Pending Home Sales Increase 4rth Straight Month
Pending Home Sales increased in May.
It’s the 4rth straight month sales volume increased. This adds momentum to the notion housing is on the mend in most U.S. markets.
Consider these other housing related stories from the past month:
- Existing Home Sales are rising
- New home supplies are falling
- The Case-Shiller Index is turning positive-like
Put it together and it looks like the housing market is close to reaching bottom.
However, just because homes are going under contract to sell doesn’t mean they actually will sell. A contract can fall apart for many reasons, including failed home inspections, buyer-seller disputes, low appraisals and mortgage approval problems.
In general, though, as the number of pending contracts increase, we find Existing Home Sales rise, too, some 45-60 days into the future. So, as long as buyers’ demand for homes remains strong, we would expect home prices to move higher.
It’s too soon to say housing has turned the corner for certain, but there’s an awful lot of data lately that suggests it has.
Posted in Housing and Real Estate, Reports.
Mortgage Rates This Week - June 29, 2009
Mortgage markets / rates improved last week on the heels of weak economic data and a non-inspired press release from the Fed.
2 events helped set the pace last week:
Jobless data showed softness and The Fed said growth appears on-track
The combination of the two created volatility that worked in favor of rate shoppers.
Mortgage rates changed a lot last week, but they moved lower overall.
Already, however, markets are looking ahead to this week’s holiday-shortened trading sessions. There is a ton of data to be released that could create some wide swings in mortgage rates.
The mystery is whether rates will be getting better or worse.
On Tuesday, markets will get Consumer Confidence and Case-Shiller Index data. The Case-Shiller Index is a home price measurement and it always gets a lot of press. Strength in either number should lead mortgage rates higher. Weakness should help rates ease.
Then, on Wednesday, Crude Inventories take the spotlight. Normally, we don’t watch this data point too closely, but with gas prices easing last week, rising oil supplies could mean even lower gas prices ahead. This is anti-inflation and a good sign for mortgage rates.
And lastly, on Thursday, the government releases June’s jobs report. This report is always a market-mover, good or bad. And with trading volume low by Thursday, mortgage rates should move more than “normal”.
Be ready to lock at a moment’s notice this week. Mortgage rates continue to be volatile and the holiday shortened week won’t do anything to counter that. If you’re the nervous type, when you see a rate that fits your budget, consider locking it in.
Posted in Mortgage Rates, Rate Update.
The Fed’s Statement Today - June 24, 2009
The Fed voted to leave the Fed Funds Rate unchanged today within its target range of 0.0-0.25%.
The Fed also reiterated its plan to support the mortgage market to the tune of $1.5 trillion.
In its press release, the Fed noted the economy is not contracting with the same speed versus just two months ago and financial markets, in general, are improving.
These are two signs the country may be emerging from recession, if it hasn’t already.
The news isn’t all good, however. The Fed made a point to highlight the potential hazards the nations faces on its path to economic recovery:
- The prices of energy and commodities have been rising
- Job losses are still mounting nationally
- Businesses are reducing capital expenditures
Also in its statement, the Fed acknowledged a plan to hold the Fed Funds Rate near zero percent “for an extended period” and a re-commitment to the U.S. Treasury and Mortgage Bond markets.
Market reaction to the Fed’s press release has been muted.
With no new stimulus and no new “tools” to spur the economy unveiled, Wall Street is business as usual. Mortgage rates are unchanged post Fed meeting today.
The Fed’s next scheduled meeting is August 11-12, 2009.
Posted in General Mortgage Info, Housing and Real Estate, Misc, Mortgage Rates, Rate Update, Reports.
Existing Home Sales Up In May
Good news for the housing market yesterday.
According to the National Association of REALTORS, the number of homes sold in May increased for the 3rd straight month and the national housing supply fell by 5 months.
First time home buyers are accounting for nearly one-third of the market activity.
But, before we declare a bottom in housing, it’s important that we remember the First Rule of Real Estate:
All Real Estate Is Local
National housing statistics like Existing Home Sales lump all locales together and don’t account for regional differences, let alone neighborhood ones.
Looking at a city-by-city, or even street-by-street basis, we can always find homes selling quickly and homes that are languishing. Real estate is highly local.
That said, the national data isn’t completely useless. From the patterns, we can infer low mortgage rates, ample home supply and available tax credits are providing a boost to the real estate market.
And based on recent pending sales data, we can expect June and July’s Existing Home Sales figures to be similarly strong to May.
Therefore, if you’re in the market for a new home now, or plan to be soon, be conscious of home inventory levels in your target neighborhoods. Fewer homes on the market usually means less ability for buyers to negotiate and that leads to higher sales prices.
Plus, the NAR is reporting buyer activity up 10% from last year.
The housing market may not be fully recovered in every housing market just yet, but in studying the data, a lot of the pieces appear to be falling into place.
Posted in Housing and Real Estate, Reports.
June 23, 2009 - Fed 2 Day Meeting Starting Today Is One To Watch
The Fed begins its scheduled 2 day meeting this morning.
When the FOMC meets, it discusses the financial and economic conditions around the country and, when appropriate, makes new policy meant to speed up or slow down the economy.
The main tool for reaching this goal is the Fed Funds Rate and, earlier this year, the Fed lowered it to “near-zero” percent in an attempt to stimulate growth.
But the Fed has other tools at its disposal, too, not the least of which is its $1.25 trillion pledge to the mortgage markets.
Now, if you’ll remember, the Fed made that pledge in two parts:
- Part 1 came in November 2008 for $500 billion
- Part 2 came in March 2008 for $750 billion
After each announcement, mortgage rates dropped and stayed low for a period of a day or two. Then, fears of inflation set in on Wall Street, causing mortgage rates to pop back up because inflation is a mortgage-rate killer.
The Fed isn’t expected to increase its mortgage market commitment this week, but because mortgage rates are above the government’s “target zone”, it’s possible that the FOMC uses its post-meeting press release to give markets some guidance and its plan for the next several months.
A statement like this could alternately raise mortgage rates or lower them, depending on what the Fed says.
It’s for this reason floating a mortgage rate through tomorrow afternoon is risky. The Fed could say nothing about mortgages, or it could say a lot.
The Fed’s press release hits the wires at 2:15 PM ET Wednesday. If you’re the cautious type, consider locking your mortgage rate prior to its release.
Posted in Mortgage Rates, Rate Update.
Mortgage Rates This Week - June 22, 2009
Mortgage markets / rates finished the week unchanged, but that’s not to say rates stayed flat.
Mortgage rate shoppers were on a veritable roller coaster all week.
- Monday and Tuesday, rates dropped
- Wednesday and Thursday, rates increased
- Friday, rates improved
This volatility caused fits for home buyers in need of a rate lock and homeowners interested in refinancing.
Rates changed quite a bit from day-to-day, and even from hour-to-hour at times.
This is the same brand of mortgage rate volatility we’ve seen all year and it’s expected to continue this week, too. There are a number of market-moving events this week.
The event to keep your eye on is the Federal Open Market Committee’s two-day meeting. Scheduled for Tuesday and Wednesday, the Fed is not expected to raise the Fed Funds Rate. The markets are more interested in what the Fed says than what it actually does.
If the Federal Reserve says long-term inflation is a concern, mortgage rates should rise because inflation often leads rates higher. Similarly, if the Fed says the economy is recovering quicker than expected, mortgage rates should rise. Hopefully, the Fed says inflation is not a concern and we still have a ways to go with the recovery. If worded similarly rates may improve.
The Fed adjourns at 2:15 PM Wednesday so watch for big market swings around that time.
In addition, there’s some big data points due out this week including the Existing Home Sales and New Home Sales reports, plus the Personal Spending and Consumer Sentiment survey.
Each of these reveals the psychology of the U.S. consumer and consumers with dollars to spend move the economy forward. If the reports are overwhelmingly positive, mortgage rates should rise as a result. On the other hand, if the data is weak or non-convincing, mortgage rates should ease.
Call or email anytime for an updated quote.
Posted in Mortgage Rates, Rate Update.
Mortgage Rates This Week - June 8, 2009
Last week, stronger than expected economic news reignited fears of inflation on Wall Street. Conforming mortgage rates increased another .5%.
It was the second week in a row of soaring mortgage rates and the fifth week out of six rates moved higher. Rates are as high as they’ve been since December 2008.
On Friday, we learned 345,000 Americans lost their jobs in May. While that’s an awfully big number, it wasn’t nearly as bad as Wall Street had expected. Furthermore, the Unemployment Rate spiked to over 9 percent.
With fewer Americans expected to be out of work, consumer spending could be poised to rebound in the months ahead, pushing the economy out of recession sooner than expected. If the sentiment holds this week, mortgage rates may rise even more.
Without much new data this week, markets are likely to trade on emotion, a difficult situation for rate shoppers. Conforming mortgage rates have been extremely volatile since May and are changing every few hours. If you see a rate you like, consider locking it.
Wait around too long, and it’ll be gone.
Posted in Mortgage Rates, Rate Update.
Pending Home Sales Up In April
The number of homes under contract to sell increased in April, climbing nearly 7% versus a month ago.
It’s the third straight month in which the Pending Home Sales Index gained and the biggest monthly jump since October 2001.
A “pending” home sale is one that’s under contract to close, but has yet to do so.
The Pending Home Sales Index is an imperfect statistic because not every home under contract makes it to closing, but the data can be a reliable indicator of home buyer activity.
It’s not tough to understand why homes-under-contract are spiking:
- There’s a $8,000 tax credit for first-time home buyers
- Conforming and FHA mortgage rates are hovering near 5 percent
- Home prices are still soft nationwide
These elements are combining to make homes more affordable than they’ve been in the recent past. In April, the Home Affordability Index posted its second highest reading since 1970.
We can’t know if home prices will rise or fall going forward, but if Pending Home Sales translate into closed home sales, values will be pressured to rise. This is because each closed transaction takes a home “off the market”, reducing the supply of available properties.
If demand rises while supplies fall, sellers regain the upper-hand in negotiations and higher prices are the inevitable result.
An estimated 80% of all Pending Home Sales close within 2 months.
Posted in Housing and Real Estate, Reports.
Mortgage Rates Up Again Monday
Mortgage rates jumped big again Monday, up .5% in a day for the 2nd time in under a week.
For home buyers recently under contract, it’s a gut wrenching time to be shopping for a home loan. Morning mortgage rates have been typically gone by early afternoon, and, in some cases, lenders have changed rates five times in one day.
The reasons for surge in rates are varied, but each is related to the idea the economic recession may be nearing its end.
- Consumer Confidence is as high as it’sbeen all year
- Consumer spending is falling at a slower pace than in months prior
- China’s factories reported an expansion in business
Each of these points bodes well for the economy and pushes Wall Street investors towards more risky investments. As a result, “safe” investments get sold, including mortgage-backed bonds, the basis for conforming mortgage rates.
However, I think the optimism of recovery is a bit much. Housing will not fully recover until homeowners are no longer worried about losing their jobs. I believe we’re months away from that.
For as long as the future of the economy remains in question, expect mortgage rates to remain volatile. We won’t get half point rate swings or five pricings in a day every day, but both are becoming more common.
Be careful when shopping for a mortgage — the rate you’re quoted may not last long.
Posted in Mortgage Rates, Rate Update.
