Market News Update - Mortgage Rates Hit Lows Again

What a difference a week makes.  Although the initial stock market elation over the launch of QE3 has tapered off, there are many other areas in which consumers are reaping the benefits.

Let’s start with mortgage rates.  According to Freddie Mac, mortgage rates have rapidly returned to record lows.  Just now the main stream media is starting to report about the new lows, so it is expected that we will see an upswing in refinance applications.  Last week the Mortgage Bankers Association reported that refinances increased only .8% and purchases declined by 4%.  I believe that it is too early to tell the impact the new stimulus plan will have on the housing market; however, I am optimistic.

Even prior to the announcement of new record low mortgage rates, housing has been continuing to maintain its slow and steady recovery.  Expectations for housing starts in August were not met, however they did show improvement.  August housing starts rose 2.3 percent following a 2.8 percent drop in July. As much as the report is not overwhelmingly positive, the numbers represent an increase of 29.1 percent from a year ago.

For the second straight month, existing home sales rose strongly, increasing 7.8 percent in August.  This is the largest monthly percentage gain since last August and the highest rate since May 2010. All regions showed significant improvement.

Housing supply is at 6.1 months at the current sales rate.  Housing inventory remains tight and may not only be limiting sales, it is likely the reason that home prices have been rising.  The last time inventories were this low was in January.  Next week there is more housing news to come with the S&P Case Shiller House Price Index, the FHFA House Price Index and New Home Sales reports to be delivered on Tuesday and Wednesday.

The job market continues to remain sluggish.  Last week’s report on first time jobless claims jumped to 385,000.  This increase was much larger than expected.  This week’s reports did not show any real improvement in that the total claims declined just 3,000 down to 382,000.  These higher than expected claims do not bode well for the national unemployment report coming out in 2 weeks.  Last month’s report was much worse than expected which was one of the main reasons why the Fed elected to launch another round of stimulus to try and assist the economy in recovering.

Although it is not as prevalent as it was earlier in the year, concerns about Europe are creeping back into the minds of investors.  The Euro zone crisis is not over by any stretch of the imagination.  What has also been putting negative pressure on the U.S. stock market is the poor manufacturing reports released from China.

Next week’s economic reports are:

• Tuesday September 25^th – S&P Case Shiller House Price Index & FHFA House Price Index
• Wednesday September 26^th  – MBA Applications and New Home Sales
• Thursday September 27^th – First Time Jobless Claims, GDP and Durable Goods Orders
• Friday September 28^th – Consumer Sentiment

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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