Market News Update - Housing Market Index Down But Home Sales Slightly Up

The housing market index, to almost everyone’s surprise, fell lower for the second straight month.  The issue seems to be more about builders having difficulty locating available lots to build and a lack of credit for new home construction than buyer demand.  The positive side to the report is that, although present conditions seem challenging for builders, sales traffic seems to be quite robust and shows no signs of slowing down.

Housing starts made a partial comeback in February; however, what many consider important for the future is that housing permits made a significant gain. Housing starts in February rebounded 0.8 percent after they had dropped 7.3 percent in January.  The report also reinforces that the market is in a much better place than a year ago, as housing starts are up a whopping 27.7 percent from the same time last year.  Housing permits continue on an upward trend, increasing by 4.6 percent.

The final piece to the housing reports for the week came on Thursday with the existing home sales report.  An unexpected rise in existing home sales inventory occurred in February with a reported increase from 4.3 months up to 4.7.  Additionally, exiting homes sales also improved, rising .8 percent with January being revised upward to .8 percent as well.

Low supply of available homes for sale had been holding down sales, but that appears to be changing as higher prices are bringing more homes into the market. Although the media has not been talking a whole lot about rising house prices, it appears that homeowners are beginning to do their own research and are finding that their homes are worth more than they initially thought.  The west coast appears to have the greatest shortage of available inventory of existing homes for sale.

Outside of housing reports for the week, the Federal Open Market Committee dominated mid week headlines.  The FOMC announced to no one’s surprise that they are leaving interest rates unchanged.  To go along with the no change rate policy, the FOMC reiterated their desire to keep interest rates low for mortgages by keeping their bond and mortgage backed securities purchase program in place. 

Mortgage rates continue to remain low but the expected news from the FOMC had only a slight impact in lowering mortgage rates.  Overall, mortgage rates continue to remain higher than their historic lows and it does not appear that they will return to set any new records.  In fact, many experts state that because the economy, and especially the real estate market are improving, if it were not for the Fed’s bond buying program, mortgage rates would probably be at least 1/2 to 1 percent higher.

A few more housing reports on tap for next week:

• Tuesday March 26^th – Durable Goods Orders and New Home Sales
• Wednesday March 27^th - MBA Applications and Pending home Sales
• Thursday March 28^th - First Time Jobless Claims and GDP
• Friday March 29^th – Good Friday…U.S. Banks and Equity Markets are Closed

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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