Economic
reports as of late have been a little more mixed than they had hoped for or
anticipated. The FOMC feels that
engaging in pulling back the stimulus program at this time would negatively
hurt employment as well as cause consumers to retreat back into not spending,
as the cost of borrowing would increase with the cutting of the stimulus
program.
The
stock market rallied on the news to reach new heights, as mortgage rates
declined on the news, prompting a sigh of relief from consumers thinking about
refinancing. Even before the Fed
announcement, mortgage rates have declined over the last week, prompting an
increase in mortgage applications for both purchases and refinances. The Mortgage Bankers Association reported
that applications for purchases increased 3%, whereas refinances jumped 18%.
Some
of the data that kept the Fed from slowing the stimulus program is that housing
starts rose in August, but only because July was revised down. Recent
indications show signs that the housing market may be slowing down. Housing starts in August advanced 0.9 percent
after rebounding 5.7 percent in July. The
main gain in starts was led by single-family homes, which increased 7.0 percent
after declining 3.0 percent the prior month.
Existing
home sales reported their best showing since the beginning of the recovery at
an annual rate of 5.480 million in August, which was well above most analysts’
expectations. The gain of 1.7 percent
comes on top of July's giant 6.5 percent surge when "panic" over
rising rates moved buyers into the market.
The National Association of Realtors (NAR) used the word "panic" in the July report and is warning that August numbers may be skewed higher by nervous buyers. Concerns exist that because of rising mortgage rates housing may begin slowing in the coming months. This is one of the factors the Fed took into consideration in deciding to hold off on cutting the economic stimulus program. Additionally, another factor holding down sales is the lack of homes available for sale on the market. Current inventory on a national basis is 4.9 months down from 5.0 and 5.1 months in the two prior months.
The National Association of Realtors (NAR) used the word "panic" in the July report and is warning that August numbers may be skewed higher by nervous buyers. Concerns exist that because of rising mortgage rates housing may begin slowing in the coming months. This is one of the factors the Fed took into consideration in deciding to hold off on cutting the economic stimulus program. Additionally, another factor holding down sales is the lack of homes available for sale on the market. Current inventory on a national basis is 4.9 months down from 5.0 and 5.1 months in the two prior months.
Next
week’s market moving reports:
·
Tuesday September
24th – Case-Shiller Home Value Index & FHFA House Price Index
·
Wednesday
September 25th - MBA Applications, New Home Sales & Durable
Goods Orders
- Thursday September 27th - First Time Jobless Claims,
Pending Home Sales and GDP
Sincerely,
Cindy Tomlinson
Loan Officer
Loan Officer
USLending Company
BRE Lic # 01520422
NMLS # 214851
NMLS # 214851
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