Lose your job, keep your home

n households with more than one wage earner, halving the monthly income can severely stretch a budget. And in households where there's one breadwinner, having zero income can be devastating. A rainy day fund helps, but it's important to craft a plan early about how you're going to get through the rough patch.

More people are facing this nightmare today: While the volume of subprime mortgages headed to foreclosure is falling, the volume of prime, fixed-rate mortgages defaulting is on the rise, according to statistics from the Mortgage Bankers Association. The MBA's chief economist said that's a result of rising unemployment. See full story.

"If you don't have the prescribed three to six months income in the bank (now eight to 12 months due to how long it takes to replace that job), you're really in deep trouble with some troubling decisions to make," said Gail Cunningham, vice president of public relations for the National Foundation for Credit Counseling, in an email. The NFCC is a national, nonprofit credit-counseling network.

"We always advise people to pay their living expenses in full (this includes the house payment), followed by any secured debt (usually the car payment), and then the creditors. This will keep a roof over your head, food on the table, utilities paid, medicine in the cabinet, the kids at day care, etc. Once the money runs out, no one beneath that line gets paid. However, this assumes that there's either some savings to fall back on or another income source," she said.

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More homeowners choose to default on loans

Strategic defaults are when borrowers who owe more on their homes than they're currently worth choose to stop paying their mortgage but continue to meet other financial obligations, according to a definition by Morgan Stanley in a research report on the

In other words, these homeowners neglect their monthly principal and interest payments, but still pay other bills on time, including credit cards and auto loans.

The Morgan Stanley report estimates that 12% of mortgage defaults in February were strategic. Other reports estimate an even higher proportion of this type of loan default.

Growing social acceptance of this behavior could have ramifications not only for personal credit histories and the health of neighborhoods, but also for the future of mortgage lending, according to those studying the issue.

For one, there's a contagion effect: As more people watch their friends or neighbors choose to default, the more it becomes a viable option for homeowners who may otherwise wait years just to return to a positive equity position in their properties, said Sam Khater, senior economist for CoreLogic, a provider of consumer, financial and property information. The volume of foreclosures on the market today is also chipping away at the stigma that used to come with defaulting on a home loan.

"If you know someone who has defaulted strategically, you're more likely to declare you're willing to do it," said Luigi Zingales, professor of entrepreneurship and finance at the University of Chicago's Booth School of Business.

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U.S. home prices fall 0.5% in March: S&P

Home prices fell 0.5% in March compared with February in 20 major U.S. cities, according to the Case-Shiller home price index released Tuesday by Standard & Poor's.

However, prices have moved up 2.3% in the past year, marking the second consecutive gain.

"The housing market may be in better shape than this time last year; but, when you look at recent trends there are signs of some renewed weakening in home prices," said David Blitzer, chairman of the index committee at Standard & Poor's.

"It is especially disappointing that the improvement we saw in sales and starts in March did not find its way to home prices," he said in a statement.

There's been recent renewed weakness in housing prices as tax incentives end and foreclosures rise, S&P noted. Nationally, home prices are back at spring 2003 levels, according to S&P.

"Now that the tax incentive ended on April 30th, we don't expect to see a boost in relative demand," Blitzer said.

The biggest month-to-month decline came in Detroit, where March prices dropped 4.1%. The biggest monthly rise was in Cleveland, where prices gained 1.8%.

In the past year, prices were higher in 10 of 20 cities, led by a 16.2% rise in San Francisco. The largest annual decline was 12% in Las Vegas.

Looking ahead, prices should be firmer in May and June due to increased sales from the tax credit, wrote Ian Shepherdson, chief U.S. economist with High Frequency Economics, in a research note.

"That effect will then fade in the summer as sales drop back, and prices could easily head into the fall a bit lower than they are now," Shepherdson wrote.

Elsewhere Tuesday, the Federal Housing Finance Agency reported that U.S. home prices were 1.9% lower in the first quarter than in the fourth quarter, seasonally adjusted. Over the year, prices were down 3.1%. The FHFA index is based on repeat sales of homes financed by Fannie Mae or Freddie Mac.

Here's a list of the 20 cities in the Case-Shiller index, with percentage changes over the past year Read more>

April sales of existing homes rise 7.6% on tax credit

Inventories surge 11.5% to 4.04 million, suggesting glut of supply

WASHINGTON (MarketWatch) -- Resales of homes in the U.S. real estate market rose 7.6% during April to a seasonally adjusted annual rate of 5.77 million as buyers rushed to complete sales before the expiration of a tax credit, according to data released Monday by the National Association of Realtors.

Sales came in stronger than the 5.63 million pace expected by economists surveyed by MarketWatch. Sales in March were revised up to 5.36 million pace from the 5.35 million reported originally. See our complete economic calendar and consensus forecast.

However, inventories surged 11.5% to 4.04 million last month -- an "unwelcome" development, said Lawrence Yun, chief economist for the real estate agents' lobbying group. Read the full press release on the NAR's Web site.

The inventory level represented an 8.4-month supply at the April sales pace. Inventories typically rise in April, but this year's gain was bigger than usual, Yun said. The inventory data are not seasonally adjusted.

The elevated inventories suggest that prices won't rise much over the next year or two, Yun said. Nor did he expect them to fall much, noting that the trend in sales prices has stabilized over the past four months.

The median price is up 4% in the past year at $173,100, according to NAR figures.

It's not clear what's behind the increase in homes for sale, he said.

It could be pent-up supply from homeowners who've wanted to sell but didn't think the market was right. That would also imply pent-up demand.

But it's also possible that investors are putting their properties on the market because they aren't getting the cash flow they need.


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Mortgage delinquencies drop in Texas

The number of Texans who are behind on their mortgages fell significantly in the first quarter. Fewer than 9 percent of Texas homeowners with loans missed at least one payment during the first three months of 2010, the Mortgage Bankers Association said Wednesday. That's down from 10.3 percent at the end of 2009.

"This certainly solidifies, in my opinion, that we have absolutely hit bottom and are starting to come out of this," said Scott Norman, president of the Texas Mortgage Bankers Association.

Only 1.45 percent of Texas mortgage holders are seriously delinquent, more than 90 days behind in payments.

Nationwide, the percentage of delinquent home mortgages rose in the quarter to 10.06 percent. And 4.63 percent of U.S. homeowners were in foreclosure.

In Texas, 2.08 percent of home loans were in foreclosure in the first quarter, said the lenders trade group, based in Washington, D.C.

Texas has outperformed the rest of the country in employment growth and economic recovery. But some states with high late loan rates are still in double digits: Nevada at 14.03 percent; Mississippi, 12.7 percent; and Georgia, 12.1 percent.

"The economy has begun to generate jobs and layoffs have declined, although new claims for unemployment insurance remained higher in the first quarter than we expected," Mortgage Bankers economist Jay Brinkmann said in the report. "The percent of loans behind one payment had been declining as first-time claims for unemployment began falling in March 2009.

"If mortgage delinquencies are not yet clearly improving, it also appears they are not getting worse," he said. "However, a bad situation that is not getting worse is still bad."

At 8.77 percent, mortgage delinquencies in Texas in the first quarter were still higher than they were in the same period of 2009, when 7.92 percent of loan holders were behind.

Home foreclosure postings in the Dallas-Fort Worth area have been down year-over-year for the last two months. But the number of foreclosure filings in the area is still up 10 percent so far this year from last year's record number.

Another new report out Wednesday says that Dallas-area home sales prices were up 3.54 percent in March from a year earlier.

California-based housing and mortgage researcher CoreLogic is predicting that home prices in the Dallas area will be up 0.75 percent for the year.

TEXAS LATE HOME MORTGAGE PAYMENTS
Percent of homeowners with loans who have missed at least one payment in each quarter.
3Q 2008 8.41%
4Q 2008 9.01%
1Q 2009 7.92%
2Q 2009 8.79%
3Q 2009 9.84%
4Q 2009 10.3%
1Q 2009 8.77%

Source: STEVE BROWN / The Dallas Morning News

Now's the Time to Buy, Investment Firm Says

When you compare the real estate downturn to the real estate market in the 1980s, Blumberg Capital Partners, which provides real estate investment management, finds similarities that lead the company to think now is an optimal time to buy.

Its analysts point out that the recession of the 1980s lasted 16 months, running from July 1981 to November 1982. Unemployment peaked in November of 1982 at 10.8 percent. From that point it took 38 months for the economy to recover fully and for unemployment to fall below 7 percent. It was another 10 months before unemployment was consistently below 7 percent.

Philip Blumberg, CEO of Blumberg Capital Partners, said in a note to investors that the real estate cycle is still three or four years from an optimal selling period, so now is the time for investors to buy.

Source: Blumberg Capital Partners (05/19/2010)

Housing Prices Could Rise 12.4 Percent by 2014

Housing prices are expected to increase 12.4 percent between 2010 and the end of 2014, predicts MacroMarkets, which surveyed more than 100 analysts and market strategists.

Those interviewed didn’t all see the housing market in the same light. Joseph LaVorgna, a economist at Deutsche Bank predicts that home prices will rise 37 percent by the end of 2014.

On the most bearish end, both Anthony Sanders, professor of real estate finance at George Mason University, and investment adviser Gary Shilling, president of A.Gary Shilling & Co., expect prices will decline 18 percent.

Source: The Wall Street Journal, James R. Hagerty (05/19/2010)

More homeowners choose to default on loans.

CHICAGO (MarketWatch) -- "Strategic defaults" are on the rise as more borrowers who are underwater on their home loans decide it's not worth it to stay current on their payments each month. That trend could have repercussions for the housing market, and for borrowers, in the future.

Strategic defaults are when borrowers who owe more on their homes than they're currently worth choose to stop paying their mortgage but continue to meet other financial obligations, according to a definition by Morgan Stanley in a research report on the topic.

n other words, these homeowners neglect their monthly principal and interest payments, but still pay other bills on time, including credit cards and auto loans.

The Morgan Stanley report estimates that 12% of mortgage defaults in February were strategic. Other reports estimate an even higher proportion of this type of loan default.

Growing social acceptance of this behavior could have ramifications not only for personal credit histories and the health of neighborhoods, but also for the future of mortgage lending, according to those studying the issue.

For one, there's a contagion effect: As more people watch their friends or neighbors choose to default, the more it becomes a viable option for homeowners who may otherwise wait years just to return to a positive equity position in their properties, said Sam Khater, senior economist for CoreLogic, a provider of consumer, financial and property information. The volume of foreclosures on the market today is also chipping away at the stigma that used to come with defaulting on a home loan.

"If you know someone who has defaulted strategically, you're more likely to declare you're willing to do it," said Luigi Zingales, professor of entrepreneurship and finance at the University of Chicago's Booth School of Business.

In areas where home prices are severely depressed, social acceptance of this decision could lead to pockets "where strategic default becomes the norm, versus the exception," Zingales said.

But look even farther in the future, and the repercussions of substantial strategic defaults could have a larger-scale effect.

"If it really does become a legitimate problem, the implications are pretty dramatic for anyone that wants to buy a home in the future," said Rick Sharga, senior vice president of RealtyTrac, an online marketplace of foreclosure properties. "The lenders would have to build this into their risk models with either larger down payments or higher interest rates."
Some owners 'mimic investors'

Many agree the ranks of people taking this route are growing, but putting a number on the trend isn't as easy. To measure the number of people who are strategically defaulting on their mortgage obligations, you have to assess borrower intent.

"Take all the numbers with a grain of salt, because it's one of those topics which is really difficult to get a firm grasp on," Sharga said. "The projections are based on limited sample sizes, and [people are] doing projections that have a lot of implications on societal behavior and political policy."

Researchers believe that being underwater on a loan is a prerequisite to strategic default, and the more underwater you are, the likelier you are to consider defaulting -- even if you can afford to keep making payments.

"In our data, what we've noticed is at about 25% negative equity, the behavior of owners begins to mimic that of investors -- they're more ruthless and rational, they're looking at it from a cash-flow perspective," Khater said. "The default rate rises as the negative equity gets deeper and deeper."

Source: "Market Watch"

This week's Real Estate stories

Despite falling mortgage rates, fewer people applied for mortgages to purchase a home last week, according to data from the Mortgage Bankers Association.

Last week was also the first week in more than a year when there was no federal home-buyer tax credit to lure prospective buyers. To qualify for that credit, a contract needed to be in place by the end of April and the deal must close by the end of June.

Still, low rates helped spur people to refinance their loans.

"Rates on 30-year mortgages dropped to their lowest level since mid-March," said Michael Fratantoni, MBA's vice president of research and economics, in a news release. "As a result, refinance applications for conventional loans jumped, hitting their highest level in six weeks.

"In contrast, purchase applications fell almost 10% in the first week following the expiration of the home-buyer tax credit, as the tax credit likely pulled some sales into April that would otherwise have occurred in May or later," he said.

The expiration of the credit could be prompting home sellers to slash prices: 22% of listings on the market as of May 1 experienced at least one price reduction -- that's a 10% increase from the previous month, according to data from Trulia.com.

"With more than a year of the federal government's involvement, we are now re-entering the free market system. As we readjust to the free market, we expect to hit turbulence in some markets," said Pete Flint, chief executive of Trulia, in a news release.

Read more real-estate news in this week's pages, including how to contest a low appraisal and a Realty Q&A about the proper use of community reserve funds. Plus, watch a video about a website that can help you remodel your home.

It's still too soon to say how dramatically the expiration of the credit will affect the housing markets, Flint said.

"We won't know the true severity of the tax credit expiration until the conclusion of the peak home buying season in the summer months. Only then will we have a better sense if the U.S. housing market can stand on its own two feet," he said.

Source: Market watch -- Amy Hoak,

When Will the Housing Market Rebound?

All the signs are there for continued improvement in the economy as well as housing markets, but it will be several years before real estate practitioners can expect to see markets returning to equilibrium, two of the country's top economists told REALTORS® this week.

By the end of this year, practitioners should see 5.4 million existing-home sales and home price growth of up to 3 percent, said NAR Chief Economist Lawrence Yun.

Already many markets are seeing home price increases, including San Diego, where prices are up some 16 percent. Orange County, Calif., and Boston are two other strong areas, with price increases of 10 percent to 12 percent, Yun said.

Did the Tax Credit Make a Difference?

The federal home buyer tax credit has been essential for getting buyers back into the market, stabilizing inventories, and shoring up prices, Yun said. He estimated that the credit -- which is available to buyers who had properties under contract by April 30 and who close on their sale by June 30 -- brought more than 4 million households into the market since it was enacted about two years ago. That includes about 1 million who otherwise wouldn’t have bought.

More fundamental to the improving housing picture is the increasing strength of the economy, which is on track to expand by 3.1 percent this year after shrinking 2.5 percent last year, Yun said.

With inflation tame and interest rates low, businesses are enjoying robust profitability and their balance sheets are in the best position they’ve been in for years, said Mike Zandi, chief economist for Moody’s Economy.com. That’s helping with employment, which about two months ago turned positive for the first time since the economic crisis began and is now seeing about 125,000 net jobs added a month, he said.


Working Through the Inventory

Even with those good signs, practitioners are unlikely to see home prices reach a level that balances with the country's growing population for several more years, maybe not until 2014, Zandi said. It'll take that long to work through the country's large overhang of inventory from high foreclosures.

There are almost 4.5 million distressed residences in the United States today, meaning the homes are in foreclosure or the owners are several months behind on their payments, Zandi said. The housing market can't return to equilibrium — which Zandi defined as something over 7 million sales a year to meet population demand — until that overhang is addressed.

In the meantime, those distressed homes are keeping downward pressure on prices. He doesn’t think values will start to show any signs of improvement across the board until next year.

What Could Jeopardize Recovery

Both Yun and Zandi cited the federal government’s budget deficit as a risk that could derail the economy if a credible plan for addressing it isn't put forward. Zandi said the government's emergency intervention to stem the mortgage crisis was necessary -- despite sending the deficit higher -- because without it the economy would still be in a crisis and interest rates would be much higher, making recovery that much more difficult.

Now, he said, the government must make it a priority to rein in the deficit.

Yun said what's happening in Europe, as Greece wrestles with its credit crisis, also poses risk to the United States. If Greece defaults and other countries run into trouble, the global market for U.S. mortgage-backed securities could be hurt badly, forcing up interest rates and driving down home sales.

The crisis in Greece could also be a preview of what the United States will face if it doesn't turn its attention to deficit reduction.

- Source REALTOR® Magazine - Robert Freedman

Dallas-Fort Worth foreclosure filings fall for 2nd straight month

Home foreclosure filings for Dallas-Fort Worth have fallen for the second month in a row. But industry analysts say it's too early to say that the flood of residential foreclosures is ebbing.

Lenders posted 4,686 area homes for foreclosure in June. That's down 7 percent from a year ago to the lowest level in 15 months, Foreclosure Listing Service said Thursday. Home foreclosure filings for May decreased 12 percent year-over-year.

Even with those declines, a record of almost 32,000 foreclosure filings have been made in the four-county area so far in 2010, up 10 percent from a year ago.

"It's good news that the numbers have been down for the last two months, but we are still way up for the year," said George Roddy, president of Addison-based Foreclosure Listing Service. "We can't say we are out of the woods yet."

Still, the trend is encouraging.

Foreclosure filings for Collin County are down 18 percent from a year ago for next month's auction. Postings are 8 percent lower in Tarrant County and 5 percent lower in Dallas County.

"I've thought 2010 would be the peak year for foreclosures," Roddy said. "If next month is down again, we could say a trend has developed."

The foreclosure volumes remain near record highs.

For the first half of 2010, lenders have posted 31,852 D-FW homes for forced sale. About 40 percent of the filings this year have been in Dallas County.

In 2009, a record of more than 61,000 home foreclosure filings were made in the D-FW area – up 23 percent from 2008.

"I think there are reasons foreclosures won't go down by much for a while," Roddy said, including estimates that almost 15 percent of Dallas-area homeowners with loans owe more than their house is worth. "Some of them are just walking away."

Source "Dallas Morning News" Steve Brown

Home Prices Gain in 91 U.S. Cities in First Quarter (Update2)

May 11 (Bloomberg) -- Home prices rose in 91 U.S. cities in the first quarter as states hard hit by foreclosures began to recover and a tax credit cut the number of properties for sale.

The median price of a single-family home sold in Saginaw, Michigan, doubled to $60,800, the Chicago-based National Association of Realtors said in a report today. Prices in Akron, Ohio, climbed 90 percent to $95,300 and Grand Rapids, Michigan, recorded a 26 percent increase to $90,700. Nationally, the median declined 0.7 percent.

Cities that led the nation in foreclosures a year earlier had the biggest price increases as a tax credit of as much as $8,000 boosted demand and drove the supply of unsold homes to a four-year low in January, according to Lawrence Yun, chief economist for the Realtors’ group. Brian Bethune, chief U.S. financial economist for IHS Global Insight, said an improving job market should sustain the fledgling rebound in real estate.

“In the second half of the year, employment growth and an improving economic situation should keep the housing recovery on track,” Bethune said in a telephone interview from his Lexington, Massachusetts, office.

Today’s report showed the recovery accelerating from the fourth quarter when 67 metropolitan areas reported price gains.

Peak to Trough

The U.S. median home price tumbled 29 percent over three and a half years as defaults among subprime borrowers flooded the housing market with cheaply priced foreclosures and Wall Street piled up $1.78 trillion in losses and asset writedowns.

The median prices of an existing U.S. home peaked at $230,300 in July of 2006 and hit a low of $164,600 in February, according to NAR data. The drop was 13 percent in 2009, outpacing 2008’s 9.5 percent decline.

This year, prices may increase 2.5 percent as the economy improves, according to the Realtors’ forecast.

The median price of a single-family home in the New York metropolitan area rose 1.8 percent to $380,400 in the three months ended March 31. The areas surrounding New Haven and Milford, Connecticut, gained 5.3 percent to $227,900.

The Edison, New Jersey, region had a 1.5 percent gain in the median price; and Hartford, Connecticut, posted a 1.6 percent increase to $225,900. Prices in the Boston metropolitan area increased 11 percent to $321,800.

Transactions Fall

In a separate report, NAR said U.S. sales dropped 14 percent in the first quarter from the prior period, mostly because buyers rushed to purchase homes in the fourth quarter when the tax credit for purchases was originally set to expire.

Congress ultimately extended and expanded the credit for purchase contracts signed by April 30.

South Dakota led the nationwide sales decline with transactions falling 33 percent in the first quarter. Sales in Pennsylvania and Idaho dropped 28 percent. Connecticut transactions decreased almost 15 percent and New York sales were down 9.4 percent, NAR said.

Nationally, home sales probably will rise 4.3 percent to 5.38 million this year and gain 5.1 percent to 5.66 million in 2011, according to a forecast posted on NAR’s website. In 2009, sales climbed for the first time in four years to 5.16 million.

Source Bloomberg Businessweek, Kathleen M. Howley

Rate of 'underwater' homeowners falls to 15% in Dallas area

Fewer Dallas-area homeowners are underwater with their mortgages, the latest figures show.

Just under 15 percent of Dallas-area homeowners with a mortgage owed more than their property was worth at the end of the first quarter, researchers at CoreLogic reported Monday. That works out to about 110,000 homes.

That's a big improvement from mid-2009, when an estimated 30 percent of Dallas-area mortgage holders were upside down.

Nationally, the number of home borrowers who had negative equity declined slightly in the first three months of 2010, the California housing and mortgage research firm said. But CoreLogic estimates that almost a quarter of Americans still couldn't pay off their mortgages if they sold their homes today.

"As house prices grow again and borrowers pay down their mortgage debt, negative equity levels will begin to diminish," Mark Fleming, chief economist for CoreLogic, said in the report. "The typical underwater borrower is likely to regain their lost equity over the next five to seven years."

North Texas median home prices have risen about 5 percent so far in 2010, according to data from real estate agents' Multiple Listing Services.

Texas never suffered double-digit home price declines in the recession, which have put borrowers in many other markets underwater. In Nevada, 70 percent of home mortgage holders are underwater. And 51 percent in Arizona and 48 percent in Florida are upside down.

Homeowners who owe more than their property is worth are more likely to default and let the house go into foreclosure.

Source "Dallas Morning News" Steve Brown

Report: 6.4% of Dallas homeowners behind on payments

The number of Dallas-area homeowners who are late with mortgage payments or in foreclosure increased again in March.

More than 6.4 percent of the area’s homeowners with loans were behind in their payments at the end of March, according to the latest data from CoreLogic Inc.

The Dallas-area late mortgage rate is higher than Texas’ 5.98 percent home loan delinquency.

But Dallas and Texas both are lower the nationwide mortgage delinquency of 8.9 percent in March, California-based CoreLogic said Wednesday.

The percentage of late home loans in the Dallas area has risen by more than two percentage points in the last year.

And 1.53 percent of Dallas-area homeowners were in foreclosure at the end of March. That’s up from just over 1 percent a year earlier.

Nationwide home foreclosure rates were at a record 3.23 percent in March. In Texas, the foreclosure rate was 1.44 percent.

Source "Dallas Morning News" Steve Brown 5/5/2010

Study: Reckless Spending Behind Foreclosures

Did banks prey on unwitting consumers or did borrowers go into foreclosure because they stretched further than they should have?

Researchers at the University of Arkansas found that most households in foreclosure were relatively affluent and highly educated people with few or no children, living in geographical areas that experienced extremely rapid real estate appreciation.

The researchers divided U.S. households into 21 life-stage groups, using data from a variety of sources. Then they identified which groups experienced the most foreclosures. The group with the highest foreclosure percentage was one they dubbed “Cash & Careers,” affluent adults born between the mid-1960s and the early 1970s.

Members of this group had high household incomes, high education levels, high home values, and none to only a few children. Also, members of this group were classified as aggressive investors, most of whom lived in areas – California, Nevada, Arizona, and Florida – with rapid real estate appreciation.

“The policy implication from our results is that strong consumer protection laws, though necessary to prevent Wall Street banks from offering high-risk loans to the most vulnerable – will not be sufficient to prevent another financial crisis like the one the U.S. economy experienced in 2007 and 2008,” says Tim Yeager, associate professor of economics and lead author of the study.

Source: University of Arkansas (05/06/2010)
Realtor Magazine

Texas home sales rise 5% over last year's 1st quarter

Texas home sales rose almost 5 percent in the first quarter from the same period a year ago. Statewide median sales prices increased more than 3 percent to $141,500, the Texas Association of Realtors said Monday.

Almost 43,000 existing homes were sold in the state during the first three months of 2010, according to the quarterly housing report from the Realtors and the Real Estate Center at Texas A&M University.

All the gains came in March, Dr. James Gaines, economist with the Real Estate Center, said in the report.

"With March's increased figures, we are cautiously optimistic that we'll continue to see positive results in the second quarter," Gaines said. "We are seeing gradual improvement in the Texas housing market and managing our foreclosure rates well compared to national rates."

Gaines said several cities reported a larger percentage of home sales coming from foreclosed properties.

Among the major cities, Austin had the biggest annual sales gain in the first quarter – up 17.11 percent. Sales were up 12.5 percent in San Antonio and rose 1.8 percent in Houston.

Sorce: Dallas Morning News 06/05/2010 Steve Brown

D.R. Horton sees 55% increase in new home purchase contracts

Homebuilder D.R. Horton Inc. reported its second quarterly profit in a row Friday.

Fort Worth-based D.R. Horton was the largest homebuilder in the Dallas-Fort Worth area in 2009, starting almost 2,300 single-family homes. That was more than twice as many starts as any other builder. " width="0">

FILE 2009/The Associated Press

Fort Worth-based D.R. Horton was the largest homebuilder in the Dallas-Fort Worth area in 2009, starting almost 2,300 single-family homes. That was more than twice as many starts as any other builder.

The Fort Worth-based builder had a 55 percent increase in new home purchase contracts during the quarter that ended March 31, fueled by federal tax credits that spurred first-time home sales.

Almost 60 percent of Horton's sales went to first-time buyers. The government tax credit of up to $8,000 expired Friday.

"It's all about sales – nothing happens until we sell something," Horton CEO Donald Tomnitz said in a conference call.

"We are prepared to compete in the industry with or without any government tax credits. Our sales are still solid in the last week."

Horton closed 4,260 home sales in the quarter, up 19 percent from a year ago, and took contracts to sell 6,438 more.

The strongest activity was in the builder's South Central region, which includes Texas.

Horton had net income of $11.4 million, or 4 cents a share, for the quarter. Analysts had forecast a loss.

In the same quarter last year, the builder lost $108.6 million, or 34 cents a share.

Revenue rose 16 percent to $896.8 million from $775.3 million.

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