Market News Update - Housing Recovery Remains Strong

The housing recovery continues to remain strong, as indicated with a few different reports this week.  The Case-Shiller Home Value Index showed that home prices in June rose 0.9% from the prior month.  This report is slightly weaker than the previous report, which showed an increase of 1.4% from May to June.  It’s crazy that already analysts are questioning the housing recovery because of this slightly weaker report.  It’s simply amazing how, with just a single month of data, people can change their opinion on the strength of the market.  Home prices overall are 12.1% higher than the same time last year.

The Pending Home Sales Index seems to be slowing down, although this is less a representation of the strength of the market and more a reaction to higher mortgage rates.  Some people believe that rising rates and rising home prices are placing the squeeze on demand.  However, most of the people rendering this opinion are not in the real estate or mortgage market on a daily basis.  Real estate and mortgage experts in the field seem to believe that the recent slowing is just a momentary lull due to home buyers accepting the fact that the cost of homeownership has gone up.  There is still plenty of demand.

Home prices are rising, which means real estate is once again becoming more than just a place to live, it is returning to the point that it can be considered a financial investment.  When real estate is viewed as an appreciating asset, regardless of home prices, demand remains strong.  Every time prices or mortgage rates rise, there is always a brief slow down, as the buyers in the market delay their decision to purchase for the moment; but rarely is it long term.

The Mortgage Bankers Association of America reported that mortgage applications for the prior week increased for purchase transactions but continued to slide on refinances.  Purchase applications increased 2.0%, whereas refinance apps declined 5%.

The GDP report released on Thursday morning shows that the economy is continuing to grow and become healthy.  GDP for the second quarter was raised to an annual rate of 2.5% versus the initial estimate of 1.7%.  The 4^th quarter of last year GDP was estimated at only 1.1%.  Sales of domestic products are also up significantly at 1.9% where expectations were only for an increase of 1.3%.  The bottom line is that the economy is really starting to improve, and the rate of improvement is also becoming more substantial. 

The fear of the United States becoming embroiled in the civil war taking place in Syria has many investors concerned.  The stock market tanked over 170 points on news that the U.S. may get involved.

Market moving reports for next week are:

• Monday September 2^nd – Markets are Closed
• Tuesday September 3^rd – ISM Manufacturing Index and Construction Spending
• Wednesday September 4^th - MBA Applications
• Thursday September 5^th - First Time Jobless Claims and ADP Employment Report
• Friday September 6^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

BRE Lic # 01520422
NMLS # 214851   

 

PS… FOLLOW ME on Facebook for the latest Mortgage updates

Market News Update - Investors Cheer at Weak GDP

It is simply amazing that there used to be a time that the stock market would tank at any economic report that was negative and indicated a less than strong economy.  However, this week the exact opposite happened.  The markets rallied on Wednesday when the GDP report came in worse than expected.

You may be reading this and thinking that investor behavior just doesn’t make any sense.  The reality is that investors cheered the weak GDP report because they want to believe that the poor report is enough to get the Fed to delay their reduction in their bond buying program and stimulus withdrawal.  The question that remains is how investors can draw this conclusion on a single economic report, plus the fact that the Fed did not give a definitive time table for the tapering of the program?

Housing just keeps rocking.  Mortgage rates have receded off of their large increases over the last couple of weeks giving mortgage lenders a breather from the panic that has set in for most of them.  Reality has finally sunk in that the refinance boom is over.  The good news is that the increase in rates has sparked fence sitting buyers to take action on purchases.  Application for purchase loans increased 2.0% while refinances declined by 5%.

Home prices showed positive increases in four major housing reports released on Tuesday.  The Federal Housing Finance Agency reported that home prices rose .7% for the month of April on single family homes that were purchased with a Fannie Mae or Freddie Mac loan.

The S&P Case-Shiller Home Value Index showed that because of a shortage of housing inventory along with a sense of panic about rising rates, home prices are rising rapidly.  The Case-Shiller 20 city index rose 1.7% for the month of April which follows March’s increase of 1.9%.  Additionally home prices are up 12% from the same time last year.  Home price gains are occurring in every part of the country in all major cities.  The West is the strongest growth area with monthly gains averaging 3% and the annual increase is currently at 20%

The third report for the week related to housing is new home sales.  The expected annual pace for new construction was 460,000 units per year.  The report shows that the pace of construction and sales is on target for 476,000 which is over 3% higher than anticipated.  Additionally, builders are increasing the pace of construction in an attempt to keep up with rising demand.

The final housing report for the week was pending homes sales.  This index rose a whopping 6.7% with the largest increase in activity occurring in the west and Midwest.

Market moving reports for next week are:

• Monday July 1^st – ISM Manufacturing Index and Construction Spending
• Tuesday July 2^nd – Factory Orders
• Wednesday July 3^rd - MBA Applications and ADP Employment Report
• Thursday July 4^th – Independence Day Holiday – Markets Closed
• Friday July 5^th – National Unemployment and 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

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

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   

 PS… FOLLOW ME on Facebook for the latest Mortgage updates