Existing home sales have remained flat however don’t let
this fool you into thinking the real estate market is not improving at a rapid
rate. Pending home sales, which is a
fairly accurate predictor of future existing homes sales, rose 1.5% in March to
an index level of 105.7. This is the
highest level for the index so far this year.
(In case you were wondering what does the index represent…it is an index
developed by the National Association of Realtors to indicate housing activity)
Reports from all over the United States reinforce the future
of housing is strong in that demand for existing homes and new construction is
rising rapidly. Real estate professional
and builders are reporting huge increases in buyer traffic at open houses and
builder locations.
Wow did the experts ever get this one wrong (including me)…almost
every expert in real estate predicted that housing values would not increase at
a pace of more than 5% per year for many years post recession. On Tuesday the Case-Shiller Home Value Index indicated
boom-time housing gains with an increase of 1.2 percent for February. This is on top of the prior months 1.0
percent gain. When we do the math that
would come out to over a 12% home value increase on an annualized basis.
Although there are no guarantees that this pace will
continue, the amount of activity happening in markets throughout the country
indicates that there is a tremendous amount of pent up home buyer demand. As of this month’s report home prices are up
9.3% from the same time a year ago and that includes periods that had much
slower housing demand than we have today.
The Mortgage Bankers Association reported that despite
interest rates once again hitting record lows, especially the 15 year fixed,
purchase applications declined 1.4% in the prior week. Do not read into this report too much in that
although mortgage applications for purchases may have declined, that does mean
that purchase activity has slowed. The
reality is that there is a lot of cash in the housing market today and more buyers
than we have ever seen are purchasing without financing. Additionally as reported by mortgage
companies and loan officers throughout the U.S. the number of pre-approved
buyers searching for homes is at record levels.
First time jobless claims for the week of April 27th dropped unexpectedly to 324,000 which is the lowest point since the beginning of the recovery. National unemployment declined .1% to 7.5% in March. The economy added 165,000 jobs following a revised increase from the prior month of 138.000. Both numbers exceeded analyst expectations and it appears that the labor market may be improving slightly faster than most experts think.
JJ Mack
916-517-1800
jj.mack@apmortgage.com
www.apmcroseville.com
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