This week presented many challenges to the market but when you dig deeper into the headlines and actually read the stories behind them, you will see that there is certainly signs of economic improvement, especially in the housing market.
It was reported that home prices declined 12% in 2009 from the previous year. This is not earth shattering news as anyone keeping any type of eye on real estate would not be surprised by this report.
Although a decline in values is usually not looked upon as favorable, the reality is that the drop of 12% is the smallest drop in 2 years. In addition, for a good part of 2009 we saw increases in average home prices, it was the 4th quarter in which housing prices dropped but the trend is not expected to continue.
Home sales in 2009 increased 27.2% from the prior year which is having an impact on housing inventories. Although a good portion of the increase is related to the purchase of foreclosures and short sales, none the less, the increase in home sales is starting to take a bite out of the excessive inventory on the market. We all know that the reduction of inventory is one of the key ingredients to house price stabilization.
Banks are also starting to get more creative in working with homeowners in trouble. Citibank announced a new program which will give homeowners that are being foreclosed on the opportunity to remain in the house for up to 6 months after foreclosure.
Mortgage rates had ticked up about 1/8th of percent earlier in the week due the positive home sales report. However, the continuing concern regarding the European markets has once again made treasuries the safe haven for investors. The 10YR Bond has dropped back to within 4 basis points of where it started the week.
In other economic news:
Retail sales for January rose .5% which was higher than expected. Many are hopeful that this slight increase is a sign that consumers are beginning to spend money on other things besides necessities.
Weekly Jobless Claims dropped more than expected. Although you cannot judge the employment trend by one week, it was nice to hear a lower than expected number for a change.
European financial concerns are still weighing on the U.S. stock market which was evident in the week of volatile trading. The stock market will finish the week about the same place it started.
Economic news that can move the markets on tap for next week is:
• Tuesday February 16th - Housing Market Index
• Wednesday February 17th - Housing Starts
• Thursday February 18th - Producer Price Index, Jobless Claims & Industrial Production
• Friday February 19th - Consumer Price Index
Have a good weekend!
JJ Mack!
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment