Market News Update - Mortgage Rates Fall!

Home prices continue to gain as the FHFA House Price Index for July rose more than expected, 1.0 percent after increasing 0.6 percent in June. Analysts expected only a .7 percent increase. If you wanted to chart the progression of the Home Price Index, you would see that for 18 straight months the index has been rising.  The largest gain in the index was seen in the West with a rise of 2.2%.  The fact that the numbers remain positive is great news; however, if you have been tracking the index in these reports, you will see that the pace of value increases has slowed considerably from just a few months ago.  Home prices are 8.8 higher than the same time last year.

Mortgage rates in the last week fell sharply after the Fed announced that they are not yet ready to begin the tapering of economic stimulus.  Pretty much everyone on Wall Street, the real estate industry, and mortgage profession, expected the Fed to begin slowing their stimulus plan and the announcement by the Fed not to taper was a surprise to all.

On the news from the Fed, mortgage rates have been falling sharply in the last week.  As is always the case, when rates drop, mortgage and housing activity jumps.  The Mortgage Bankers Association reported that applications for purchase loans jumped 7% in the prior week, while refinances increased 5%.

The craziness that has existed in regard to the run up in home prices has slowed somewhat.  Now that prices seem to be stabilizing, it appears that this is giving a boost to the sales of new homes.  In August, sales jumped 7.9%, which was on target with most analysts’ expectations.

Additionally, new homes have been coming into the market and that likely contributed to another dip in the median home price which declined 0.7 percent.  This is the 4^th monthly decline in a row, which definitely shows a reversing trend in prices.  It is not likely that we will see a sustained drop in prices, but more of a leveling out after the recent frenzy of purchasing.

The final numbers for housing in this report is that the number of new homes for sale rose by 6000 to 175,000 units.  Supply in relation to the pace of sales actually slipped to 5.0 month from 5.2 months.  In June the supply was only 4.3 months, and at the same time last year supply was 4.6 months.  Housing overall has improved from a year ago; however, demand is clearly not as strong as it was just a few months ago.  Seasonal factors are considered to be playing a role in the declining numbers.

Finally, consumer spirits have been sagging in the most recent consumer confidence report.  Could it be for the fact that mid-term elections are just a month away? (Just a thought.)

Next week’s market moving reports:

·        Tuesday October 1^st – ISM Manufacturing Index & Construction Spending

·        Wednesday October 2^nd – MBA Purchase Applications and ADP Employment Report

• Thursday October 3^rd - First Time Jobless Claims
• Friday October 4^th – National Unemployment

I appreciate your business and look forward to talking to you soon! Have a great day!!!
 
Sincerely,

Cindy Tomlinson
Loan Officer

USLending Company

BRE Lic # 01520422
NMLS # 214851   

 

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