LOW mortgage rates fuel clients!!

Signs that housing is coming back continue to be sporadic.  However indications are that the market is getting a little bit stronger with each passing month.  According to the nation’s home builders whose housing market index surged in July, they say “the housing market has turned the corner.  The monthly gain in the index is the largest in nearly 10 years while the level, which has been moving higher all year, is now at its highest of the recovery, since March 2007. Regions throughout the country all reported strong gains with the expectation for real growth to occur in about 6 months.  This report comes off of the dismal reports last year and is the strongest report we have seen in 2012.

The mild improvement in home sales is finally beginning to work its way into new construction.  Housing starts in June jumped 6.9 percent after dropping 4.8 percent in May. The June pace of housing starts came in higher than expectations.  This latest report is an increase of 23.6 percent from the same time last year.  The single-family and multifamily components both gained. Single-family starts increased 4.7 percent after a slight increase of 2.2 percent in May. The multifamily component, which tends to be more volatile, jumped 12.8 percent, following a 19.3 percent drop in May.

The West led the country with a 36.9 percent jump.  The Northeast followed a distant second with a gain of 22.2 percent. The Midwest declined 7.3 percent while the South decreased 4.2 percent.

As mentioned many times before in previous reports, the warm winter seems to have taken the wind out of the typically more robust spring and summer home selling season.  Existing home sales fell a surprising 5.4 percent in June which is the lowest of the year.

Record low mortgage rates continue to fuel strong demand for refinancing.  Applications for refinances soared a whopping 22.0 percent in the July 13 week.   Unfortunately the record low mortgage rates are not stimulating purchase financing as those numbers continue to remain virtually flat.

Once again investors in the stock market are showing that they are nervous about investing and trading stocks.  We are right now in the midst of 2^nd quarter profit reporting season for corporations and they, for the most part, have been positive, but nothing exceptional that is lifting investor confidence.

Europe continues to remain a major factor for uncertainty, and when you combine that with this week’s weaker than expected retail sales report, it is hard to tell when investors are going to jump back into the markets with both feet.

Signs of inflation are beginning to appear, although not at a rate which is creating any type of panic.  Although the headline for consumer prices shows that prices remained virtually unchanged, one of the reasons is that energy prices have declined which is offsetting the core inflation rate which is actually increased .2%.

The economy keeps humming along, and the presidential election is getting nastier and nastier by the day.  What scares me most is that the campaigning is really just beginning.  This election battle combined with the stalemate in Congress does not bode well for future reports on consumer confidence

JJ Mack