Market News Update - Housing Prices Rise Even As Unemployment Rises

Wow it has been many months that I had to search high and low for good news on the economy, and I hate to say it, this week I really couldn’t find much.  After many months of economic indicators heading in a positive direction, it seems that almost every one of them has reversed course. 

The biggest headline this week is the National Unemployment figures which came in far worse than expected.  Unemployment increased .1% up to 8.2%.  What makes the report even worse is that the number of people that obtained jobs in April was revised downward by 73,000 and in May the economy only added 69,000.

The housing market which seemed to be showing signs of life has appeared to have reverted back to its old ways of bouncing along what most people consider is the bottom of the market.  Although we are not seeing a decline in housing values the way we experienced at the height of the recession, we are seeing the slow but steady improvement fade away.

Mortgage rates have once again hit all time lows yet housing purchases and refinances both have been slowing.  Pending Home Sales which steadily rose for three straight months reversed course in April with an unexpected 5.5% drop.  This report does not bode well for the May and June existing home sales reports. 

Despite the record low mortgage rates, the Mortgage Bankers Association reported that applications for refinancing and purchases dropped 1.5% and .6% respectively.  Many believe that the uncertainty in housing is more related to the jobs market and consumer confidence than anything really related to housing itself.

The single bright spot in the housing reports this week is the S&P Case-Shiller Home Value Index.  The S&P reported that home prices in the 20 major cities measured rose for the second straight month.  The increase may be small, but an increase is an increase.  Additionally, home values are only 2.6% lower than they were a year ago which is the closest margin we have had since the recession started.

As you already read, the improvement of the job market in recent months has stalled out and is turning for the worse.  I don’t want to make a judgment based upon this month’s report alone, however we have been seeing a steady slowing in the hiring sector and more people have been heading to the unemployment lines to file.

Thursday the stock market finished its worst month since December 2010.  The DOW and S&P 500 both declined by 6% where as the NASDAQ dropped an even larger 7%.  The scary part is the market is being gripped by the fear of what is happening in Europe versus anything going on in the U.S.

First we had Italy, then Portugal, followed by Greece, and now Spain joined the fray of European countries that is having major financial issues.  Last week it came to light that the Spanish banking system may have more to worry about than first thought.  This all came up when it was reported that the Spanish government had to bail out one of the nation’s largest banks.  More news from Spain is coming out daily and many investors feel very insecure about how the ripple effect of the European debt crisis is going to impact the U.S.

Reports for next week are:

• Monday June 4^th – Factory Orders
• Tuesday June 5^th  - ISM Non Manufacturing Index
• Wednesday June 6^th - MBA Applications
• Thursday June 7^th - First Time Jobless Claims

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

Sincerely,

Cindy Tomlinson
Loan Officer

USLending Company

DRE Lic # 01520422
NMLS # 214851   

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