The housing data released this week was not as good as we would have liked to see. The National Association of Realtors reported that pending homes sales dropped 8% from the prior month. This decline continues to demonstrate the weakness that exists in the housing sector.
It is important to note however that pending home sales are still up from a year ago and many believe that the drop is related to the harsh weather that has plagued the northeast this winter. In addition, many experts feel that the impending expiration of the tax credit will put a spark into the fence sitters and move more people to action in home buying.
The media as of late has actually been assisting the housing market to become more active versus their normal M.O. of being a market killer. Fortunately the news and media have been reminding potential home buyers about the tax credit expiration and they have been urging buyers to take action.
More positive news for the economy is that national unemployment remained the same at 9.7%. This report was better than expected as the markets were anticipating an increase to 9.8% given all of the weather related issues that have occurred. The economy is still shedding jobs on a monthly basis however the pace in which jobs are being lost is the slowest it has been in almost 2 years.
Interest rates on mortgages had been stable all week until the news report Friday morning regarding national unemployment. The better than expected report set off a rally in the stock market which has resulted in upward pressure on the 10YR Bond Yield. The yield, which was at 3.61 for virtually the entire week, rose to 3.68 by the end of the trading day resulting in a slight increase in mortgage rates.
In other positive economic news, the manufacturing activity index rose for the 7th straight month. Although the rise in the index was not as much as we have seen in previous months, the fact that it has continued to rise indicates a slow but steady recovery for the sector.
Mortgage rates continue to remain low, and housing prices have shown that they are not going up any time soon. Foreclosures still remain a big concern for the housing market and will continue to weigh on house values for quite some time. Since foreclosures make up a high percentage of home sales taking place across the country, it is very likely that the home affordability index will continue to remain at one of its highest points in the last 10 years.
Next week stands to be a quieter news week as there appears to be only a few economic reports due out. The majority of the reports, on face value, should not have a major impact on the markets.
Have a Great Weekend!!
JJ Mack
Your Mortgage Professional
916-517-1800 x 300
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