Mortgage rates remain low!!

Is it possible that the new “normal” for the markets is what we have been experiencing for the last year?

Every month the Fed meets to discuss economic policy, and every month they issue virtually the same report.  We continue to hear that the economy is moderately improving and that the Fed plans on maintaining economic policy the same as it is.  Simply put, this means that we are growing and recovering very slowly and that challenges to the economy will continue to remain both from the U.S. and from abroad.

Additionally the Fed has indicated that they stand ready to add more stimulus to help the economy if it is warranted, however their current plans and actions being taken will remain unchanged for now.  By the way, the stock market seemed to like this news because we have had 4 straight days of upward numbers.

Quite a few pieces of real estate data were released this week.  Guess what the data showed?...Answer:  Nothing NEW.  The real estate market continues to mend itself at a very slow pace.  Don’t get me wrong, the trend is in the right direction, it is just taking much longer than anyone predicted and it is occurring at a slower pace than predicted.  Many experts believed that housing would be in better shape than it is today.

The S&P Case-Shiller Home Value Index showed that home prices have ticked up .2% in the 20 major cities throughout the U.S. that they measure.  In addition, the report shows that the rate of overall value decline may be slowing.  In February the index showed that home prices were down 3.9% from the prior February.  The latest report shows that values are down 3.5% from a year ago which indicates that the market may be stabilizing.

New Home Sales came in weaker than expected and that is what made big headlines early this week.  However, as the media always does, they only report the headline and they didn’t report what is really happening which is much better than expected.  March new home sales declined 25,000 which had people worried about the future of building.  What mainstream media failed to announce is that the prior month’s numbers had been revised upward by 40,000 showing that in February there was huge gain in sales.  The reality of the matter is that new homes sales are improving and more than likely there will be an upward revision to this week’s numbers as well.

Additional positive real estate data came in the report on Pending Home Sales which showed a 4.1% increase in contract signings from the prior month.  This is another consecutive monthly increase that has occurred since September.  Concern remains that there is a large gap between pending and existing home sales.  The difference is attributed to the number of transactions that are being put together versus the number that are closing.  All indications point to the continued tight lending guidelines that exist.  The bright side is that more home buyers are hitting the market attempting to purchase real estate.

Mortgage rates continue to remain very low and home affordability is still at one of the highest points in history.  The inventory of homes for sale is dropping slowly.  The question remains now that the five biggest lenders in this country have settled with the government on their illegal practices of handling foreclosures, just how much will foreclosures increase in the coming months now that the banks are bank pursuing once again after the moratorium that lasted almost a year?  We just have to wait and see what the real impact will be.

JJ Mack

Increased buyer activity in March!

Gee, it has been a while since we had a week like this on the economic front.  With the exception of mortgage rates declining slightly, and the retail sales report coming in better than expected, the bulk of the economic data and market news this week has been pretty disconcerting.

The week started off with a jump when the retail sales report came in much stronger than expected for the month of March.  Auto sales had a larger than expected increase as well as pretty much all of the broader measures of sales resulting in a total rise of .8%, far higher than the expected .3%.  Good news, consumers are still spending money.

After seven months of straight gains, the home builders' housing market index declined. All three components are down this month with the greatest decline, in what is a clearly not a good sign, is the slowing of incoming buyer traffic.  For months we have seen an increase in activity however March seems to have slowed, which is unusual for this time of year.

Following suit is the decline in existing home sales for March which came in softer than expected.  In February we saw a decline of .6% where as March dropped a much larger than expected 2.6%.  Unfortunately the signs of buyer apprehension are showing up in various parts of the country.

There is one possible argument that housing may not really be as bad as the recent reports indicate.  Throughout the U.S. almost every region had a much warmer winter than normal.  Some believe that the atypical weather which attributed to better than expected housing reports throughout the winter may in fact be catching up to us now.  If a lot of the building and selling took place earlier than normal, then it is possible that the recent declines can be a reflection of that.  The one redeeming part of the housing report is for those involved in residential real estate.  The report clearly indicated that the bulk of the decline was in the multifamily sector.  Single family homes edged down only slightly.  Additionally, the report also shows that existing sales are up 5.2 percent from the same time last year.

Mortgage applications for purchases, which spiked at the end of March mostly related to the scheduled premium increase on FHA loans, slipped back for a second week.  Purchase applications declined 11.2 percent while refinance applications rose 13.5 percent.  This just goes to show that there are people that still have yet to refinance, and that borrowers are very sensitive to slight movements in mortgage rates in either direction.

Not sure if this is good news or bad news but I will report it none the less.  A story on CNNMoney.com predicts that shorts sales will increase 33% this year.  The fact that more lenders are working faster with struggling homeowners, as well as being more willing to negotiate on the price of homes, may help to move inventory off the market.  On the one hand this will help reduce the number of homes for sale,  on the other hand nobody knows how this will really impact home values.

Last but not least, the recent trend of improving first time jobless claims has come to a halt.  The last two weeks of claims have seen a net increase of 24,000 putting us back up to 386,000 claims.  The last two weeks of reports are the highest so far this year.

JJ Mack

mortgage rates on a 15 year fixed came close to the all time record lows

NOW is the time to buy so give us a call!
JJ Mack

“Oh no, here we go again”!After a few months of positive economic news, the tide seems to be turning.Although I won’t say the tide is reversing, there certainly may be cause for concern. After repeated months of an improving employment picture, the numbers last month indicate a possible change in direction. Before we go any further, don’t be fooled by the announcement that unemployment dropped from 8.3% down to 8.2%. The cause of this drop is only because of one factor which is simply that people are leaving the workforce. All of the other metrics related to employment are worse this month than last month.
JJ Mack