A Housing Start is a new home on which construction has started and, over the last 6 months, home builders are averaging one half-million starts per month.

This marks the highest 6-month average since 2008 and a reading one-fifth percent better from 12 months ago.  Revisions to prior data have all been higher, too.

Even more interesting, though, is that the number of newly-issued building permits is exploding. Permits were up more than 5 percent last month and have climbed back to the levels of late-2008.

Housing permits are an important data point in housing because permits are precursors to actual housing starts.  According to the Census Bureau, 82% of homes start construction within 60 days of permit-issuance.

Therefore, because March’s housing permits increased, we should expect Housing Starts to continue to rise into the early months of summer.

This, too, reflects well on housing because the federal home buyer tax credit won’t be in existence this summer. The simple fact the homes are being built now shows that housing is likely to expand even after the tax credit expires.

Non-military members must be under contract by April 30, 2010 and closed by June 30, 2010 in order to claim up to $8,000 in federal tax credits.

As expected, the February Home Sales figure dipped relative to January.  It’s four straight months of lower month-over-month totals.  However, it’s actually pointing towards rising values.

November of 2009 was an exception.  The expiration of the first time home buyer tax credit flooded the market with buyers.  These were buyers that would have ordinarily been more evenly distributed through the winter months, instead, that “December-February” buyer bought sooner.

The trends and moving averages all point towards continued momentum in the real estate recovery.

The rumor that the market is soft may not last much longer.  When the first time home buyer credit was extended until April 30th, it created a spot for another huge spike in buyer traffic.  Buyer traffic means multiple offer situations and that means less power in negotiating.

The Existing Home Sales report is based on February’s closings which is really a reflection of buyer traffic in December and January.   The reality of today’s market is that there are more buyers than the stats are tracking.

Existing Home Sales should gain through March and April, pressuring home prices higher. And, by the time the press reports the gains, the best deals may already be gone.  Consider acting sooner rather than later.

The credit ranges up to $8,000 per buyer. There’s now just 7 weeks left to take advantage.

To be eligible, home buyers must be under contract for a new home no later than April 30, 2010, and must be closed no later than June 30, 2010.

In addition to meeting the deadline dates, there’s a basic set of requirements to be tax credit-eligible:

• You can’t purchase the home from a parent, spouse, or child
• You can’t purchase the home from an entity in which the seller is a majority owner
• You can’t acquire the home by gift or inheritance
• Each buyer in the purchase must meet eligibility requirements

There’s other criteria, too.

For one, the sales price on the subject property cannot exceed $800,000. Homes sold for more than $800,000 are ineligible for the tax credit. Furthermore, households earning more than $125,000 as single-filers, or $225,500 for joint-filers, are ineligible.

You can read the complete eligibility requirements at the IRS website, or, you may just find it simpler to speak with your accountant about it. There are some nuances in qualifying for and claiming the tax credit on your returns and getting a professional’s opinion is always wise.

And lastly, don’t forget that government’s tax credit program is a true tax credit. It’s not a tax deduction.  This means that a tax filer whose “normal” tax liability is $3,500 and who is eligible for $8,000 in credit will receive a $4,500 refund from the U.S. Treasury.

Mark your calendar for April 30, 2010. It’s 7 weeks away and you can be sure that as the date gets closer, buyer traffic is going to increase.  You may find sellers more willing to negotiate today than several weeks from now.

After a big drop of 17% December, the January Existing Home Sales report yielded a 7% slide.  An “existing home” is a home not being resold by a previous owner.  It essentially excluded only new construction.

Existing Home Sales data on an annualized and adjusted basis shows:

1. 1. 1. Sales volume is at its lowest levels since June 2009
      2. Sales volume fell below its 12-month rolling average
      3. Home supplies are at a 5-month high

This mirrors the data from the government’s New Home Sales data released last week.  That report put new home sales at a 40-year low and showed new homes supplies higher by an entire month.

This is not a crisis and hasn’t moved housing off of its rebound.  Home sales are always cyclical and outside forces always influence the market.  Now is no exception.

For one, home sales were so high in October and November due to the original November 2009 first time home buyer tax credit expiration.  Many buyers shifted out of December/January and into October/November.  This is a natural reason for the dip.

Over the long-term trend, the numbers came in near to what you’d expect as a rolling average.  A smaller, but important part was that January’s weather was awful from Mexico to Canada.  That will slow down home sales.

We’re seeing higher activity in February and March.  It’s unlikely that we’ll see a repeat of last Apri-November’s run, but there are enough buyers to support this housing rebound. The good news of the sagging sales reports is that today’s buyers may find home prices are lower and sellers are more willing to negotiate.

A Pending Home Sale is a home under contract, but not yet closed. It’s compiled using over 60 large brokerages and over 100 regional data listing services and is considered to be one of the best indicators of home sales activity.

As such, it’s pretty accurate in projecting forward-looking housing reports.  Notably, with the data showing a moderate tick up on Pending Home Sales in December, it’s reasonable that we should see a tick up in Existing Home Sales in January.

With the first time home buyer tax credit ending soon, FHA interest rates likely to go up, and now housing looking like it is going to resume its upward trend, the time to buy might be now.

For home buyers in Chicago , this is all a bit of good news. Home prices are based on the supply-and-demand balance that exists between buyers and sellers.  When buyers outnumber sellers, like they did through most of 2009, home supplies dip and, in fact, the national home inventory nearly halved during the 12 months ending November 2009.

With fewer homes for sale, multiple-offer situations were almost commonplace and home values rose as result.

Activity has since slowed, however, and fewer buyers are in today’s market. The supply-and-demand equation has shifted back some. In December, home supplies rose for the first time in 7 months and January will likely show the same.

The net result: Home buyers have more homes from which to choose and that can create negotiation leverage for better prices and better concessions.

With mortgage rates still low and a looming deadline on the homebuyer’s tax credit, market activity should be strong between now and April.   Take your time and bid right. And when you’re ready, be ready. The best deals likely won’t last.

Home prices ticked up 0.7% in November.  The Federal Housing Finance Agency tracks this data and, like Case-Shiller, it runs on a two-month delay.

That is perhaps the biggest issue.  The Realtor data shows 80% of Pending Home Sales close within 60 days meaning that the home price figures are always about a full sales cycle behind.

Over a year, the data can be fairly useful.  The facts are that home prices are up and home supplies are down over the past 12 month.

There are three main reasons to buy a home today:

1. First time home buyer tax credit
2. Home prices are low
3. Mortgage rates are low

We’re inside of 90 days on the expiration of the tax credit, we’re already seeing home prices move higher, and FHA interest rates are going to rise at the termination of the Fed’s purchase program.

Homes may not be this affordable for quite some time.

Version 3.0 of the first time home buyer tax credit expires in 100 days.

The end of the first time home buyer $8,000 tax credit has been pushed forward to spring, requiring homebuyers to be under contract for a home no later than April 30, 2010, and to be closed no later than June 30, 2010.

In addition, “move-up” buyers were also added to the program’s eligibility list.  This means that you don’t have to be a first-time home buyer to be eligible for the tax credit.  If you’ve lived in your home for 5 of the last 8 years, you meet the IRS requirements.  Tax credits of up to $6,500 on the “move-up” or “long-term residents” program.

The basic eligibility requirements are still the same:

• You can’t purchase the home from a parent, spouse, or child
• You can’t purchase the home from an entity in which they’re a majority owner
• You can’t acquire the home by gift or inheritance
• All parties to the purchase must meet eligibility requirements

There are still some notable changes.

First, the subject property’s sales price may not exceed $800,000. Over $800k?  Fully ineligible.  The good:  household income thresholds have been raised to $125,000 for single-filers and $225,500 for joint-filers.

And lastly, don’t forget that the program is a true tax credit — not a deduction.  This means that a tax filer who’s eligible for the full $8,00 credit and whose “normal” tax liability totals $5,000 would receive a $3,000 refund from the U.S. Treasury at tax time.

The complete list of qualifying criteria is posted on the IRS website.  Review it with a tax professional to determine your eligibility.  Then mark your calendar for April 30, 2010.

There’s just 100 days to go.