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The Commerce Department said new home sales rose 6.2% last month, to a seasonally adjusted annual rate of 430,000, from an upwardly revised rate of 405,000 in September. It was the sixth time new home sales had risen in the past seven months.

The October increase far surpassed industry expectations. A panel of expert forecasts compiled by Briefing.com had predicted new home sales of 404,000.

“The evidence continues to show stabilization in the housing market,” said Mike Larson, a real estate analyst with Weiss Research. “It’s not a huge new bull market, mind you, but an end to the relentless flood of bad news we had [in previous years].

“The conditions are in place that will enable prices to begin stabilizing,” he added.

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New houses sold in October for a median price of $212,200, up from $204,800 in September. The average sales price was $261,100.

Larson was especially positive about the reduction in inventory. There were 239,000 new homes on the market at the end of the month, a 6.7 month supply at the current sales rate.

“Construction has been cut to such low levels that the absolute number of homes on the market is at its lowest level since 1971,” said Michelle Meyer, an economist with Barclays Capital. “The supply has been reduced significantly and is calibrated better with demand.”

There has been some rise in demand for those few homes on the market but, compared with recent years, sales are still very modest. At the height of the market in July 2005, new homes sales peaked at an annualized rate of nearly 1.4 million. That puts October’s rate about 70% lower.

The sales report followed a release last week from the National Association of Home Builders revealing that home construction fell to a six-month low during October.

Some of that decline probably stemmed from a reaction by builders to the impending end of the first-time homebuyers tax credit, which had been due to lapse Dec. 1.

The credit has been extended, however, and expanded to include existing owners. That should provide a boost for new home construction again.

Residential construction is a large part of the economy. During the third quarter, the home building and remodeling industry added about a half percentage point to the 2.8% rise in the gross domestic product, according to Meyer.

“Home construction often has a big impact on quarterly growth,” she said.

The pending home sale index, compiled monthly by the National Association of Realtors, was up 21 percent higher this September compared with September of 2008. That’s the biggest year-over-year increase in the history of the index, dating back to 2001.

Plus the September gain in pending sales was the eighth straight month of higher numbers — and that’s also a record for the index. Pending sales were up by 10.2 percent in the Western states, 8.1 percent in the Midwest, 5 percent in the South.

Only the Northeast saw a decline, and that was by 2 percent.

Those numbers are pretty robust, but some economists caution that the index is likely to see a tapering off during the winter and holiday months, when fewer people are shopping.

David Semmens, an economist with Standard Chartered Bank in New York, said “we expect a far slower growth rate going forward.”

But other economists question whether that seasonal pattern might be overridden by the short term extension, and expansion, of the tax credit through next June.

That extension not only continues the $8,000 credit for first time buyers, but allows people who’ve owned their homes for the past five years to qualify for a $6,500 credit if they sign a contract by April 30th 2010 and go to closing by June 30.

In other key economic developments affecting real estate this week, the Commerce Department reported that spending on construction, both residential and commercial, was up by eight tenths of a percent during September. That’s a further welcome indication the recession is over.

Also, the Clear Capital “HDI” home price index rose by 3.7 percent on a national average basis between September 26th and October 28th.

Meanwhile, mortgage rates got even a little better last week, according to the Mortgage Bankers Association. Average 30-year fixed rates slipped just below 5 percent, while 15-year fixed rate loans dropped significantly — and now average just 4.3 percent.

Not surprisingly, given all these positive indicators, new applications for mortgages to buy homes were up again last week — this time by 3 percent.

The recovery looks like it’s well on track.

by Kenneth R. Harney

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WASHINGTON — Senators agreed Wednesday to extend a popular tax credit for first-time homebuyers and to offer a reduced credit to some repeat buyers.

The tax credit provides up to $8,000 to first-time homebuyers but is set to expire at the end of November. The Commerce Department said Wednesday that new home sales fell 3.6 percent in September, and some industry representatives blamed uncertainty about the tax credit.

Senators agreed to extend the existing tax credit for first-time homebuyers while offering a reduced credit of up to $6,500 to repeat buyers who have owned their current homes for at least five years, said Regan Lachapelle, a spokeswoman for Senate Majority Leader Harry Reid, D-Nev.

The tax credits would be available to homebuyers who sign sales agreements by the end of April. They would have until the end of June to close on their new homes, according to a summary of the legislation being circulated among lawmakers.

Senators were still negotiating the expansion of a separate tax credit that lets money-losing businesses get refunds for taxes paid in previous years, providing them with an immediate source of cash.

Senators in both political parties were hoping to add both tax provisions to a bill that would give people running out of unemployment insurance benefits up to 20 more weeks of federal aid. The Senate could vote on the overall bill as early as Thursday, but lawmakers were still haggling over several unrelated amendments Wednesday evening.

Popular bills like the one to extend unemployment benefits often attract amendments that would have a difficult time passing on their own.

Republicans were demanding that they be given a chance to offer amendments to restrict federal aid to the beleaguered community activist group ACORN and on requiring that people receiving unemployment insurance be processed through E-Verify, an Internet-based system that employers use to check on the immigration status of new hires.

Majority Democrats have refused to add the amendments.

If the Senate passes the bill, it would go to the House, which passed a similar bill extending unemployment benefits last month. House leaders have also said they support extending the tax credit for homebuyers.

Sen. Chris Dodd, D-Conn., has been negotiating for several weeks with Sen. Johnny Isakson, R-Ga., to craft an extended tax credit for homebuyers that would pass the Senate.

Lawmakers didn’t release a cost estimate for extending the tax credit, though similar proposals were projected to cost about $10 billion.

Industry representatives said uncertainty about the tax credit is hurting new home sales. September’s decline was the first since March.

It takes 45 days to 60 days to close on a house, making it unlikely a sale made today would be consummated by the end of November, said Lucien Salvant, spokesman for the National Association of Realtors.

“Buyers right now have an incentive to hold off, not knowing whether the credit will be extended,” Salvant said.

About 1.4 million first-time homebuyers have qualified for the credit through August. The National Association of Realtors estimates that 350,000 of them would not have purchased their homes without the credit.

The tax credit for money-losing businesses is a favorite among Republican lawmakers. Businesses could get tax refunds by using losses from 2008 and 2009 to offset taxable profits made in the previous five years. Under current law, they can only offset profits from the previous two years.

The provision would help a variety of industries, including retailers, manufacturers and home builders, though it’s expensive.

“It’s clearly a way to put cash in the hands of some major economic players,” said Clint Stretch, a tax policy expert at Deloitte Tax.

A similar proposal that was ultimately dropped from the economic stimulus package enacted in February would have cost nearly $20 billion over 10 years. Lawmakers are working to reduce the price tag.

Because people are so strapped for cash, this is a good way to get refunds when businesses need them for operating expenses, said Rachelle Bernstein, vice president and tax counsel for the National Retail Federation.

STEPHEN OHLEMACHER, Associated Press Writer
POSTED: 3:32 pm MDT October 28, 2009
UPDATED: 5:56 pm MDT October 28, 2009

The action is another important step in the Aamodt case filed 43 years ago to settle the water-rights claims by Nambé, Tesuque, Pojoaque and San Ildefonso pueblos. The pueblos, the state, the city of Santa Fe and Santa Fe County in 2006 reached a settlement that needs congressional approval. This year, Congress has steadily advanced legislation to ratify and fund the settlement, but no final act has been passed. Some of the nonpueblo landowners in the valley with domestic wells have fought against the settlement for years and continue to oppose portions of it.

Meanwhile, the federal district court must finalize the priority dates on acequias in the valley as part of the settlement. Priority dates were given by the state to more than 70 streams in the area and people with water rights had an opportunity to ask for a change in the date.

Priority dates on irrigation ditches are a critical part of New Mexico’s water law and the wheeling and dealing by cities and developers over water rights. New Mexico follows a “first in time, first in right” approach to water — the first person, or ditch, to use water beneficially has the senior claim on the water. The ditches with the oldest priority dates receive their water first off a stream.

The pueblos are recognized as the first people in the valley to use water for farming and other uses, so they have first rights to water.

Priority dates on the acequias in the Pojoaque Valley range from 1728 within the Rio Tesuque to 1907 on parts of the Rio en Medio. Gerald Peters, for example, believes the priority dates on several irrigation ditches fed by the Rio en Medio should be older than the those given by the state. The state gave the Questa Ditch a 1907 priority date; Peters believes it should be 1899.

According to a legal notice published Friday in The New Mexican, people who have challenged their ditch’s priority date and those who want to challenge any changes have until Dec. 31 to file notice they intend to participate in the court proceedings. They must also attend a pretrial conference Jan. 13 with the special master reviewing the priority dates. This is the only opportunity people with surface water rights will have to participate in the adjudication of priority rights, according to the state. Anyone who doesn’t participate won’t be able to object later.

Staci Matlock | The New Mexican

 The 15-year FRM this week averaged 4.43 percent with an average 0.6 point, up from last week when it averaged 4.37 percent. A year ago at this time, the 15-year FRM averaged 5.72 percent.

The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.40 percent this week, with an average 0.6 point, up from last week when it averaged 4.38 percent. A year ago, the 5-year ARM averaged 6.06 percent.

The one-year Treasury-indexed ARM averaged 4.54 percent this week with an average 0.6 point, down from last week when it averaged 4.60 percent. At this time last year, the 1-year ARM averaged 5.23 percent.

“Following bond yields, long-term mortgages rates edged up slightly this week,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Although rates for 5/1 ARMs and traditional 1-year ARMs are around half a percentage point below 30-year fixed mortgages, consumers appear to be seeking the stability of fixed-rate mortgages. According to the Mortgage Bankers Association, ARMs averaged only about 6 percent of the number of mortgage applications in September and October thus far.”

“The housing market is still trying to recover in the second half of the year. The Federal Reserve reported in its October 21st regional economic review that housing market conditions improved in recent weeks, primarily from a pickup in sales of low-to medium-priced houses. However, residential construction activity was reported to remain weak in most areas. New construction of single family homes rebounded in September, rising at a 3.9 percent annual rate, but did not erase all of the declines set in August, based on figures released by the Department of Commerce. Moreover, homebuilder confidence, as measured by the National Association of Homebuilder’s Housing Market Index, fell slightly in October and marked the first decline since January of this year.”

Attorney: $388,000 due for potable water and $51,000 due for treated sewage effluent

Julie Ann Grimm | The New Mexican

Las Campanas Limited Partnership is current on payments for the joint city/county Buckman Direct Diversion Project, but still owes the city of Santa Fe for past-due water bills, attorneys said this week.

The luxury development, now under the control of Lloyds Banking Group, this summer fell about $1.6 million behind on its share of the Rio Grande diversion project. On Monday, a check delivered to the city took them out of arrears, project manager Rick Carpenter said.

In the case of a separate arrangement with the city’s Water Division, it’s not clear why no one demanded payment sooner on what officials now say is up to $388,000 in payments for potable water — bills that have stacked up for service provided to Las Campanas since 2004 — and about $51,000 for treated sewage effluent billed in August, Assistant City Attorney Marcos Martinez said.

The development uses effluent from the city sewage-treatment plant to irrigate golf courses.

Managers at the luxury development say they don’t agree with the city’s accounting. Michelle Hoeft, a spokeswoman for Las Campanas Limited Partnership, said Thursday that the numbers “are in dispute.”

The issue at hand, she said, is that in 2004 a water cooperative took responsibility for a portion of the water delivered there, and the city began sending bills to both the Las Campanas corporate partnership and the co-op.

“Everybody was making payments,” Hoeft said. “From an administrative standpoint (the co-op was) writing checks and the partnership was writing checks. The process now has been to separate these two entities and try to reconcile what was legitimately paid for by the partnership and the co-op and how those payments got applied.”

The past-due bills came to light after Councilor Miguel Chavez asked for an audit of all the city accounts associated with the financially troubled development, according to Martinez.

The city delivers potable water to the development for irrigation and for domestic and commercial uses there. A legal agreement in place for more than six years stipulates that the city will each year sell up to 322 acre-feet of water to the subdivision until the Buckman Direct Diversion comes online.

That project is being constructed under a three-way deal between the city and county and Las Campanas, who agreed to proportionately split the cost of more than $216 million in shared facilities. The original plan was for Las Campanas to build its own water treatment plant nearby, but the development is in the process of changing those plans.

Just last week, the county agreed to allow Las Campanas to become a wholesale water customer of the county and to share in the cost of a new pipeline to make that possible.

Such an arrangement will likely require alteration of the Buckman contracts, which requires approval from the City Council. Since construction on the shared facilities has been under way for more than a year, project manager Carpenter said the county and Las Campanas have agreed to pay for changes to the Buckman project associated with their arrangement.

Becoming a wholesale water customer of the county does not relieve Las Campanas of its obligation to the Buckman project, estimated at about $11.2 million of the $216 million design-build budget. Including Monday’s payment, Las Campanas has paid about $4.2 million, Carpenter said.

They were spot-on with their prediction of Wednesday’s storm, which dumped several inches of snow in the Sangre de Cristo Mountains, sent water rushing down the Santa Fe River and brought gusty wind problems to the Santa Fe Municipal Airport.

Forecasters had predicted major thunderstorms in the central Rio Grande region, wind gusts of 50 miles per hour or more and up to 7 inches of snow above 7,500 feet in the mountains.

The Santa Fe snowpack telemetry site, near the ski basin above 11,000 feet in elevation, gained more than half a foot of snow Wednesday. But melted down into a cup, the snow at the measuring point only equaled a gain of about an inch of water. Information for the Elk Cabin snotel site east of Santa Fe at 8,200 feet elevation was not available Wednesday evening.

“This was a very wound-up storm with a lot of moisture wrapped in it,” said meteorologist Chuck Jones from the National Weather Service in Albuquerque.

Temperatures in Santa Fe plummeted from the 70s on Tuesday to the 40s on Wednesday, and a steady rain fell in the downtown area.

The National Weather Service issued a winter storm warning for north-central and northeastern New Mexico through Wednesday late afternoon as the storm that formed over California moved across Arizona and into New Mexico. The same storm dumped more than a foot of snow in parts of Colorado and an inch of rain in Albuquerque.

Accuweather predicted snow through Wednesday night in the mountains. Jones said parts of the state, including Santa Fe, would continue to feel the storm’s effects through today with cloudy, cold weather. Mostly sunny skies are predicted through the weekend for the Santa Fe area.

 Staci Matlock | The New Mexican