The housing market is recovering, and so is the economy!!

Despite the fact that the Federal Housing Finance Agency released their report accidentally on Tuesday evening instead of Wednesday morning, the important aspect is that the report continues to show an improving housing market.  According to the FHFA home prices rose .7% in August following a .1% rise in July.  Experts were anticipating an increase of .4% so the fact that the August report was better than expected bodes well for the belief that housing is on the rebound.  The August increase is 4.7% better than the same time last year.

The new home market is a greater source of strength for the economy in that new home sales jumped 5.7% in September.  This is the largest increase since the stimulus efforts of 2010.   Although prices for new homes slid back just by 3.2%, we are still seeing that median home prices are 11.7% higher from a year ago.  Despite all of the recent strong news in housing, the stock market has not been reacting to it on account of investors being focused primarily on employment and corporate profits reports.

The pending home sales report continues to lag behind the sales growth for new homes.  September’s increase of only .3% was a little disappointing to most that were expecting an increase of 2.5%.  The National Association of Realtors remained upbeat in that the report was in positive territory and that the belief that continued low interest rates will spur home purchases significantly in 2013.

Speaking of corporate profits, overall the numbers released this week have been worse than many analysts and investors anticipated.  Talk of an economic slowdown is really taking hold as more and more data is showing that consumers are retreating in their spending habits once again.  Initially I thought that a big portion of this could be due to the impending election, however the slowdown is on a global scale and not just in the United States.

First time jobless claims have been swinging wildly over the last few months and this week’s report is no exception.  After jumping up to 392,000 the prior week, the report this week shows a drop down to a slightly better level of 369,000 which was in line with expectations.  What is more concerning is that the prior week’s report initially came in at 388,000 and then was adjusted up to 392,000.  Had the initial report come in at the higher level, you would have seen much more reporting about it because that is coming dangerously close to the psychological 400,000 mark.

To no one’s surprise the Fed left interest rates unchanged after this week’s monetary policy meeting.  In addition, the Fed reiterated their commitment to keep interest rates exceptionally low as well as continue their massive bond buying and mortgage backed securities purchase programs to keep interest rates down.

JJ Mack

Housing recovery is in full swing!!!

Over the last few weeks I have been excited to write good news about the housing market.  To be honest as much my fingers were doing the typing about the good news, my heart was wondering if it was really going to last.  I am finally ready to say the housing recovery has arrived.

I am not suggesting that there are not any issues or concerns that remain regarding housing, it is just that it has become very clear that housing is improving and with each passing month the data appears to support the notion of a recovery.

Despite the fact that interest rates have come off their new record lows, buyers are growing in numbers in the new home market.  The number of serious buyers exploring properties with the nation's home builders continues to rise with the housing market index moving up by one point in October.

Trends in current sales and especially in expectations of future sales have been sloping steeply higher this year.  The big surprise has been the significant increase in buyer traffic as it is at its highest level since the boom days of 2006.

Further evidence of housing improvement is in the recent release of stronger-than-expected growth of both housing starts and permit in the latest report. The September housing starts report is up 34.8% from a year ago.

Imagine all of this is happening while many of the other economic reports are headed in the wrong direction.  This week First Time Jobless claims jumped back up to 388,000 which is higher than we have seen in recent weeks.  Before we begin to panic we must recognize that this weekly report has had large movements over the last few months and a consistent rise in claims has not been seen.  The reports seem to vary significantly week to week.

Mortgage rates have been climbing for the last 2 weeks and the impact is being seen in the number of people refinancing.  Last week the MBA reported that refinance applications declined by 5%.  Purchase applications increased slightly which continues to validate the improving housing picture.

I don’t know about you but the election and the debates have been giving me big headaches.  Neither candidate talks about what they will do to help the economy in any sort of detail.  All they both do is just work feverously to scare the voters into believing that if they vote for their opponent, the country will suffer.  So I guess whomever you decide to vote for will be a decision not based upon the promise of the future but more so a vote for the lesser of two evils.

JJ Mack

Housing recovery just keeps getting better and better!!!

The housing recovery just keeps rolling along. The number of foreclosures has hit the lowest point in 5 years. Filings in total are down 7% from August and 16% lower than the same time last year. The combination of an improving economy and lenders working much harder and effectively to help homeowners remain in their homes is what has created the improving conditions.

Some irony for this morning is that Wells Fargo reported record profits primarily related to their improvement in their mortgage banking division the same week that the government filed a lawsuit against Wells Fargo for mortgage fraud. Wells Fargo’s currently announced record profits have nothing to do with the timing of the lawsuit because the government is accusing the bank of mortgage fraud on loans closed between 2002 and 2010. What I do find very interesting and disturbing is that the mortgage crisis began in 200 and based upon the government’s lawsuit, Wells Fargo may have been continuing to commit fraud through 2010 which is 3 years into the mortgage and housing crisis. We will have to watch and see how this plays out.

More evidence of the housing recovery is that JP Morgan Chase also reported record profits relating in large part to improvement in their housing and mortgage division. Jamie Dimon, CEO of the bank made a bold declaration this week that in his opinion the housing recovery has arrived.

What excites me most about all the positive housing news is that even though the market is improving off of very low numbers, the fact is that the positive news for housing just keeps coming. This is bound to accelerate the housing recovery as the “herding effect” begins to take hold. “Herding” is a term often used when people flock together towards a trend. It is likely that with the continuing positive housing news homebuyers will begin to flock back towards the purchase market further improving the overall housing market.

The stock market continues to remain stuck in neutral as the concerns about Spain’s financial troubles along with the stalemate in Congress regarding the “fiscal cliff” has investors sitting on the sidelines. It is clear that until the election is settled, we cannot expect any movement in government.

JJ Mack