Fiscal Cliff Still Pending and New Home Sales Down

It seems that the only two main news drivers of the market these days are housing and the fiscal cliff debate.  The housing news has been getting better and better.  Negotiations on the budget are inching forward as well and hope seems to be increasing that a budget deal will be reached in Congress.

Mortgage rates have risen off of their lows and the reaction in mortgage applications reflects this.  Home purchase applications rose 3% in the prior week, however refinances, which are much more interest rate sensitive, declined by 2%.  Refinancing activity remains very strong and this slight decline is not significant.  The continued improvement in purchase applications is always welcome.

Earlier in the week the Case-Shiller Home Value Index continued the positive pricing trend with a report that home prices nationally increased .4%.  Although this increase is not earth shattering, for a one month measurement the increase is very respectable.  In addition home prices according to the report are 3% higher than the same time last year.

The Federal Housing Finance Agency which does its own home valuations analysis reported that home prices increased .2% from the prior month and 4.4% from the same time last year.  Whether you look at Case-Shiller or the FHFA report they both have 2 major aspects in common, housing is improving month by month and year by year.

New home sales which had been a bright spot in the monthly housing reports turned slightly negative.  The new home sales report came in 19,000 lower than expected on an annualized basis, which is the first signs of new home sale weakness we have seen in quite some time.  In addition, September’s numbers were also lowered, which is beginning to create a little bit of concern in the new home sector.  The one thing to realize is that earlier in the year new homes sales were stronger than expected and that may have something to do with the weakness we are seeing now. 

Lastly, let us not forget about the fiscal cliff debate that just won’t go away.  Many potential homebuyers have been interviewed and many of them have indicated that they are waiting to see what happens with the government budget before they make the decision to purchase a home.  Many homebuyers and employers are concerned about the future of the economy and employment and what will happen if the government fails to come to an agreement before the end of the year.

I have faith that our elected officials will figure out a way to come to an agreement on the budget.  It may not be pretty but I would have to think that they all recognize that allowing the country to fall back into a recession is something that just cannot be allowed to occur.

Next week’s economic reports are:

• Monday December 3^rd – ISM Manufacturing Index
• Wednesday December 5^th - MBA Applications, ADP Employment and Factory Orders
• Thursday December 6^th –First Time Jobless Claims
• Friday December 7^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

DRE Lic # 01520422
NMLS # 214851   

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