Sales of existing homes jumped more than 7% last month, indicating progress in the recovery of the housing market.

According to the National Association of Realtors, sales of previously occupied homes climbed 7.6% in August from July to a seasonally adjusted annual rate of 4.13 million units. The average sales price, on the other hand, inched up by 0.8% from a year earlier to $178,600. Despite the monthly increase, however, August remains the second-worst month for home sales in more than a decade as sales fell 19% from the same month a year ago.

Sales of residential real estate picked in spring, when the government provided tax credits of up to $8,000 to first-time home buyers. However, sales began to tank when the federal tax credit program expired in April and it has been a struggle for sellers to convince buyers to purchase residential properties since then.

Despite low home prices and the cheapest mortgage rates, buyers are still reluctant to make some purchases. According to experts, the sluggish job market and the worsening foreclosure rate are discouraging most buyers to invest in residential real estate.

“Nobody wants to see their investment go down after they buy it,” he said. “It’s as tough as I’ve ever seen it,” said Eric Matz, a Coldwell Banker real estate agent in the San Diego, California, area.

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Michigan’s largest city topped Coldwell Banker’s list of most affordable city to purchase a home this year. On the other end of the survey, it was Newport Beach, California, earned the spot as the most expensive city to buy a home.

The survey examined more than 18,000 four-bedroom, two-bathroom properties listed on its website between February and August.

According to the Coldwell Banker Home Listing Report, which covered more than 300 markets across the country, said that the average listing price in Detroit is $68,000. Based on a 4.5% interest rate on a 30-year fixed-rate mortgage and a 20% down payment, the monthly payment would be $350. Meanwhile, the average price listing in Newport Beach is a stark contrast at $1.83 million. It is the setting of a number of television shows like “The O.C.”

Looking at the list, most of the expensive listings were seen in California and the Northeast. The modest prices, meanwhile, were mostly found in the Midwest.

Jim Gillespie, chief executive of Coldwell Banker, said that the results were widely expected. “People like the sun, they like the beaches, they like the mountains. (California) has been the land of opportunity,” he said, noting that the Golden State is one of the largest economies in the world.

Here’s the top ten most affordable cities to purchase a home, according to Coldwell Banker: Detroit, $68,007; Grayling, Mich., $84,625; Sioux City, Iowa, $85,967; Cleveland, Ohio, $87,240; Muncie, Ind., $100,314; Norfolk, Neb., $107,814; Kansas City, Mo., $112,449; Canton, Ohio, $114,325; Port Huron, Mich., $116,267; Topeka, Kan., $116,343

Here’s the top 10 most expensive cities: Newport Beach, Calif., $1.83 million; Palo Alto, Calif., $1.48 million; Rye, N.Y., $1.33 million; San Francisco, $1.33 million; La Jolla, Calif., $1.21 million; Greenwich, Conn., $1.20 million; Wellesley, Mass., $1.08 million; Pasadena, Calif., $1.04 million; Honolulu, $1.03 million; Santa Barbara, Calif., $1.02 million.

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Despite government efforts to ease the country’s worsening foreclosure problem, it seems that the Obama administration’s flagship mortgage relief program continues to garner unfavorable responses from its intended recipients.

Data released by the Department of Treasury revealed that more than half of those who have applied to get their mortgage payments lowered have fallen out of the program. As of last month, 680,000 homeowners, or 51%, have been disqualified. The figure jumped from 48% in July.

The mortgage relief program, which was launched in February 2009, was geared towards helping 4 million homeowners lower their mortgage payments and avoid foreclosure. However, of the 1.3 million people who have enrolled, only about 449,000 borrowers or 34% have received permanent loan modifications and are making their payments on time.

With the series of problems encountered by the mortgage relief program, many homeowners believe that it would be better to walk away from their mortgage than to wait for the government to help them. Critics, on the other hand, said the Obama administration should have just let distressed homeowners lose their properties.

Despite the criticisms, however, government officials vowed to continue efforts to help alleviate the country’s worsening problem with foreclosures. “We’re certainly not going to stop fighting to turn things around,” said Raphael Bostic, an assistant secretary at the Department of Housing and Urban Development.

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Various groups have expressed concern over the possible effects of Ally Financial’s decision to review foreclosure cases in 23 states.

Iowa Assistant Attorney General Patrick Madigan said that the move might be a huge issue across the country, not only in the affected states. “If servicers are submitting court documents that aren’t true or that have not been verified, that is of great concern,” said Madigan, who heads a national foreclosure prevention group.

Ally Financial, formerly GMAC Mortgage, is reviewing the cases for a “potential issue.” It did not elaborate on the matter but representatives of disgruntled home buyers claim that it’s because of cases filed against the former financing arm of General Motors.

Lawyers said Ally employed one man to sign all the documents it uses to get eviction permits from courts. The employee, 41-year-old Jeffrey Stephan, testified that he was the head of document execution unit of Ally. Based on the number of documents he approved and supposedly reviewed on an eight-hour workday, Stephan signs one document per 1.5 minutes. Thomas Cox, an attorney in Maine, said that obviously that time is not enough to review the documents. “A ridiculous amount of time for something so critically important,” he said.

Meanwhile, Florida lawyer Christopher Immel, who deposed Stephan in a case, said the employee was probably under the impression that “it was okay to do this.” “GMAC has a business model to do this, and Stephan was just one small part of it,” he said.

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Market analysts and real estate experts breathed a sigh of relief as last month’s housing starts registered the highest increase since November last year after a series of declines.

According to the U.S. Department of Commerce, groundbreakings for new homes expanded by 10.5% in August to an annual rate of 598,000 units. The figure surpassed market expectations as analysts earlier predicted an increase of just a 550,000-unit pace.

Industry experts attributed the surge to a growth in activity in the multifamily sector. Official data showed that construction starts of multifamily homes jumped by almost 30% to an annual rate of 160,000 units last month. Single-family starts, on the other hand, climbed 4.3% to 438,000 units during the same period. The figure is reportedly the highest since June this year.

Meanwhile, new building permits for future home construction increased by 1.8% to a 569,000-unit rate, surpassing earlier predictions by 9,000 units. Like in the case of housing starts, the growth in the number of new building permits was bolstered by a 9.8% increase in the multifamily sector. Permits for single-family homes, however, declined for the fifth-straight month.

Despite the latest development, certain experts believe that it would take quite some time before the housing market fully recovers. “It is reasonable to believe that the post-tax credit plunge in housing activity, both sales and construction, is over, but we do not expect to see a strong recovery any time soon,” said Ian Shepherdson, chief economist of the New York-based High Frequency Economics.

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The Federal Housing Administration (FHA) is on its way to financial recovery. The agency’s chief said the government body is benefiting from the fees borrowers shoulder and on more stringent standards imposed by lenders.

“While there is still much work to be done, FHA is on a predicted path that will put the agency in a stronger position for the future,” FHA Commissioner David Stevens said.

He made the remarks in a prepared statement he is set to deliver before House of Representatives Financial Services Committee today. The remarks were posted in the FHA website. He also noted that compared to loans made in previous years, the mortgages FHA insured in last year and this year are “much stronger.”

According to an actuarial study released late last year, FHA’s capital reserves stood at only 0.53% of the value of the mortgages it guarantees. It is required by law to have coffers of at least 2% of the mortgage loans it ensures.

As a measure to raise its capital reserves, it was authorized by Congress to triple the annual fees it imposes on borrowers. It can now raise the rate up to a 1.5% over the duration of the loan. Previously, the cap was set at 0.55%. Stevens’ testimony before the House committee today comes a month before the staggered increases on the annual rate are started.

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Some 23 states will be affected by a halt order on foreclosures imposed by one of the country’s largest home lender.

GMAC Mortgage, the troubled lender that once served as the financing arm of General Motors, said that the moratorium would last for a few weeks or probably until the end of the year. It is meant to review a “potential issue” that it found on the cases.

The affected states are the ones called “judicial states,” wherein the courts mediate between the homeowner and the lender. These include Florida, New Jersey, New York and 20 others located mostly in the Midwest and on the East Coast.

Also known as Ally Financial, GMAC declined to specific the number of cases affected by the review. Although it declined to reveal what the “potential issue” is, homeowners’ lawyers claim they know why.

Lawyers said that the review followed the lawsuits they filed against GMAC. They claim that only a single employee approved tens of thousands of foreclosures across the country. The employee allegedly signed the cases without inspecting the files he was supposed to.

“(The employee) doesn’t know what he’s talking about,” said Thomas Cox, who is representing homeowners pro-bono. He added that the employee also said that the supposed witness to the signing – the notary – was absent during the approvals. “We’ve established that in these foreclosures GMAC hasn’t proven its case,” Cox stressed.

GMAC, which the government has injected with billions of dollars of aid, focused on dealing with subprime loans during the housing boom.

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Home builder sentiment has remained at its lowest level in more than a year amid worries on a potential home sales decline.

The National Association of Home Builders (NAHB) revealed that its monthly index of builder’s confidence remain at 13 points this September. Since March 2009, the index, which is broken down into three readings, has been at its lowest level for two straight months. According to the group, readings below 50 points suggest a negative outlook on the market.

The index measuring foot traffic from prospective home buyers, which gauges future sales, declined slightly. On the other hand, the indices measuring market expectations for the next six months and current sales conditions remained the same.

NAHB chairman and Michigan home builder said the index indicated that more and more home builders are becoming disillusioned with the housing market. “In general, builders haven’t seen any reason for improved optimism in market conditions over the past month. If anything, consumer uncertainty has increased, and builders feel their hands are tied until potential homebuyers feel more secure about the job market and economy,” he remarked.

The trade group also warned that weak home sales may affect job creation in the construction industry, which may eventually affect efforts to revitalize the sluggish economy. On average, each new home creates three jobs in a year and generates around $90,000 in taxes.

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If you believe that owning a home amid the housing slump is a bad idea, then you’re probably one of the more than 30% of Americans who no longer consider homeownership as a safe investment.

According to a new survey conducted by the Federal National Mortgage Association, or Fannie Mae, homeowners’ confidence hasn’t improved that much since the beginning of the year as the number of respondents who consider owning a home a safe investment fell from 70% in January to 67% in July. Two years ago, 83% of respondents were willing to put their money on residential real estate. The National Housing Survey also revealed that33% of the respondents said they would rather rent than buy a house if ever they decide to move out of their current home.

Doug Duncan, vice president and chief economist for Fannie Mae, said the survey results indicated that more and more consumers are becoming reluctant to invest their money in residential properties. “Homeowners and renters alike continue to be wary of taking on risk, and they are less confident in the long-term outlook for housing,” he added.

Despite the consumer’s negative attitude towards homeownership, however, majority of the respondents remain optimistic on the recovery of the housing market. About 78% said home prices will either remain flat or will increase next year. Some 70% also believe that it is a good time to buy a house.

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A new survey of economists shows that home sales probably rose last month. It could be an indication that the real estate market is stabilizing, albeit at a very slow pace.

According to a Bloomberg survey, signs of housing stabilization following the expiration of the federal government’s first-time home buyer tax credit. The program’s expiration on April 30 was blamed for the sudden plunge in sales in July.

Economists said they expect a 7% increase in the combined sales of new and previously owned homes, leading to a 4.395 million annual rate. Investors in existing homes may heave a sigh of relief, experts say. They believe that the annual pace of previously owned homes stood at a 4.1 million in August, up from the existing 3.83 million pace. If the predicted 7.1% increase materializes, it will be a huge leap from the record 27$ nosedive recorded in July. Meanwhile, new home sales are expected to rise 6.9% to a pace of 295,000.

The survey counted a new home sale upon the signing of the contract. Existing home sales, which account for 80% of the market, were logged upon the closure of the deal.

The Bloomberg estimates come a few days before the National Association of Realtors releases its report on Thursday. Aaron Smith, a senior economist at Moody’s Analytics in West Chester, Pennsylvania, said that home sales are “consistent with stabilizing growth, albeit at a slower (rate).” “Housing is in a fragile bottoming process,” he said.

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