Federally backed mortgages account for 59% of new home sales transactions with 96.5% to 100% loan-to-value (LTV) so far in 2009, according to the latest John Burns Real Estate Consulting homebuilder survey. The availability of Federal Housing Administration (FHA), Veterans Administration (VA) and US Department of Agriculture (USDA) residential mortgage financing programs has been critical to the new home market this year, the firm said. Northern California builders reported the highest use of FHA financing, while Southern Florida builders reported the highest percentage of cash purchases. Southern California builders reported the largest use of jumbo mortgages, but stricter underwriting and higher prices for jumbo loans has constrained sales of move-up homes, said John Burns vice president Jody Kahn. Nationally, the average unsold, finished inventory per community decreased nationally to 2.7 homes from 3.7 in September, due in part to the sale of speculative homes started in the summer. Southern California, the Northwest and Southern Florida all experienced declines in new home inventory. The Northeast, Southeast and Northwest regions reported increased starts ranging from 8% to 9%. Southern Florida reported the largest increase in October housing starts. The Midwest, and Southern and Northern Florida all saw declines in starts. But average net sales per community also declined from 2 to 1.6 homes, on par with levels in June and July 2008. Lower home prices and mortgage rates, along with the first-time homebuyer tax credit are boosting new home sales, but some builders reported losing business to competitors due to a lack of entry-level inventory available to close by the Nov. 30 expiration of the tax credit. “The good news for builders is that there seems to be momentum behind the effort to extend the federal tax credit and that the FHA is going to become more conservative, but not significantly curtail operations,” said CEO John Burns. “Political winds can change quickly though, so stay tuned.” More than 260 home building industry executives from public and private companies, representing insight on 86 metropolitan statistical areas (MSAs) and 1,741 communities participated in the October survey. Write to Austin Kilgore.