Housing Supply Tight for First Time Home Buyers:

In roughly half of the top 100 cities in Trulia's analysis, first-time buyers with 33 percent of the local median income could afford to buy the median-priced starter home.

Some eight years after its worst collapse since the Great Depression, the housing market has recovered in much of the country, with prices approaching peak levels set a decade ago.

But the supply of affordable houses available for first-time buyers remains tight, leaving many on the sidelines.That shortage is worsening, according to real estate site Trulia.

Researchers there say the number of affordable homes on the market for the average first-time homebuyers this year took its biggest year-over-year drop in three years, falling 12.1 percent. The good news for younger home shoppers is that wages have begun rising after a long, flat spell following the Great Recession.

Though incomes are up, home prices have been rising even faster in many cities. That's pricing out more households looking to get started as homeowners.

To afford the median-priced starter home, first-time buyers, on average, now have to pay some 39 percent of their monthly income — up 2 percent in three years. But mortgage lenders have held the line on strict credit and income standards when they approve a mortgage. As a result, there's a squeeze on the supply of starter homes.

Households moving up to a larger home have it a lot easier, Trulia found. A buyer of a so-called "trade-up" home needs just 25.5 percent of their monthly income. Buyers at the upper end need just 14 percent of monthly income to afford a premium home, according to Trulia's data. 

Smart Home Technologies Becoming More Important to Buyers:

As smart homes become more popular among consumers, buyers and sellers are showing greater interest in those homes and smart-home technologies.

A recent survey of home buyers by the National Association of Realtors showed that in terms of smart home devices, 37 percent of Realtors said clients find smart locks to be very important, followed by lights at 29 percent and thermostats at 26 percent. Forty-three percent said clients were neutral about the importance of voice control features and 38 percent for smart appliances and doorbells.

When it comes to the importance of smart home functions to their clients, 80 percent of Realtors see security as very or somewhat important. Nearly half of Realtors view privacy as a very important smart home function to their clients, while 30 percent see it as somewhat important. Four in ten Realtors see both cost savings and energy savings to be very important to their clients and 38 percent see comfort to be a very important smart home function.

According to the report, slightly more than half of Realtors' clients were not familiar with what's available for smart home technology. Nearly 40 percent of Realtors discussed security and privacy issues with their clients followed by technology cost at 31 percent and interoperability at 6 percent.

Of the many types of smart home technologies available, 42 percent of Realtors said clients were most interested in smart home devices, followed by whole home technology (22 percent) and smart home technology for specific rooms (13 percent); 41 percent of clients were not interested in any of these technologies. 

Ben Carson to be new head of HUD:

President-elect Trump has officially nominated Dr. Ben Carson to head up the Department of Housing and Urban Development.

“I am thrilled to nominate Dr. Ben Carson as our next Secretary of the U.S. Department of Housing and Urban Development,” Trump said in a statement released today. “Ben Carson has a brilliant mind and is passionate about strengthening communities and families within those communities.”

The selection is considered to be very interesting as Dr. Carson (who grew up in Detroit) does not share the classical views of prior HUD secretaries.  Last year, Carson publicly criticized an Obama policy requiring that cities publicly report racial bias in their housing patterns, the Post reported.

“These government engineered attempts to legislate racial equality create consequences that often make matters worse,” Carson wrote in the Washington Times. “There are reasonable ways to use housing policy to enhance the opportunities available to lower-income citizens, but based on the history of failed socialist experiments in this country, entrusting the government to get it right can prove downright dangerous.”

Separately, Trump selected Steve Mnuchin, the former Goldman Sachs executive tapped for the Treasury job.  He said that one of the things at the top of the Trump administration’s agenda will be “getting Fannie and Freddie out of government ownership.”

The news sent Fannie and Freddie stocks skyrocketing to 45% above their opening price, to levels not seen since June of 2014. Both stocks closed near $4.40.

With these two appointees, the housing market is in store for many policy and structural changes in the coming years. 

2017 Projections Show Tight Housing Market:

It has already started, the wave of projections for 2017.  And as we are seeing more and more start to hit, they have a common theme: 2017 will continue to be a very tight market.

The latest prognosis comes from Money magazine which reported that nationally, home prices are expected to keep rising, albeit more slowly— 3.5% in 2017, vs. 4.5% in 2016, per Moody’s Analytics projections.

In 2016, small homes have seen much sharper price growth than larger ones, and urban areas have appreciated faster than metro outskirts— and both trends are expected to continue in 2017 and brace yourself: Inventory has tumbled among less expensive homes, which means your money may not buy as much as you expect.

If you’re looking to trade up to a larger home, you’re in the housing market’s sweet spot, and the first part of 2017 should be a particularly good time to strike. Over the five years between 2011 and 2016, the average price on a two-bedroom house climbed 59% nationwide, while four-bedroom houses rose a more modest 41%, according to an analysis by Attom Data Solutions. Inventory has also risen at the higher end of the market, climbing almost 8% for homes in the $500,000 to $750,000 range.

But if you’re hoping to cash out and scale back—or if you’re a first-timer looking for a starter home—you face a tight market with low supply and greater competition from rival buyers.

Housing Starts Hit 9 Year High:

The Commerce Department showed that U.S. new-home construction jumped to a nine-year high in October driven by a strong pickup for single-family housing.

Residential starts surged 25.5 percent to a 1.32 million annualized rate, the fastest since August 2007 and exceeding the highest market projections. The increase from September was the biggest since July 1982. Multifamily-home building was also up, by a whopping 68.8 percent.

The figures indicate the housing market has been making great progress due to increased hiring and healthier finances that have been driving demand.

Single-family house construction rose 10.7 percent to an 869,000 rate, the highest since October 2007.

Permits, a proxy for future construction, increased 0.3 percent to a 1.23 million annualized rate. They were projected to fall to a 1.19 million pace, according to the survey median.

The National Association of Home Builders/Wells Fargo index of home builder sentiment in November held near the highest level of the year, figures showed on Wednesday. Readings greater than 50 mean more respondents reported market conditions as good. A measure of prospective buyer traffic rose.

Homeowners are Twice as "House Rich" as They Were 5 Years Ago:

America's housing market is heating up again, fortifying the finances of current homeowners and frustrating potential first-time buyers.

After hitting bottom in 2012, home prices took off dramatically before leveling off a bit in mid-2014. In the last two months, though, they turned higher again. The amount of equity homeowners now have — the value outside their mortgage debt — has doubled in the last five years, according to CoreLogic.

The latest read on September home prices showed a 6.3 percent annual gain, a touch bigger than August and a clear sign that prices are heating up again after cooling through much of spring and summer.

"Home-equity wealth has doubled during the last five years to $13 trillion, largely because of the recovery in home prices," said Frank Nothaft, chief economist for CoreLogic. "Nationwide during the past year, the average gain in housing wealth was about $11,000 per homeowner, but with wide geographic variation."

Homeowners today show more wealth on paper, but they are not extracting it at nearly the rate they did during the last housing boom. Near-record-low mortgage rates have certainly prompted thousands of borrowers to refinance and lower their monthly payments, but a very small share have extracted cash in these refinances and home equity lines of credit (HELOC).

So homeowners get richer, and those trying to become homeowners have to face not just higher prices, but a severe lack of homes for sale, especially at the entry level. There is clearly demand, just not enough supply.

Housing Market Trends

We were certainly traveling on happy trails last week following two upward trending housing market reports. New Home Sales in September went up 3.1%, just shy of a 600,000 unit annual rate. Compared to a year ago, sales are up 29.8%. If that doesn't make you happy, consider this. After experiencing a summer lull in August, new home sales in September posted their fastest sales pace since 2008, excluding July's excellent numbers. The biggest obstacle to higher sales remains low inventories. As those slid in September, it shows builders are falling behind demand, so there's lots of room to increase construction activity.

The other happy housing report? The Pending Home Sales index of contracts signed on existing homes was up 1.5% in September following its August dip. Combining readings from recent months indicates existing home sales in coming months should continue the gains made in September. The index is 2.4% ahead of September last year, its 25th month in a row of year-over-year increases. The national Case-Shiller home price index was up 0.6% in August and up 5.3% versus a year ago. The FHFA index of prices for homes bought with conforming mortgages gained 0.7% in August and 6.4% over a year ago. Should make more homeowners happy enough to list their properties.

Using Drones to Collect Data:

The government tracks commercial construction data, as do other companies, through building permits, but it is often revised over and over and is never exact. CoStar, like its competitors today, used to put more than 1,000 researchers in cars crisscrossing the nation to gather data from the ground. That is time-consuming, tedious and expensive. It would take CoStar, for example, a year to fully cover the Baltimore area; with the small Cessna plane and mapping system, it can do it in three days, with far more accuracy and cost efficiency.

Above Southern Maryland, Andy Florance is spying on millions of miles of real estate in the United States and around the world, as his team is doing on this day over the suburbs of Washington.

Using a low-flying, military-grade reconnaissance plane, equipped with cameras once used to gather data over Iraq and Afghanistan, CoStar Group, a commercial real estate information company, is gathering about twice as much construction data as its competitors. It is exactly what CoStar CEO Florance envisioned a year ago, when he made a multimillion dollar buy into the technology.

"Investors, lenders, developers, people that manage apartment buildings need to understand exactly how much new competitive supply is coming into each sub-market or neighborhood so they can set rents, they can determine what additional inventory they want to build," said Florance, standing in a hangar in front of the small white plane. "This technology allows us to track construction activity in the United States in a way that no one has ever been able to do."

"We can actually operate and cover the United States, 168 markets, for less than $1 million a year using this technology," said Florance. "We typically collect twice as much under-construction activity as any of our competitors, and that can be as much as hundreds of thousands of apartment units that we know about that no one else knows about."

"New construction activity will move rents down, so if I own a large building, and two new buildings are being built right next to my building, I need to lower my rents before they deliver, so that I can lease up my building before I have to compete against these new buildings," Florance said. "Often the decision-makers that are setting rents are thousands of miles away. Being able to capture really high quality information like this and provide it to our clients allows them to more effectively set their rents and be able to position against competitors remotely."

Home Builder's Sentiment Jumps Two Points:

Builder confidence in the market for newly constructed single-family homes  in August rose two points to 60 from a reading of 58 in July on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). Any reading above 50 is positive, a reading below 50 is negative.

“New construction and new home sales are on the rise in most areas of the country, and this is helping to boost builder sentiment,” said NAHB Chairman Ed Brady, a home builder and developer from Bloomington, Ill.

“Builder confidence remains solid in the aftermath of weak GDP reports that were offset by positive job growth in July,” said NAHB Chief Economist Robert Dietz.  “Historically low mortgage rates, increased household formations and a firming labor market will help keep housing on an upward path during the rest of the year.”

Two of the three HMI components posted gains in August. The component gauging current sales conditions rose two points to 65, while the index charting sales expectations in the next six months increased one point to 67.  The component measuring buyer traffic fell one point to 44.

Looking at the three-month moving averages for regional HMI scores, the South registered a two-point uptick to 63, the Northeast rose two points to 41 while the West was unchanged at 69. The Midwest dropped two points to 55.

Mortgage applications jump 7% as rates drop on weak GDP

Lower interest rates driven by a weak GDP reading for the second quarter boosted mortgage applications last week, a sharp reversal from the previous week.

Total mortgage application volume increased 7.1 percent on a seasonally adjusted basis last week from the previous week, when applications fell 3.5 percent, according to the Mortgage Bankers Association.

The drop in interest rates for the second week in a row also spurred a 10 percent increase in mortgage refinance activity from the previous week.

With lingering concerns over a weak second quarter reading of US GDP growth, along with continuing anxiety over global growth and financial markets, rates edged lower for the second week in a row, " said Joel Kan, associate vice president of industry surveys and forecasts at the Mortgage Bankers Association. He said Friday's strong employment report for July was too late to influence average mortgage rates.

He said home purchase applications increased 2.6 percent last week, reversing three-straight weekly declines. The level was almost 13 percent higher than a year ago.

GDP for the second quarter came in at 1.2 percent, versus an expected 2.6 percent.

The increase in refinance activity was led by government refinance applications, which saw a 27 percent increase. 

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 3.65 percent from 3.67 percent, with points increasing to 0.34 from 0.30 (including the origination fee) for 80 percent loan-to-value ratio loans. That rate is down 48 basis points in the past year.

Matthew Graham, chief operating officer of Mortgage News Daily, said that the strong uptick in refinancing applications made sense given recent events, which spurred demand.

"It might seem like refi apps increased more than is justified by the drop in rates, but it actually makes fairly good sense if we break down the timing," Graham wrote in an email. "The following week [after the July FOMC decision] began with rates near two week lows, more aggressive government loan pricing noted at several lenders... all serving to motivate application demand."

UPDATED: This story was updated to include comments from Matthew Graham, chief operating officer of Mortgage Daily News.

Source: Ivan Levingston

Special to CNBC.com

Pending Home Sales 2nd Best in Last 12 Months:

Pending home sales, based on signed contracts but not yet closed, rose 0.2 percent in June compared to May and is 1 percent higher than June 2015, according to the National Association of Realtors (NAR).

The improvement puts sales at the second-highest level of the last 12 months.

"Until inventory conditions markedly improve, far too many prospective buyers are likely to run into situations of either being priced out of the market or outbid on the very few properties available for sale," said Lawrence Yun, the NAR's chief economist, in a release.

Housing inventory was almost 6 percent lower at the end of June compared to a year ago, and home prices, while easing up slightly, are still rising at a faster pace than wage and income growth.

Realtors say the one positive development in the first half of this year was a decline in investor sales activity, from a high of 18 percent in February to a low of 11 percent in June. That is the smallest share since July 2009 and likely due to the drop in the number of distressed homes for sale.

"Limited selection of homes at bargain prices is reducing the number of individual investors willing or able to buy," wrote Yun. "This will hopefully open the door for first-time buyers, who made some progress last month but are still buying homes at a subpar level even as rents increase at rates not seen since before the downturn." 

New Record High Home Prices:

boosted by a greater share of sales to first-time buyers not seen in nearly four years, existing-home sales maintained their upward trajectory in June and increased for the fourth consecutive month, according to the National Association of Realtors®. Only the Northeast saw a decline in closings in June, and sales to investors fell to their lowest overall share since July 2009.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, climbed 1.1 percent to a seasonally adjusted annual rate of 5.57 million in June from a downwardly revised 5.51 million in May. After last month's gain, sales are now up 3.0 percent from June 2015 (5.41 million) and remain at their highest annual pace since February 2007 (5.79 million).

The median existing-home price for all housing types in June was $247,700 (a new record), up 4.8 percent from June 2015 ($236,300). June's price increase marks the 52^nd consecutive month of year-over-year gains and surpasses May's peak median sales price of $238,900.

Total housing inventory at the end of June dipped 0.9 percent to 2.12 million existing homes available for sale, and is now 5.8 percent lower than a year ago (2.25 million). Unsold inventory is at a 4.6-month supply at the current sales pace, which is down from 4.7 months in May.

The share of first-time buyers was 33 percent in June, which is up from 30 percent in May and a year ago and is the highest since July 2012 (34 percent). Through the first six months of the year, first-time buyers have represented an average of 31 percent of buyers; they were 30 percent in all of 2015.

Lawrence Yun, NAR chief economist, says the impressive four month streak of sales gains through June caps off a solid first half of 2016 for the housing market. "Existing sales rose again last month as more traditional buyers and fewer investors were able to close on a home despite many competitive areas with unrelenting supply and demand imbalances," he said. "Sustained job growth as well as this year's descent in mortgage rates is undoubtedly driving the appetite for home purchases." 

Video Game May Help Sales:

Pokemon Go, has teenagers and adults jumping off of the couch and into the real world with fresh air and vitamin D.  And savvy real estate agents smell "opportunity". Real estate agents are starting to play the game of using the game. An ad on Zillow for a home in Redmond, Washington, details a long list of upgrades, including a new roof, new hardwood floors, a tankless water heater and, at the bottom of the list, a "Pokemon Go" gym less than five minutes away. Another in Tacoma, Washington, goes into more detail: "3 Pokemon Go Gyms, and 5 Pokestops. Confirmed Squirrtle sighting in the backyard, and there may or may not be a Charzard lvl 7 in the neighbors shed. Must see to appreciate!" Using "Pokemon Go" to drive higher foot traffic to any form of real estate seems like a no-brainer, but when it comes to residential real estate, foot traffic hasn't exactly been the problem this year. Still, you never want to pass on any marketing gimmick. Real estate agent Jay Glazer hoped a redesigned roof deck might help draw potential buyers to the open house at his $1.5 million listing but, just in case, he added this to the ad: "I'm fairly certain there is a PIKACHU at this open house, don't miss it." Of the dozen or so people who showed up, only one knew exactly what "Pokemon Go" was, but Glazer said it was still worth adding the app as something of an appetizer to the ad. "I think at the end of the day the goal is to get as many people through the door and interested in the apartment, and ultimately, if there's a 'Pokemon' obsessed person out there who also likes this home, then we want them here, and this is the best way to attract them," said Glazer, 32, a "Pokemon Go" player himself.

Foreign Buyers Flood our Market:

With Inventory levels tight and rising prices, the last thing our red hot real estate market needs is more demand.  Yet, that is exactly what we have and it is providing even more support for our housing market.

The appetite for U.S. real estate continues to flourish, but international buyers are shifting their sights from luxury to less-pricey properties. This may be due to overall higher home prices, along with a stronger U.S. dollar, which both cost foreign buyers more at the negotiating table.

Foreign buyers purchased $102.6 billion of residential property in the U.S. between April 2015 and March 2016, according to NAR's annual report on international activity in U.S. real estate.

The number of properties purchased rose 2.8 percent to 214,885. The value of homes bought by foreigners was typically higher than the median price of all U.S. homes.

Lawrence Yun, chief economist of the National Association of Realtors (NAR) said that foreign purchasers' overall sales dollar volume was the second highest since 2009.

Chinese purchasers continued to outpace all others, with their dollar volume exceeding the total of the next four ranked countries combined. Their dollar volume of sales, at $27.3 billion, was a slight decrease from last year's survey but was still three times as much as Canadian buyers, who were ranked second. Chinese buyers also bought the most expensive homes at a median price of $542,084.

London had been a favorite of foreign investors, but the impact of the Brexit vote is already hitting the housing market there. Buyers from the United Kingdom were the fourth-largest consumer of U.S. real estate in the data that was gathered before the Brexit vote.

As for U.S. destinations, five states accounted for half of foreign buyer purchases: Florida, (22 percent), California (15 percent), Texas (10 percent), Arizona and New York (each at 4 percent). Latin Americans, Europeans and Canadians, who historically favor warmer climates, were most prevalent in Florida and Arizona. Asian buyers flocked to California and New York. Texas was more a mix of buyers from Latin American, the Caribbean and Asia. Texas may be more of an investment play, as demand for single-family rentals there remains strong. 

City OKs Master Plan For Canyon Country Community Center

Santa Clarita City Council official approved Tuesday a master plan for a new Canyon Country Community Center.

The master plan calls for a slightly less than 7-acre patch to offer east side residents a “tot lot,” a special events court, the center, an open-play area and a pedestrian bridge, in addition to several other features.

The process to develop the current spot started in September 2014, when City Council authorized the purchase of three parcels comprising of 6.5 acres located in Canyon Country, northeast of the intersection of Soledad Canyon Road and Sierra Highway, according to city officials.

The master plan calls for a slightly less than 7-acre patch to offer east side residents a “tot lot,” a special events court, the center, an open-play area and a pedestrian bridge, in addition to several other features.

The process to develop the current spot started in September 2014, when City Council authorized the purchase of three parcels comprising of 6.5 acres located in Canyon Country, northeast of the intersection of Soledad Canyon Road and Sierra Highway, according to city officials.

The preliminary plan provided for the location of a proposed 20,000 square foot community center building with parking and passive recreational amenities. The initial parcel of land has proved difficult to develop as intended because of its shape, and city officials are currently negotiating with county officials to purchase an adjacent piece of land.

The Canyon Country Community Center Conceptual Master Plan was presented to the Parks, Recreation, and Community Services Commission on May 5.

“The newly proposed Canyon Country Community Center provides a great asset for our community as well as an opportunity to improve a major section of Sierra Highway,” said Alan Ferdman, chair of the Canyon Country Advisory Committee. “What a super project, our community services will be much improved and appreciated.”

The commissioners, all of whom participated in one or more of the outreach events, voiced their support of the project, with some commissioners voicing support for the addition of a half-court basketball court somewhere on the site.

Other commissioner comments and concerns relative to an emphasis on safety and other design issues were taken by staff for consideration during the design phase of the project.

Home Builders' Sentiment Rises as Prices Hit New Record:

After sitting tight for four straight months, confidence among U.S. home builders improved in June. A monthly survey of builder sentiment from the National Association of Home Builders (NAHB) rose two points to 60. Anything above 50 is considered "positive" sentiment.

"Builders in many markets across the nation are reporting higher traffic and more committed buyers at their job sites," said NAHB Chairman Ed Brady, a home builder and developer from Bloomington, Illinois. "However, our members are also relating ongoing concerns regarding the shortage of buildable lots and labor and noting pockets of softness in scattered markets."

June's reading is the highest since January of this year but the same as June of 2015. Of the index's three components, all posted gains. Current sales conditions rose one point to 64, sales expectations in the next six months increased five points to 70. Buyer traffic rose three points to 47, but it is still the only component in negative territory.

"Rising home sales, an improving economy and the fact that the HMI gauge measuring future sales expectations is running at an eight-month high are all positive factors indicating that the housing market should continue to move forward in the second half of 2016," said NAHB chief economist Robert Dietz.

Home builders have benefited from very short supply of existing homes for sale nationwide, but their costs continue to rise, and they are passing those on to buyers in the form of higher prices. Sales of newly built homes jumped dramatically in April, as did prices. The median price of a newly built home hit $321,100, up 9.7 percent year-over-year to the highest level on record. 

First Time Home Builders Concerned about Credit:

Too many young consumers, however, are concerned their credit scores won't make the cut when it comes to financing a home today, and they may be right.

"We're still seeing credit remain relatively tight," Jonathan Corr, CEO of mortgage processor Ellie Mae, said in a release.

About a third of future first-time homebuyers say their credit score might hurt their ability to buy a home and that 45 percent said they have delayed a home purchase in order to improve their credit, according to a new survey by Experian. One in 5 said they were likely to opt out of the mortgage process or buying a home all together for the next five to 10 years.

"Your credit profile is one of the factors that can have a substantial impact on securing a home loan because it is used by lenders as an indicator of your financial health," said Rod Griffin, director of public education at Experian. "It is important to take steps early in the homebuying process to allow time to make changes and have those changes be reflected on your credit score."

Nearly three-quarters of those surveyed said they are working to improve their credit, paying down debt, making sure bills are paid on time and even taking steps to protect their credit from identity theft and fraud. Still, just 30 percent of homebuyers in March were first-time buyers, well below the historical average. 

The Best Month and Day to List is?

Spring has officially sprung, but the spring housing market started about a month ago, according to most real estate agents. With the supply of homes for sale not even close to demand, competition has been fierce, and that is changing the rules of the real estate road. Yes, it's a seller's market, but not all homes sell quickly, especially if they're not priced right and if the timing isn't right.

When is the best time to sell? That depends on whom you ask.

"It's early May, and the reason is because inventory being so tight, a lot of homebuyers are having to put in multiple offers. That is extending the length of the homebuying season, such that a lot of times later on in the season people are more eager to buy the house because they have been frustrated with earlier offers, and they are paying a little bit more money," said Stan Humphries, chief economist at Zillow Group.

There are 9 percent fewer homes this buying season compared with a year ago, so listing in early May results in you selling your house about 18 days faster and for about 1 percent more than you would get otherwise, according to Zillow.

In other words, Zillow expects a buyer-desperation factor come May that will result in buyers paying more. Back in 2011 and 2012, when there was less buyer competition, March was best for sellers. Zillow then looked at the last two years, when competition was hotter and found May was better in 18 of the largest 25 metropolitan housing markets.

"In most markets right now we are seeing the conventional way of buying to have shifted really to staging for multiple offers, which is a huge shift from where we were just three-four years ago," Humphries said.

Yearly Existing Home Sales Continue to Increase:

The Existing Home Sales report (homes that have been previously occupied) is hot off the press.  The National Association of Realtors released the data this morning for the largest segment of our housing market. 

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, came in at an annual rate of 5.08 million in February which is 2.2 percent higher than a year ago. 

Job growth and low rates continue to fuel the housing market but a severe lack of inventory is making it difficult to move at a faster pace and was the primary reason that the month-over-month reading fell.

The median existing-home price for all housing types in February was $210,800, up 4.4 percent from February 2015 ($201,900). February's price increase marks the 48^th consecutive month of year-over-year gains.

Total housing inventory at the end of February increased 3.3 percent to 1.88 million existing homes available for sale, but is still 1.1 percent lower than a year ago (1.90 million). Unsold inventory is at a 4.4-month supply at the current sales pace, up from 4.0 months in January.

All-cash sales were 25 percent of transactions in February, down from 26 percent both in January and a year ago. Individual investors, who account for many cash sales, purchased 18 percent of homes in February (17 percent in January), matching the highest share since April 2014. Sixty-four percent of investors paid cash in February.

House Flipping Hits 10Y High:

Rising home prices are bringing more house flippers out of the woodwork. The number of active home flippers last year was the highest in nearly a decade, and it is only growing.

Nearly 180,000 family homes and condos were flipped in 2015, according to RealtyTrac. A flip is defined as a home that is bought and sold again within the same 12 months. Flips made up 5.5 percent of all sales last year, and that is the first increase in the flip share after four years of shrinking. Flipping increased in 75 percent of U.S. markets, and the profits are growing as well.

This serves an important role in a market with extremely tight inventories.  These homes are revitalized and added to the inventory pool.

Prices are rising fast, not because buyers can afford to pay more but because of extremely short supply of homes for sale, especially on the lower end of the market. Home prices in January were 6.9 percent higher than the January 2015, according to CoreLogic, a higher annual gain than in December. Home flipping can push prices even higher, especially in markets with the tightest inventory.

As confidence in the housing recovery spreads, more real estate investors and would-be real estate investors are hopping on the home flipping bandwagon," said Daren Blomquist, senior vice president at RealtyTrac. "Not only is the share of home flips on the rise again, but we also see the flipping trend trickling down to smaller investors who are completing fewer flips per year."

Flippers are watching home prices rise, and in turn seeing returns rise. Homes flipped in 2015 yielded an average gross profit of $55,000 nationwide, the highest for flips nationally since 2005, according to RealtyTrac. The return on investment was close to 46 percent, up from 44 percent in 2014 and up from 35 percent in 2005. 2005 was when flipping was rampant, thanks to super easy credit. Back then, over 8 percent of all sales were flips.

Homeowners are once again taking cash out:

Home values are rising and homeowners are taking advantage of that, finally tapping into that equity again in the form of cash-out mortgage refinances. They are doing so, however, by pulling the most conservative amounts in history.

Prior to the historic housing crash of the last decade, homeowners used their homes like ATMs, pulling out as much cash as the bank would allow, which at the time was essentially all of it and more. This led to millions of borrowers falling underwater on their home loans as home prices fell, and leading to 7.1 million homes so far ending up in foreclosure, according to Black Knight Financial Services.

Lending standards have tightened significantly since then, but borrowers are clearly much more risk averse. They are taking cash out again; 42 percent of mortgage refinances last fall involved borrowers taking cash out of their homes, not just lowering their interest rates. That is the highest share since 2008, according to Black Knight.

The average cash-out amount was over $60,000, but the average loan-to-value ratio after the refinance was 67 percent, the lowest level on record. Borrowers left 33 percent equity still in the home which is still a very healthy level.  

With rents rising, many are taking out cash to purchase rental properties or make some upgrades to their current homes as there is simply not enough quality inventory available.  So, many are not selling..they are staying put and improving instead. 

December Existing Home Sales Jump:

Sales of existing homes jumped 14.7 percent in December compared to November, according to the National Association of Realtors.  The nearly 11 percent monthly drop in home sales in November was not due to a pull back in demand for housing but rather, that drop in November had all to do with something in the mortgage market called "TRID."

TRID is an acronym for TILA-RESPA Integrated Disclosure. It's a new set of rules from federal regulators, deemed "Know Before You Owe," designed to protect borrowers from hidden fees and costs in a home loan. It requires lenders to present borrowers with a simple disclosure form listing all facets of the loan three business days prior to closing. This is so borrowers can ask educated questions if they need to.

"(Friday's) data just confirms that the November drop was due to delays in closings that were pushed to December," said Lawrence Yun, chief economist for the NAR.

"November was the first month of getting a sense of some impact. We saw a softer November in terms of closings and saw much of that activity push into December. December is going to look a little stronger relative to seasonality," said Jonathan Corr, president and CEO of Ellie Mae, a mortgage software company, which saw an average delay of three days due to the new rules.

Closings are in December took a week longer than in December 2014, according to Ellie Mae, but that may be due to factors outside of TRID. Lenders began downsizing as mortgage rates rose, expecting fewer refinance applications, but rates stayed low longer than expected, after the Federal Reserve delayed increasing its lending rate until December. That prompted more refinances.

"Things were creeping out throughout the year, and as that refi picked up, and there was more demand, they tried to accomplish it with the same labor force," Corr said. 

Home Builders Remain Optimistic:

A monthly survey of builder sentiment held steady in January. The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) stands at 60, in positive territory, and well above 50 which is the line between positive and negative sentiment.

Current sales condition rose two points to 67 in January. The index measuring sales expectations in the next six months fell three points to 63, and the index measuring buyer traffic dropped two points to 44. Buyer traffic has yet to break out of negative territory.

"January's HMI reading is right in line with our forecast of modest growth for housing," said NAHB Chief Economist David Crowe. "The economic outlook remains promising, as consumers regain confidence and home values increase, which will help the housing market move forward."

"After eight months hovering in the low 60s, builder sentiment is reflecting that many markets continue to show a gradual improvement, which should bode well for future home sales in the year ahead," said NAHB Chairman Tom Woods, a homebuilder from Blue Springs, Missouri.