More New Homes?

My favorite, most reliable economic indicator may be the overheard conversation. People aren't spinning you when they're chatting with a friend who just happens to be within my earshot. Despite all the layoff announcements recently, I am definitely hearing more chatter about home buying, mostly from (still-employed) first-timers who stand to benefit from the new $8,000 tax credit.

So, I was disheartened to hear that builders started work on 22 percent more homes in February than in the month before. Were builders going to pounce on the first faint glimmer of buyer activity and start building again? I was reassured, though, to learn that most of the increase came from construction of new apartments, and that these numbers tend to jump around a lot in any given month, anyway. Odds are high that the number is a fluke.

There's no surge of new single-family houses on the way yet, and that's a good thing. Markets won't get back into balance, with prices stable or rising moderately, until some of the surplus inventory, new and resale, is bought up.

Some good news on the supply front: The Federal Housing Finance Agency reported that foreclosure sales and evictions fell 77 percent in December because Fannie Mae and Freddie Mac temporarily suspended such actions to allow more time for lenders to work on modifying the loans. The agency said loan modifications shot up 76 percent in the last three months of 2008, compared with the previous quarter. Fewer foreclosures mean fewer super-discounted listings out there to drag down your own home's value.

The question that can't yet be answered is whether these anti-foreclosure measures will turn around people's fortunes enough so they can keep their homes for the long term, or whether they will simply push foreclosures into the future.

What are you seeing out in the field? More first-timers shopping? Are lenders modifying loan terms enough to really make them affordable?