U.S. Economic Outlook
(PDF: 28KB)The recent action by the federal government in "taking over" the two GSEs could be the shot in the arm that the housing market needs.
http://www.realtor.org/research/reinsights/forecast
The Forecast: Charts(PDF:180KB)With the government's takeover of Fannie and Freddie, the spread between 10-year Treasuries and the 30-year fixed mortgage rate will surely narrow and hence result in lower mortgage rates.
A "Shot in the Arm" for the Housing Market
By Lawrence Yun, NAR Chief Economist
Home sales continue to edge up and down. Overly stringent lending criteria imposed by Fannie Mae and Freddie Mac in the past month no doubt held back contract signings. Pending home sales (see page 3) declined in July, after rising in June. But the recent action by the federal government in "taking over" the two GSEs could be the shot in the arm that the housing market needs.
Even with the latest pullback in contract signings, pending home sales have been fairly stable on a national basis for nearly a year, with dramatic local market differences continuing. Contract signings have been steaming ahead, nearly doubling in activity from a year before in several California and Florida markets. The outer Washington, D.C., exurbs also are coming around very strongly. That bodes well for future home sales nationally.
Another factor is the attractiveness of FHA-mortgages. FHA is taking a more active role in serving a broad cross-section of home buyers, but it will take some time to fully get up to speed. There's been a surge in FHA mortgage applications. Interestingly, many people in high-cost areas aren't familiar with FHA programs. REALTORS® should be aware that they are one of the major sources of information about mortgage programs for their clients. They should familiarize themselves with this increasingly valuable program.
Still, there are many ambiguities in the marketplace. The economy is producing more, yet job cuts continue. GDP growth in the second quarter of this year was 3.3 percent. In fact, the last time GDP growth was negative was in the fourth quarter of last year - and that was before the unprecedented surge in oil prices. In spite of relatively healthy GDP growth, 84,000 non-farm payroll jobs were shed in August - more than most analysts (including me) expected. And those most recent job cuts have been across the board in all sectors.
Those job cuts help explain anemic consumer confidence. While consumer confidence rose in August, the Conference Board reports that its consumer confidence index stood at 56.9 for that month.. The reading suggests that for most Americans, the economy is basically in "neutral." A first-time home buyer tax credit - one of the provisions of the economic stimulus legislation passed and signed into law earlier in the summer - and lower interest rates on newly conforming jumbo loans favors consumers. But buyer confidence remains low. Even with the Treasury Department's direct intervention in the secondary mortgage market, it is unclear if we will go back to sound normal underwriting criteria, or if it will remain overly stringent. The housing market outlook is very cloudy.
We often cite the real estate professional's mantra: all real estate is local. But economic conditions are also local. The speed and timing of a housing and economic recovery depends on local market conditions. Based on local market fundamentals, I expect robust home price growth in places like Denver over the next two years. Up until the weekend of September 12, I would have included Houston in that list as well, but given the recent damage wrought by Hurricane Ike we'll have to watch the Houston market closely to see how fast its economy recovers from the storm. In addition, the frequent reporting of multiple bids in California and Florida may be signaling a bottom in home prices in those areas. Nationally, home sales are stable now but are expected to increase in coming quarters.
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Marina Vialtsina
Showing posts with label Existing home sales. Show all posts
Showing posts with label Existing home sales. Show all posts
Saturday, October 4, 2008
Tuesday, September 9, 2008
11-Month Supply of Homes for Sale
Total housing inventory at the end of July rose 3.9 percent to 4.67 million existing homes available for sale, which represents an 11.2.-month supply at the current sales pace, up from a 11.1-month supply in June. The rise in supply results from a sharp increase in condo inventory; the single family supply declined.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 6.43 percent in July from 6.32 percent in June; the rate was 6.70 percent in July 2007.
Single-family home sales rose 3.1 percent to a seasonally adjusted annual rate of 4.39 million in July from 4.26 million in June, but are 12.4 percent below the 5.01 million-unit level a year ago. The median existing single-family home price was $210,900 in July, down 7.7 percent from July 2007.
Existing condominium and co-op sales increased 3.4 percent to a seasonally adjusted annual rate of 610,000 units in July from 590,000 in June, but are 18.6 percent below the 749,000-unit pace in July 2007. The median existing condo price4 was $223,400 in July, which is 2.7 percent below a year ago.
In Detail: Regional Sales, Prices
West. Regionally, existing-home sales in the West jumped 9.7 percent in July to a level of 1.13 million and are 0.9 percent higher than July 2007. The median price in the West was $273,200, down 22.2 percent from a year ago.
Northeast. In the Northeast, existing-home sales rose 5.9 percent to an annual pace of 900,000 in July, but are 11.8 percent below a year ago. The median price in the Northeast was $278,700, which is 4.9 percent lower than July 2007.
Midwest. Existing-home sales in the Midwest increased 0.9 percent to an annual rate of 1.12 million in July, but are 17.0 percent lower than July 2007. The median price in the Midwest was $175,400, up 1.0 percent from a year ago.
South. In the South, existing-home sales slipped 0.5 percent to an annual pace of 1.85 million in July, and are 18.1 percent below a year ago. The median price in the South was $179,300, down 3.5 percent from June 2007.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 6.43 percent in July from 6.32 percent in June; the rate was 6.70 percent in July 2007.
Single-family home sales rose 3.1 percent to a seasonally adjusted annual rate of 4.39 million in July from 4.26 million in June, but are 12.4 percent below the 5.01 million-unit level a year ago. The median existing single-family home price was $210,900 in July, down 7.7 percent from July 2007.
Existing condominium and co-op sales increased 3.4 percent to a seasonally adjusted annual rate of 610,000 units in July from 590,000 in June, but are 18.6 percent below the 749,000-unit pace in July 2007. The median existing condo price4 was $223,400 in July, which is 2.7 percent below a year ago.
In Detail: Regional Sales, Prices
West. Regionally, existing-home sales in the West jumped 9.7 percent in July to a level of 1.13 million and are 0.9 percent higher than July 2007. The median price in the West was $273,200, down 22.2 percent from a year ago.
Northeast. In the Northeast, existing-home sales rose 5.9 percent to an annual pace of 900,000 in July, but are 11.8 percent below a year ago. The median price in the Northeast was $278,700, which is 4.9 percent lower than July 2007.
Midwest. Existing-home sales in the Midwest increased 0.9 percent to an annual rate of 1.12 million in July, but are 17.0 percent lower than July 2007. The median price in the Midwest was $175,400, up 1.0 percent from a year ago.
South. In the South, existing-home sales slipped 0.5 percent to an annual pace of 1.85 million in July, and are 18.1 percent below a year ago. The median price in the South was $179,300, down 3.5 percent from June 2007.
Monday, September 8, 2008
Median Price Down 7.1% from Year Ago
Median Price Down 7.1% from Year Ago
The national median existing-home price for all housing types was $212,400 in July, down 7.1 percent from a year ago when the median was $228,600.
Lawrence Yun, NAR chief economist, said home prices in some regions could soon increase.
“Sales have picked up significantly in several Florida and California markets. Home prices generally follow sales trends after a few months of lag time,” he said. “Still, inventory remains high in many parts of the country and will require time to fully absorb. We expect more balanced conditions in 2009 and will eventually return to normal long-term appreciation patterns.”
Analysis of NAR price data since 1968 shows home prices normally rise 1 to 2 percentage points above the overall rate of inflation, building wealth over the typical period of homeownership.
The national median existing-home price for all housing types was $212,400 in July, down 7.1 percent from a year ago when the median was $228,600.
Lawrence Yun, NAR chief economist, said home prices in some regions could soon increase.
“Sales have picked up significantly in several Florida and California markets. Home prices generally follow sales trends after a few months of lag time,” he said. “Still, inventory remains high in many parts of the country and will require time to fully absorb. We expect more balanced conditions in 2009 and will eventually return to normal long-term appreciation patterns.”
Analysis of NAR price data since 1968 shows home prices normally rise 1 to 2 percentage points above the overall rate of inflation, building wealth over the typical period of homeownership.
Sunday, September 7, 2008
Existing-Home Sales Hit 5-Month High
Existing-Home Sales Hit 5-Month High
Existing-home sales rose in July to the highest level in five months, although they continue to be well below the numbers from last year at this time, according to the NATIONAL ASSOCIATION OF REALTORS®.
Existing-home sales – including single-family, townhomes, condominiums and co-ops – increased 3.1 percent in July to a seasonally adjusted annual rate of 5 million units from a downwardly revised level of 4.85 million in June. Sales were 13.2 percent lower than the 5.76 million-unit pace in July 2007.
NAR President Richard F. Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., said the up-and-down pattern may break soon.
“We hope the new tools in the hands of home buyers from the recently enacted housing stimulus package will spark a sustained sales uptrend in the months ahead,” he said. “Buyers who’ve been on the sidelines should take a closer look at what’s available to them now in terms of financing and incentives. Given some of the inventory on the market, we also strongly encourage buyers to get a professional home inspection.”
Existing-home sales rose in July to the highest level in five months, although they continue to be well below the numbers from last year at this time, according to the NATIONAL ASSOCIATION OF REALTORS®.
Existing-home sales – including single-family, townhomes, condominiums and co-ops – increased 3.1 percent in July to a seasonally adjusted annual rate of 5 million units from a downwardly revised level of 4.85 million in June. Sales were 13.2 percent lower than the 5.76 million-unit pace in July 2007.
NAR President Richard F. Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., said the up-and-down pattern may break soon.
“We hope the new tools in the hands of home buyers from the recently enacted housing stimulus package will spark a sustained sales uptrend in the months ahead,” he said. “Buyers who’ve been on the sidelines should take a closer look at what’s available to them now in terms of financing and incentives. Given some of the inventory on the market, we also strongly encourage buyers to get a professional home inspection.”
Monday, September 1, 2008
Pending Home Sales Index and Existing-home Sales
Pending Home Sales Index and Existing-home Sales
The Pending Home Sales Index (PHSI), based on contracts signed in June, rose 5.3 percent to 89.0 from a downwardly revised reading of 84.5 in May, but remains 12.3 percent below June 2007 when it stood at 101.4. The PHSI jumped 9.3 percent to 92.4 in the South; rose 4.6 percent to 101.0 in the West; increased 3.4 percent to 79.6 in the Northeast and rose 1.3 percent in June to 79.6 in the Midwest. Lawrence Yu, NAR chief economist, said, "This is welcome news because a rise in contract activity is necessary for an overall housing recovery. With a tax credit now available to first-time home buyers, increases in home sales could be sustained with the momentum carrying into 2009.”
Existing-home sales – including single-family, townhomes, condominiums and co-ops – increased 3.1 percent to a seasonally adjusted annual rate of 5.00 million units in July from a downwardly revised level of 4.85 million in June, but are 13.2 percent lower than the 5.76 million-unit pace in July 2007.
The Pending Home Sales Index (PHSI), based on contracts signed in June, rose 5.3 percent to 89.0 from a downwardly revised reading of 84.5 in May, but remains 12.3 percent below June 2007 when it stood at 101.4. The PHSI jumped 9.3 percent to 92.4 in the South; rose 4.6 percent to 101.0 in the West; increased 3.4 percent to 79.6 in the Northeast and rose 1.3 percent in June to 79.6 in the Midwest. Lawrence Yu, NAR chief economist, said, "This is welcome news because a rise in contract activity is necessary for an overall housing recovery. With a tax credit now available to first-time home buyers, increases in home sales could be sustained with the momentum carrying into 2009.”
Existing-home sales – including single-family, townhomes, condominiums and co-ops – increased 3.1 percent to a seasonally adjusted annual rate of 5.00 million units in July from a downwardly revised level of 4.85 million in June, but are 13.2 percent lower than the 5.76 million-unit pace in July 2007.
Thursday, January 3, 2008
New Market News
This week will be very important for mortgage rates despite the fact that it is a holiday shortened week. There are four relevant factual economic reports scheduled for release along with the minutes from the last FOMC meeting. This means that we may see fairly significant changes to rates more than one day this week.
Today brings us the release of November's Existing Home Sales report, which comes from the National Association of Realtors. It gives us a measurement of housing sector strength and mortgage credit demand, but is not considered to be of high importance to bonds or mortgage rates. However, after the surprisingly large drop in November's New Home Sales report, we could see this data also influence mortgage rates if it shows similar results. The financial markets will close early today and remain closed Tuesday in observance of the New Year's Day holiday. They will reopen Wednesday morning with the release of the Institute for Supply Management (ISM) manufacturing index. This highly important index measures manufacturer sentiment. A reading above 50 means that more surveyed manufacturing executives felt that business improved during the month than those who felt it had worsened. Analysts are currently expecting to see a 50.5 reading in this month's release, meaning that sentiment fell slightly from November's 50.8. A smaller reading will be good news for the bond market and mortgage shoppers while a higher than expected reading could lead to higher mortgage rates Wednesday morning.Also Wednesday will be the release of the minutes from the last FOMC meeting. This will give market participants insight to the Fed's thinking and concerns regarding inflation and monetary policy. It may also help form opinions of the Fed's future moves toward interest rates. It is one of those pieces of information that may cause a great deal of volatility in the markets or be a non-factor, depending on what the minutes show. They will be released at 2:00 PM ET, so they shouldn't affect the markets or mortgage rates until afternoon hours. The Commerce Department will post November's Factory Orders data late Thursday morning, giving us an important measurement of manufacturing sector strength. This report is similar to the Durable Goods Orders release that was posted late last month, except this report includes orders for both durable and non-durable goods. Durable goods are items that are expected to last three or more years such as electronics and autos. Examples of non-durable goods are food and clothing. Analysts are expecting to see an increase of 1.0% in new orders. This report generally does not have a huge impact on the bond market or mortgage rates, but it can influence bond trading enough to create a small change in rates.The final report of the week comes Friday morning when the Labor Department will post December's employment figures. The Employment report is considered to be one of the most important monthly releases we see. It gives us the national unemployment rate, the number of jobs added or lost during the month and average hourly earnings, which is a key measure of wage inflation. Rising unemployment, a smaller than expected increase in new payrolls and a small increase or even a decrease in earnings would be good news for the bond market. Current forecasts call for a 0.1% increase in the unemployment rate, pushing it to 4.8%. Analysts are expecting to see an increase in new payrolls in the neighborhood of 70,000 with earnings rising 0.3%. If we see much fewer than 70,000 new jobs, we should see mortgage rates drop considerably Friday. However, stronger than expected readings will likely push mortgage rates higher.Overall, the key data of the week will be Wednesday's ISM index and Friday's Employment report, which could set the tone for the bond market and mortgage pricing for the next few weeks. If they show weaker than expected results, mortgage rates should move lower for the week.
Today brings us the release of November's Existing Home Sales report, which comes from the National Association of Realtors. It gives us a measurement of housing sector strength and mortgage credit demand, but is not considered to be of high importance to bonds or mortgage rates. However, after the surprisingly large drop in November's New Home Sales report, we could see this data also influence mortgage rates if it shows similar results. The financial markets will close early today and remain closed Tuesday in observance of the New Year's Day holiday. They will reopen Wednesday morning with the release of the Institute for Supply Management (ISM) manufacturing index. This highly important index measures manufacturer sentiment. A reading above 50 means that more surveyed manufacturing executives felt that business improved during the month than those who felt it had worsened. Analysts are currently expecting to see a 50.5 reading in this month's release, meaning that sentiment fell slightly from November's 50.8. A smaller reading will be good news for the bond market and mortgage shoppers while a higher than expected reading could lead to higher mortgage rates Wednesday morning.Also Wednesday will be the release of the minutes from the last FOMC meeting. This will give market participants insight to the Fed's thinking and concerns regarding inflation and monetary policy. It may also help form opinions of the Fed's future moves toward interest rates. It is one of those pieces of information that may cause a great deal of volatility in the markets or be a non-factor, depending on what the minutes show. They will be released at 2:00 PM ET, so they shouldn't affect the markets or mortgage rates until afternoon hours. The Commerce Department will post November's Factory Orders data late Thursday morning, giving us an important measurement of manufacturing sector strength. This report is similar to the Durable Goods Orders release that was posted late last month, except this report includes orders for both durable and non-durable goods. Durable goods are items that are expected to last three or more years such as electronics and autos. Examples of non-durable goods are food and clothing. Analysts are expecting to see an increase of 1.0% in new orders. This report generally does not have a huge impact on the bond market or mortgage rates, but it can influence bond trading enough to create a small change in rates.The final report of the week comes Friday morning when the Labor Department will post December's employment figures. The Employment report is considered to be one of the most important monthly releases we see. It gives us the national unemployment rate, the number of jobs added or lost during the month and average hourly earnings, which is a key measure of wage inflation. Rising unemployment, a smaller than expected increase in new payrolls and a small increase or even a decrease in earnings would be good news for the bond market. Current forecasts call for a 0.1% increase in the unemployment rate, pushing it to 4.8%. Analysts are expecting to see an increase in new payrolls in the neighborhood of 70,000 with earnings rising 0.3%. If we see much fewer than 70,000 new jobs, we should see mortgage rates drop considerably Friday. However, stronger than expected readings will likely push mortgage rates higher.Overall, the key data of the week will be Wednesday's ISM index and Friday's Employment report, which could set the tone for the bond market and mortgage pricing for the next few weeks. If they show weaker than expected results, mortgage rates should move lower for the week.
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