First time home buyers! Now is the time to buy!
When bonds do well, it is usually a
sign of market and economic instability.
This week the bond rally has been driven by concerns about the global
economy. The economic concerns in Europe
and Asia are beginning to take their toll on the U.S. stock market and the
mindset of investors.
There is the index called the “Vix”
which is used to measure investor fear about the current economic climate. The higher the Vix, the great the fear. This week the index has been in similar
territory as when the great recession was beginning to take hold. The Vix is a very volatile index and it can
change dramatically in the span of a week.
The reason it has been rising is because there are more and more reports
coming out about the potential for another economic slowdown. However this one is NOT being driven by the
United States. However we cannot remain
insulated from it.
In the U.S. there are also signs of
growth slowing as factory orders, manufacturing, and construction spending were
all reported unexpectedly down. The
numbers are not terrible however they are concerning in that all of the reports
showed declines.
The previously mentioned reports
all coming in negative seems to coincide with the latest report on consumer
confidence. In recent weeks the measure
of confidence has been rising. This
latest report however shows a reversal in direction that was not necessarily
expected.
On the home front the major
economic news for the week was the monthly employment report for September
released by the Labor Department. The
report came in much better than expected with new jobs for September coming at
248,000. The unemployment rate declined
to 5.9 percent.
In the housing market the number of
pending home sales continues to remain flat.
Sales declined 1.0 percent for the month of August. Additionally sales are down 2.2 percent from
the same time last year. The challenge
to the market appears to be the lack of first-time buyers and the increased
demand for rentals.
As is expected, with the decline in
demand for homes, home prices dropped 0.5 percent for the month of July
according to the Case-Shiller Home Price Index.
This is the 3rd straight month of declines and the steepest
decline dating back to November 2011.
The one bright side to the report is that values continue to remain
above the levels from the same time last year by 6.7 percent.
The Mortgage Bankers Association of
American reported that for the week ending September 26th
applications for purchase applications remained stable. Refinance applications declined 3.0 percent
which is normal considering the uptick in mortgage rates last week. This week rates are once again declining.
JJ Mack
916-517-1800 x 300
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