Knight reported that origination volume dropped below 400,000 mortgages for the first time since 2011. And by year-end, we were at the lowest point since mid-2008 when volume plummeted to around 300,000, and it felt like the world might not make it through the bloodletting.
However, mortgage originations during the first quarter were pathetic, down some 70 percent year-over-year at Citi and Chase, and its safe to assume elsewhere as well. Then the second quarter was similarly bad… originations were down 66 percent year-over-year at the end of Q2.

Now, the American Enterprise Institute (AEI) has reported that, “potential default rates remain nearly double the 6 percent maximum AEI says is conducive to a stable market, suggesting there’s been no “discernible impact from QM [Qualified Mortgage] regulation.”

Unnamed AEI researchers were quoted in DS News as saying: “Risk in the mortgage marketplace remains perilously high.”

So, that’s all very encouraging in terms of pointing to the obviously bright future ahead, as I’m sure you’d agree.

All done waiting for the kids to come home?

Zillow and Puulseonomics, whoever they are, just published the results of their study of why “millennials” are still not buying homes like no one thought they would.
Apparently, “a panel of economists, real estate experts, and market strategists” has finally found the courage to agree publicly that “the median age of first-time homebuyers is likely to keep moving up in the next decade,” because they’ve all concluded at long last that the millennials have decided to sit out the carnage and not buy homes until later in their lives.

You know, later in their lives… like maybe the times of their lives when they have jobs, can qualify for loans, and aren’t still watching their parents, aunts and uncles losing homes every year, because those sorts of times would seem to be worth waiting for as far as house hunting is concerned.
Hey, maybe some of the millennials are simply waiting to buy their own parent’s home after foreclosure as an REO. What? It could happen.
The National Association of Realtors said that the typical first-time homebuyer in 2013 was 31 years old, but a significant number of “experts’ sais they think the average age will go up to 34 or even older in the years to come.

Homeownership in the United States today is at a 20 year low, and the Zillow/Pulse study reported that the largest declines are among “younger and early middle-aged Americans,” which could mean that many of the older folks have already lost homes to foreclosure, like maybe over the last six years, or that the older homeowners have become too much of a pain in the neck to foreclose on, I’m not sure which is more likely.

Of course, student loan debt and bleak prospects for good jobs were cited as the only culprits, which just shows me that they think that collectively we’re dumber than a stump.

Household formation is still down at levels never before seen in this country, and there’s simply no need to buy a home until you’ve got a household to put in it. And household formation is likely to be down in part because of student loan debt, but also because fewer people want to get married when they’re poor.
And as to the big picture, the survey concluded that, “it’s way too soon to conclude that the market has healed and returned to the old normal,” thus establishing for all to see that it is they who are dumber than stumps. (Does that last sentence make me something less than a serious journalist, or just someone who tells truth to power?)
Triple Celebrity Foreclosurcide…

And speaking of power, Burt Reynolds has lost his motion in a Florida court to have his foreclosure thrown out, instead the judge told Bank of America to proceed with the foreclosure on his waterfront Hobe Sound home known as Valhalla. Merrill Lynch filed the foreclosure action in 2011, after Burt fell behind on his payments.
Witnesses on the scene said that Burt, asking that the court call him “Lewis,” turned to them and said: “Sometimes you have to lose your house ‘fore you can find anything.”

Actress Mischa Barton, former star of “The O.C.” is officially in foreclosure, after the bank filed a Notice of Default this week on her Beverly Hills property. Barton is said to have bought the place for $6.4 million in 2005, when presumably she was still a famous movie star. Now $100,000 behind, TMZ.com reported that she’s been trying to unload the place since 2010.

Her mortgage is approximately $4.25 million, so it would seem that she’s down over $2 million since she bought it, and couldn’t sell it for what she owed. She even tried renting it out for $35,000 a month, but couldn’t find another member of the nouveau riche crowd to over-pay to live in the place.

Just further evidence of how red hot the Beverly Hills housing market has gotten over the last couple years as home prices have reportedly skyrocketed to 2006 levels… apparently everywhere but in the 90210.

Rounding out the celebrity trifecta is former heavyweight boxing champion, Evander Holyfield, whose failed business ventures, two divorces and hefty six-figure annual child support bills, have lad him to recently lose his 54,000 square foot mansion complete with 109 rooms, bowling alley and in-home theater, to foreclosure.

It took nearly four years for JPMorgan Chase to take ownership of the shopping mall size home in Fairburn, Georgia for $7.5 million. Holyfield reportedly owed north of $14 million. So, is that another example of home prices recovering? Georgia mansions are still down by 50 percent? How low were they?

Sources say that Holyfield never applied for a loan modification, but if he had, my advice to Chase would have been that they place armed guards, motion sensors, and video surveillance all around the Holyfield file 24 hours a day in a fire proof environment in order to make sure that his paperwork could not be lost under any circumstances. I would not want to be the guy that lost his paperwork, would you?

Loan modification madness…

With all of this swirling around us every day, the news continues to report only that economic recovery is sweeping the nation. That anyone still listens to such fanciful tales, let alone believes them, is amazing to me. The only explanation I can come up with is that optimism is a very hard thing of which to let go.


But we all know the real deal, we can feel the truth about the economy, we know what recovery feels like and this is not it.

Every month, foreclosures are supposedly down or coming to an end, until they’re up in Illinois, or breaking records in Connecticut… the numbers are always manipulated, and there’s no money in telling the truth about the whole mess, so no one does.

Although I couldn’t prove it, because I don’t keep track of the specific numbers, I think Mandelman Matters is a valid barometer for what’s going on with foreclosures and loan modifications. I hear from homeowners everyday from all over the country and those I can help in some way, I help. So, if the news about foreclosures were true, I’d know it.

Yes, for some homeowners loan modifications are easier to get than they have been in the past, but that’s not to say the process is easy or fun by any means. The people who have it the easiest are those with W-2 income and one home, who aren’t more than a year behind.

But, for the self-employed with a rental property who are more than a year behind… it’s like playing Pin-the-Tail-on-the-Donkey barefoot in a pitch black room filled with dangerous objects and broken glass all over the floor. It’s not impossible, by any means, I see these sorts of cases get approved every week, but it’s next to impossible without some sort of real expert guidance.

I wish I could do more to help more people, but I’m just one person and I can’t really afford to do what I do now. And the problem is, it’s obvious that our government, both state and federal, have essentially given up on doing anything more to make anything better. So, I fear this is it.

If you’re reading this and need help, especially if you’re with Bank of America or Ocwen, but also if you’re with Chase and/or a few others like SPS, SLS… maybe even Nationstar, you can contact me at Mandelman@mac.com. And if I can help you in some meaningful way… I certainly will.

People ask me why I continue to do what I do all the time now… and I wonder about the same thing myself every few hours on some days. The reasons are below… from one homeowner I spoke with just a few days ago… and another I’ve never spoke with, but who I apparently helped anyway.

DougMacG:

To go with your Collections post about the 35%, here is some more numbers to put things into a better perspective. Per the Fed

33% of all people have no revolving debt.
33% of the people have less than $1000 in revolving debt.
The remaining group has all the rest of the revolving debt.

Dependent upon the source, the "average" revolving debt in the country is from $8k to $15k.  (The differences are based upon what is considered revolving debt.)  So if 66% of all people have $1000 or less in revolving debt, imagine what the real numbers are for those who hold all the debt.

 

Will Wesbury and others start to believe that the party is over?  Or is this the result of potential buyers deciding to go on a June vacation after school ended.  Waiting with baited breath for the excuses.......


New Home Sales Plummet

WASHINGTON (AP) — Sales of new U.S. homes plunged in June, a sign that real estate continues to be a weak spot in the economy.

New home sales fell 8.1 percent last month to a seasonally adjusted annual rate of 406,000, the Commerce Department said Thursday. The report also revised down the May sales rate to 442,000 from 504,000.

Buying of new homes fell 20 percent in the Northeast, followed by less extreme declines in the Midwest, South and West. The modest sales caused the inventory of new homes on the market to increase to 5.8 months, the highest since October 2011.

The median sales price was $273,500, up 5.3 percent over the past 12 months.

Home sales had been improving through the middle of 2013, only to stumble over the past 12 months due to a mix of rising prices, higher mortgage rates and meager wage growth.

The pressures from mortgage rates have eased since the start of 2014 and the pace of price increases have slowed. Still, other indicators suggest that home-buying has stalled after rebounding from lows reached during the Great Recession.

The National Association of Realtors reported that sales of existing homes increased 2.6 percent in June to a seasonally adjusted annual rate of 5.04 million homes. It marked the first time that sales have been above the 5 million-mark since October.

Economists were encouraged by the second straight monthly gain in existing home sales, though those sales are still hovering below the recent peak of 5.38 million sales hit last July.

At least Wesbury admits that Single Family have been flat for the last two years.......

But single family is the key to housing recovery. Multi units are apartments and condos for the most part. They do not stimulate Single Family actions in any meaningful manner, except for condo purchases which are generally people who could not buy single family.

BTW, Chase is bailing out on FHA lending. Too much risk as I have been saying all along. Chase represents just over 2% of FHA lending and dropping down to probably 1.5%.

Mortgage bankers are now up over 50% of all lending activity, if current reports are correct. But that is in an environment where mortgage lending has dropped 72% from last year levels.

First time buyers are now about 20% of activity, down from traditional levels of 35-40%.  And most are FHA, of course.  Moveup buyers are lacking in traditional numbers like first time buyers.  And with the hot money investors leaving the market, watch out.

Pay attention to Phoenix. The party is over there.....again.....Homes sales are down considerably and home values are falling again.  Vegas will be next.

Hey Wesbury and you other idiots bulls:

What happened to Housing Starts?  Here was the most positive spin I could find to post.  Maybe Wesbury can use it to draw up his latest report.

Apr, May and Jun are supposed to be the best months for housing, and this is all we get?  Interesting that this happens as housing inventory is increasing, existing sales are down year over year, pending sales are weaker than expected and new home sales are not that great.  Maybe Obama can restart housing by offering all the new illegal children new homes free to live in, and then bring the families in.

Going to be a fun second half of the year.



Housing starts hit slowest pace in nine months

WASHINGTON - U.S. home construction fell in June to the slowest pace in nine months, a setback to hopes that housing is regaining momentum and will boost economic growth this year.

Construction fell 9.3 percent last month to a seasonally adjusted annual rate of 893,000 homes, the Commerce Department said Thursday. That was the slowest pace since last September and followed a 7.3 percent drop in May, a decline even worse than initially reported.

Applications for building permits, considered a good indicator of future activity, were also down in June, dropping 4.2 percent to a rate of 963,000 after a 5.1 percent decline in May.

The worse-than-expected June performance reflected a big drop in activity in the South, where construction plunged by 29.6 percent last month.

Analysts, however, said that the June decline in construction may have been influenced by temporary factors such as heavy rain in parts of the South which could have held back housing starts in that region.

Jennifer Lee, senior economist at BMO, said it was too soon to conclude that the housing recovery has stalled. "After all, job growth continues, mortgage rates are near their lows for 2014 and homebuilder confidence has been increasing," she said in a research note.

"In short, much weaker than expected, but the data are volatile and the plunge in starts was all in one region. We view the homebuilder survey as more of trend-setter over time -- it suggests that the weakness in this report be discounted," said Jim O'Sullivan, chief U.S. economist at research firm High Frequency Economics.

The overall weakness reflected a 9 percent fall in construction of single-family homes, the biggest part of the market, and a 9.9 percent drop in construction of apartments and other multi-family units.

All of the June weakness was confined to the South, where about 40 percent of home construction occurs. Construction was up 14.1 percent in the Northeast, 28.1 percent in the Midwest and 2.6 percent in the West.

Home construction has struggled to gain traction this year, limiting its ability to contribute to economic growth. Part of the weakness reflected an unusually severe winter which hampered construction. But rising home prices, a rise in mortgage rates from historically low levels and tighter lending standards imposed since the financial crisis have also been a barrier, especially for potential first-time buyers.

There still is hope that housing will perform better in the second half of the year although Federal Reserve Chair Janet Yellen told Congress this week that the slowdown in housing is one of the concerns at the Fed and that its forecast for an economic rebound may prove to be too optimistic.

The National Association of Home Builders, however, reported Wednesday that homebuilder confidence surged in July, reflecting heightened expectations that the second half of the year will see rising sales. The builders' sentiment index rose to 53, up four points from a revised reading of 49 in June. Readings above 50 indicate more builders view sales conditions as good rather than poor. The July reading was the first month above 50 since January when the index stood at 56.

New home sales surged 18.6 percent in May to a seasonally adjusted annual rate of 504,000, the highest level in six years, while sales of previously owned homes rose 4.9 percent, the biggest one-month gain in nearly three years, to a rate of 4.89 million homes.

Even with the big May increases, sales of new homes are still running at just about half the pace of a healthy real estate market.

Economists expect there is a lot of pent-up demand for homes after many potential buyers put off purchases during the 2007-2009 recession and the weak recovery since that time. Job growth has accelerated in recent months, with an increase of 288,000 jobs in June. That has helped to push down the unemployment rate to a nearly six-year low of 6.1 percent in June.

There is optimism that employers will step up their hiring further in the second half of this year as they respond to a rebound in overall economic growth following a weak winter.

The economy shrank at an annual rate of 2.9 percent in the January-March quarter but analysts believe growth rebounded to around 3 percent in the April-June quarter and will remain around that level for the remainder of this year.