The Future of Housing is Strong

Existing home sales have remained flat, however don’t let this fool you into thinking the real estate market is not improving at a rapid rate.  Pending home sales, which is a fairly accurate predictor of future existing homes sales, rose 1.5% in March to an index level of 105.7.  This is the highest level for the index so far this year.   (In case you were wondering what the index represents…it is an index developed by the National Association of Realtors to indicate housing activity.)

Reports from all over the United States reinforce that the future of housing is strong in that demand for existing homes and new construction is rising rapidly.  Real estate professional and builders are reporting huge increases in buyer traffic at open houses and builder locations.

Wow! did the experts ever get this one wrong…almost every expert in real estate predicted that housing values would not increase at a pace of more than 5% per year for many years post recession.  On Tuesday, the Case-Shiller Home Value Index indicated boom-time housing gains with an increase of 1.2 percent for February.  This is on top of the prior months 1.0 percent gain.  When we do the math that would come out to over a 12% home value increase on an annualized basis. 

Although there are no guarantees that this pace will continue, the amount of activity happening in markets throughout the country indicates that there is a tremendous amount of pent up home buyer demand.   As of this month’s report, home prices are up 9.3% from the same time a year ago and that includes periods that had much slower housing demand than we have today.

The Mortgage Bankers Association reported that despite interest rates once again hitting record lows, especially the 15 year fixed, purchase applications declined 1.4% in the prior week.  Do not read into this report too much in that although mortgage applications for purchases may have declined, that does mean that purchase activity has slowed.  The reality is that there is a lot of cash in the housing market today and more buyers than we have ever seen are purchasing without financing.  Additionally, as reported by mortgage companies and loan officers throughout the U.S., the number of pre-approved buyers searching for homes is at record levels.

First time jobless claims for the week of April 27^th dropped unexpectedly to 324,000, which is the lowest point since the beginning of the recovery.  National unemployment declined .1% to 7.5% in March.  The economy added 165,000 jobs following a revised increase from the prior month of 138.000.  Both numbers exceeded analyst expectations and hopefully the labor market may be improving slightly faster than most experts think.
Next week economic reports are extremely light:

• Wednesday May 8^th – MBA Report
• Thursday May 9^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   

 

PS… FOLLOW ME on Facebook for the latest Mortgage updates