Great News for the Housing Market!

Last week I wrote about Friday’s crazy stock market rally based upon the tentative agreement reached in Europe to avert the debt crisis. If you recall, I asked, let’s see how long the agreement will last? Although the agreement remains intact, after carefully digesting and analyzing the terms of the agreement, investors, economists, and almost anyone else you can think of, feel that the plan will not work and once again fear has gripped the markets.

The Federal Open Market Committee released their report on Tuesday, and with little surprise, they have reiterated their plan to keep interest rates exceptionally low through mid 2013. The FOMC reported that the economy continues to grow at a moderate pace however unemployment remains uncomfortably high and that a rebound in the employment sector will be a very slow process. (No surprises here)

On the positive side of the employment picture, First Time Jobless Claims dropped to 366,000 which is the lowest level since 2008. This second consecutive week of a drop in claims may point to an improvement trend.

Despite next week being one of the major housing data reporting periods of the month, The National Association of Realtors made sure we had some drama this week. NAR announced that they have been incorrectly reporting existing home sales data for the last 5 years. (Yes 5 years) NAR has issued an advisory that existing home sale data has been overstated since 2007. NAR is waiting until next week’s monthly report on the 21st to provide the latest housing data along with the 5 year correction figures. In NAR’s statement, they reported that the overstatement of figures was due to double counting of sales in certain regions. You may not remember, or even be aware of this, but NAR was accused of making this miscalculation about 4 years ago however they denied that there was an issue then.

It has been a while since I have written about foreclosure data so let me give you the latest. November foreclosure filings are down 3% from October and 14% below the same time a year ago. This could be good news for the housing market. The only downside to this latest report is that there is a 13% increase in the number of auctions scheduled. There is a slight possibility that if the auctions prices are lower than current home sale prices, values could be negatively impacted. On the positive side however, most experts don’t believe that this latest round of auctions will have a negative impact on home values.

In a final housing note, mortgage rates have tied the lowest level on record. Imagine a 30 year fixed rate below 4%. Despite these crazy low interest rates, fears and uncertainty about the economy and employment have many home buyers remaining on the sidelines. The good news is that despite the fact that the MBA reported that mortgage applications for purchases declined 4.2% last week, the real estate agents I have been speaking with have all said they have seen an increase in buyer traffic in their offices in recent weeks.

Finally, Retail Sales continued to show improvement in the month of November. The increase of .2% was less than experts forecasted however… improvement is still improvement right?. Does this mean that the kick off to the holiday season was not quite as strong as many had hoped? It is still too early to tell. The December final retail sales tally will be the true indicator on how the consumer opened their wallets for gift giving this holiday season.