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   

 

PS… FOLLOW ME on Facebook for the latest Mortgage updates

Market News Update - Home Construction is UP

Housing definitely seems to be on the upswing.  Although not all of the housing news is positive, we have been seeing steady signs of improvement month after month.

Housing starts slowed slightly in July after a strong June; however, permits for new construction showed a healthy gain.  Housing starts in July slipped 1.1 percent, following a 6.8 percent jump in the prior month.  July’s pace for new home construction is annualized at 746,000.  This figure is slightly lower than the market expectation of 750,000, however the current figures are up 21.5% from a year ago.  Additional data in the report shows considerable strength for the future of housing as permits filed for new construction jumped dramatically.

Home builders continue to report significant improvement in activity with the housing market index rising another 2 points this month.  This is the fourth straight month of significant improvement that puts the index at its best level since early 2007.  Home builders were excited to report that current sales and traffic continue to improve.

Mortgage applications were reported down slightly by 2.0% on purchases and down 5.0% for refinances.  Rising mortgage rates are the reason for the declines in both areas, especially in the refinance sector. 

Mortgage rates this week have been steadily rising and I expect that next week’s report on refinances will show even more of a decline in applications.  It appears that the refinance boom may very well be coming to an end.  Mortgage rates remain very low and are still below 4.0%.  Many experts believe that 4% is the threshold that will stop the majority of homeowners from refinancing.  On the purchase side, I believe that hitting the 4% mark will have a positive impact on buyer activity.  Purchasers that have been sitting on the sidelines may finally come to realize that if they don’t act now, they may miss out on the double benefit of very low home prices combined with very affordable mortgage rates.

There are many reports indicating that the economy is getting stronger.  This is one of the major reasons that mortgage rates have been rising.  In addition, many of the major lenders have been very slow to release their foreclosed properties into the market for sale.  It appears that the lenders are focusing more on stabilizing their balance sheets and, by slowly releasing properties into the market, they are stabilizing home prices.  In fact, it is being reported in more and more markets that homes are getting multiple offers and bidding wars are starting again because inventory is at the lowest point in more than 5 years.

My suggestion to anyone who has been thinking about purchasing a home…now is the time to act.  Home prices are heading up as well as mortgage rates and it makes sense to take advantage of the current conditions because no one really knows how quickly they will change.

The inflation report for the month of July continues to show that inflation remains under control.  Consumer prices in July came in softer than expected at both the headline and core levels. The concern is that inflation will begin to rise starting with next month’s report.  Prices on the wholesale level have been increasing.  It is especially noticeable in the cost for food and energy.   

The stock market has been showing signs of life this week as the indices have been steadily rising.  Many investors remain cautiously on the sidelines and the market movement has been based upon light trading that is typical for the summer.

Next week’s economic reports are:

• Wednesday August 22^nd - MBA Applications, Existing Home Sales and FOMC Minutes
• Thursday August 23^rd - First Time Jobless Claims, New Home Sales and FHFA House Price Index
• Friday August 24^th – Durable Goods Orders

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