I am very excited today! I finally get to write something positive about housing. It has been a while but today I will relish the opportunity to deliver some good news.
It appears, at least for now, the free fall in house prices has ended. The Case-Shiller Housing Value Index rose 1.2% showing that stability to house prices in major cities across the U.S. is taking hold.
In even more positive housing news, New Home Sales rebounded 23.6% from May's previous drop of 36.7%. It seems that the tax credit hangover is starting to dissipate and we are on a slow road to rebuilding a normal housing market. (I'm not exactly sure what "normal" is, or what it will be in the future, however it feels good for the moment to be able to use the word "normal")
Housing inventory dropped from 9.6 months down to 7.6%. This significant drop is a welcome sign, however, and it is a big however, let us not be naïve. We all know the banks are sitting with over 3 million properties that they have not placed on the market. So in reality the supply is more like 5 years however we know the banks are going to drip these properties out for sale in order to keep house prices stable.
In other areas of the economy, news was not quite as optimistic. Consumer Confidence continues to erode due to the job market. Finding jobs is very difficult for the unemployed and the number of people that are part of the on-going claims is rising again. Keep in mind that on-going claims is rising and there are more people falling off the unemployment rolls so in fact the job market is really worse than the numbers indicate.
Corporate profits this week showed many companies are increasing their bottom line which is the foundation for future economic growth and the recovery of the jobs market. I have said it before, and I will say it again, although profits are increasing, until sales increase, which is still not happening, we will not see a huge change in the unemployment picture. The good news is that stronger bottom lines mean the government will be able to stay on the sidelines in regard to bailing out companies again.
Mortgage applications for purchase transactions declined 4.4% for the prior week and refinance apps declined 5.9%. These numbers are not anything to be concerned about in that for the most part, the decline represents the typical mid-summer real estate slow down.
Jobless claims dropped slightly less than expected but none the less they dropped. (Do I have to keep writing about Jobless Claims because the market is not paying attention to them right now so why should I?)
Economic reports due out next week are:
• Monday August 2nd - Construction Spending
• Tuesday August 3rd - Pending Home Sales
• Wednesday August 4th - MBA Purchase Applications
• Thursday August 5th - Weekly Jobless Claims
• Friday August 6th - Employment Situation
Your Mortgage Professional,
JJ Mack
916-517-1800
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