US Housing Increasing

US housing starts showed a surprise increase of 4.5 percent in December, according to new government figures.

The Commerce Department reported that the number of housing starts spiked to a seasonally adjusted rate of 1.642 million units.

Most economists had forecast that starts would fall to around 1.570 million units.

Starts from November were revised lower to 1.572 million units, compared with an initial estimate of 1.588 million units, but remained higher from October's clip.

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Real Estate to Bloom in Springtime?

Investors might discover in the weeks ahead that calling a bottom in the housing downturn is a mug's game.   First, it had been looking to some like a bottom might be at hand. Then, Lennar Corp. said it expected to show a large loss on the back of land write-downs of $400 million to $500 million. The home builder said it has yet to see "tangible evidence of a market recovery." Later on, the National Association of Realtors said its index of pending home sales, which is based on how many sales contracts have been signed in a given month, slipped in November. The Dow Jones index of home-building shares fell 4.3%.

This is a slow time of year for the housing market. Little wiggles in actual activity can look bigger after statisticians make their seasonal adjustments. A warm January can distort the view even more. Home builders say they won't know for sure if the downturn is over until the spring, when seasonal activity picks up.

Here is one reason to be careful about calling a bottom now. A large number of homes for sale are unoccupied.   Read the full story here…

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Insurance Rates to Drop

According to an insurance industry group, rates for commercial, auto and homeowners insurance will fall in most areas of the United States this year but will continue to rise in storm-prone coastal areas.

The industry-sponsored Insurance Information Institute said property and casualty insurers had such a good year in 2006, when no hurricanes hit the United States, that they had built up combined reserves by $55.7 billion.

"Insurers took advantage of last year's respite to fix the roof while the sun was shining," institute President Robert Hartwig said in an interview.

The industry now has an overall reserve of $481.5 billion, up from $425.8 billion at the end of 2005, Hartwig said, although he added that reserves were not as big a defense against major disasters as they might appear.

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Americans Struggle to Afford Housing

Accoring to a new study, U.S. home prices may have dipped over the past year, but many American workers would still struggle to afford a median-priced home in major cities.

"American workers are really not gaining ground and they're so far behind in the first place," said Barbara Lipman, research director for the nonprofit Center for Housing Policy, which conducted the study.

While the median home price in the 202 largest metropolitan areas declined 2 percent from a year ago to $248,000 in the third quarter of 2006, mortgage rates rose enough over the year that homes actually became less affordable as pay did not keep pace.   "The real story is what happened to salaries," Lipman said. "Lower-paid occupations - such as in retail, or home health workers - their salaries went up only about 3 percent."

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Home Shopping in a Buyers Market

The housing market finally, after a long while, belongs to the buyer. Home sales and prices sagged in 2006, and 2007 is not expected to be too different.   Don't limit yourself. While you should look for homes that are listed with real estate agents, don't discount properties that are for sale by owner. They make up about 25% of the market, and you may be able to find a good deal with one of them thanks to a lack of agent commission and fees.

Here are a few rules for shopping for a new home in a buyer's market:  

• Hold onto a property for a while. Now is not the time to buy a condo or home to flip quickly for a profit. Make sure you buy a property at a good value — you're more likely to have a good sale in the future.  

• Take your time. There's no need to rush in this market, so don't worry about putting in the highest bid or writing a check the minute you like a place. Research the neighborhood to find out if the asking price is consistent with other homes in the area.  

 • Ask for incentives. To sell their homes, owners may be willing to throw in extras such as appliances, work sheds, drapes or even patio furniture for the asking price. Try negotiating some extras.  

 • Shop around for a mortgage. To get the best deal available, ask for as many quotes as you can. If you get a pre-approved mortgage, you'll have even more leverage at the negotiation table.

If you're in the market for a new home, tell us how you feel about the current state of home sales.  Leave us your comment about the rules for shopping for a new home in a buyer's market.