Is it possible that the new "normal" for the markets is what we have been experiencing for the last year?
Every month the Fed meets to discuss economic policy, and every month they issue virtually the same report. We continue to hear that the economy is moderately improving and that the Fed plans on maintaining economic policy the same as it is. Simply put, this means that we are growing and recovering very slowly and that challenges to the economy will continue to remain both from the U.S. and from abroad.
Additionally the Fed has indicated that they stand ready to add more stimulus to help the economy if it is warranted, however their current plans and actions being taken will remain unchanged for now. By the way, the stock market seemed to like this news because we have had 4 straight days of upward numbers.Quite a few pieces of real estate data were released this week. Guess what the data showed?...Answer: Nothing NEW. The real estate market continues to mend itself at a very slow pace. Don’t get me wrong, the trend is in the right direction, it is just taking much longer than anyone predicted and it is occurring at a slower pace than predicted. Many experts believed that housing would be in better shape than it is today.
The S&P Case-Shiller Home Value Index showed that home prices have ticked up .2% in the 20 major cities throughout the U.S. that they measure. In addition, the report shows that the rate of overall value decline may be slowing. In February the index showed that home prices were down 3.9% from the prior February. The latest report shows that values are down 3.5% from a year ago which indicates that the market may be stabilizing.
New Home Sales came in weaker than expected and that is what made big headlines early this week. However, as the media always does, they only report the headline and they didn’t report what is really happening which is much better than expected. March new home sales declined 25,000 which had people worried about the future of building. What mainstream media failed to announce is that the prior month’s numbers had been revised upward by 40,000 showing that in February there was huge gain in sales. The reality of the matter is that new homes sales are improving and more than likely there will be an upward revision to this week’s numbers as well.
Additional positive real estate data came in the report on Pending Home Sales which showed a 4.1% increase in contract signings from the prior month. This is another consecutive monthly increase that has occurred since September. Concern remains that there is a large gap between pending and existing home sales. The difference is attributed to the number of transactions that are being put together versus the number that are closing. All indications point to the continued tight lending guidelines that exist. The bright side is that more home buyers are hitting the market attempting to purchase real estate.
Mortgage rates continue to remain very low and home affordability is still at one of the highest points in history. The inventory of homes for sale is dropping slowly. The question remains, now that the five biggest lenders in this country have settled with the government on their illegal practices of handling foreclosures, just how much will foreclosures increase in the coming months now that the banks are bank pursuing once again after the moratorium that lasted almost a year? We just have to wait and see what the real impact will be.
Keep in touch for the next Market News Update. Have a great day!!!
Cindy Tomlinson
Loan Officer
USLending Company
DRE Lic # 01520422
NMLS # 214851
NMLS # 214851
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