Survey findings: Homebuyers Clueless about Mortgages

May 31, 2013

According to an article from CNN, “Among the survey’s findings, 31% of buyers don’t think it is possible to get a mortgage for less than 5% down; 34% don’t know what the tern ‘annual percentage rate’ (APR) means and one in four believe you must close with the lender that pre-approves your mortgage.”

The article also noted “And 24% of buyers believe the best mortgage deals are available through the banks where they currently have their savings and checking acounts, but often competing lenders can undercut those banks by large margins.”

Check out the article to see more:

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Higher home sales…

May 30, 2013

Today’s economic data came in weaker than expected as Americans filing for first time unemployment benefits rose while growth in the U.S. was a bit less than expected. In addition, the housing market received some mixed news.

The Labor Department reported this morning that Weekly Initial Jobless Claims rose by 10,000 in the latest week to 354,000 and above the 340,000 that was expected. The labor markets are producing jobs at a modest rate, but not enough to bring down the stubbornly high unemployment rate, currently at 7.5%. The four-week moving average for new claims, which smoothes out seasonal abnormalities, edged up 6,750 to 347,250.

Growth in the first quarter of 2013 rose by 2.4%, as measured by the Gross Domestic Product (GDP) data that was released this morning. GDP rose by 2.4% for the second reading for the first three months of the year and the Bureau of Economic Analysis said that overall economic activity is not greatly changed. GDP measures the output of goods and services produced by labor and property located across the nation.

The last data point this morning was a decline in Pending Home Sales rising by only 0.3% in April and below the 1.5% increase expected. However, the index now stands at 106.0, the highest reading since April of 2010 and is up 10.3% since April of 2012. The National Association of Realtors said that due to inventory shortages, higher home sales will push up home values to the highest level in five years. The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes.

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Home loan rates highest in a year

May 29, 2013

Home loan rates have pushed up to their highest levels in a year due to better than expected economic data and fears that the U.S. Federal Reserve may pull back on its stimulus program that was put in place to promote jobs and speed up the economic recovery. The Mortgage Bankers Association reported today that its Market Composite Index, a measure of loan application volume, fell nearly 9% in the latest week and has declined three weeks in a row. The refi index fell 12% while the purchase index increased by 3%.

Over on the foreclosure front, CoreLogic reports that completed foreclosures in April amounted to 52,000, which is a 16% decline from the 62,000 that were completed in April of 2012. From March to April foreclosures were flat. By comparison, between the 2000 and 2006, completed foreclosures averaged 21,000 per month across the nation. Since September of 2008 there have been 4.4 million completed foreclosures.

Lender Processing Services, a leading provider of integrated technology, data and analytics to the mortgage and real estate industries, reported yesterday that home prices rose 1.4% from February to March and were up 7.6% year-over-year from March 2012 to March 2013. The average home price was $213,000 in March, up almost 3% from the beginning of the year.

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Home prices rose at the fastest annual pace in 7 years

May 28, 2013

Home prices rose at the fastest annual pace in 7 years in March as the sector continues to rebound after the housing bubble burst. The Case Shiller 20-city Home Price Index rose 10.9% year-over-year ended in March, above the 10.1% expected. On a month-over-month basis, the index rose 1.12%. In the first quarter of 2013, the seasonally adjusted national index was up 3.9%, above the 2.4% from the final quarter of 2014.

Global Stocks are rising after central banks around the globe reassured investors that easy money policies will continue through 2013 and should last until mid-2014. U.S. Stocks opened sharply higher and is putting a big dent in Bond prices. The recent fall in Bond prices have caused home loan rates to rise in the past few week, though rates are still closer to record low levels. Bond prices and home loan rates work in inverse relationships, as Bond prices rise, rates tend to move lower and vice versa.

The summer driving season kicked off this past weekend with gas prices at the pump at $3.65 a gallon on Memorial Day. This good news for motorists is that prices tend to move lower in June and will most likely decline as the summer unfolds.

Americans across the nation are feeling more optimistic on the economy due to an improving job market and better than expected economic data that has been reported lately. The Consumer Confidence Index rose to 76.2 in May, the highest level since February 2008. A spokesperson for the Conference Board, which issues the survey, said, “Consumers’ assessment of current business and labor-market conditions was more positive and they were considerably more upbeat about future economic and job prospects.”

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News as the sales of New Homes rose to their second highest level since the summer of 2008

May 23, 2013

The housing sector continues to receive positive news as the sales of New Homes rose to their second highest level since the summer of 2008 to an annual rate of 454,000 in April, up 2.3% from March. That was above the 444,000 that was recorded in March, which was revised up from 417,000. The rise to 454,000 has pushed sales up 29% since April of 2012.

Within the New Home Sales report it showed that the median price for a new home was $271,600 and that was the highest price on record going back to 1993. The positive data has been spurred on by lower home loan rates and an improving job market.

As if that wasn’t enough good news for housing, the Federal Housing Finance Agency reported this morning that home prices across the nation rose by 1.3% in March from April . In addition, from March of 2012 until March of 2013, prices rose by 7.2%. A rise in home prices tends to encourage new home construction and the higher prices helps owners to sell properties more quickly to buy a new home.

The last economic data point today was a drop in Americans filing for first time unemployment benefits. The Labor Department reported that weekly initial jobless claims fell by 23,000 in the latest week to 340,000 as the job market continues to improve.

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The past few weeks have seen a rise in home loan rates to the highest level since March…

May 22, 2013

The foreclosure front received some good news today as Lender Processing Services (LPS) reported that the number of Americans in the foreclosure process continues to decline as the housing markets recover, down almost 25% in the past year. LPS went on to say that total delinquency for loans 30 days or more past due, but not yet in foreclosure, dropped below 6.5% for the first time since July of 2008.

The past few weeks have seen a rise in home loan rates to the highest level since March, which led to a decline in mortgage applications in the latest survey. The Mortgage Bankers Association reported that its Market Composite Index, a measure of loan application volume, fell by nearly 10% as the downward trend continues. The refinance gauge dropped 12% while the purchase index fell 3%.

Over in the home purchase markets, home resales rose to the highest level in three and a half years in April as the sector continues to recover. The National Association of Realtors reported that Existing Home Sales rose to an annual rate of 4.97 million units to the highest level since November of 2009, but was slightly below the expectation of 4.98 million. When compared to last year, sales climbed nearly 10%. The rise has been due in part to tighter supplies in parts of the country, but with the rise in home prices, sellers have come back into the market.

In an expected move, Lois Lerner, head of the tax exemptions department at the IRS, took the 5th today in front of the House Oversight Committee investigating the agency’s increased scrutiny for tax exempt status for conservative groups. Ms. Lerner stated that she has done nothing wrong and did not break any laws. But she followed the advice of her attorney to not answer any questions.

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Housing One of the Main Catalysts to Sustain the Growth

May 21, 2013

A devastating tornado hit a suburb in Oklahoma yesterday with wind speeds of up to 200 mph killing at least 51 people, 20 of them children. The tornado raced through the suburb of Moore and ripped through two elementary schools. The tornado touched down near 3:00pm with just a 16 minute warning.

Government Sponsored Enterprise Fannie Mae published its monthly market update yesterday reporting that the U.S. economy should see a modest re-acceleration in the second half of 2013, with housing one of the main catalysts to sustain the growth. Fannie Mae went on to say that economic activity eased in the past few months due to fiscal drags and the sequester.

The GSE sees growth of 2.2% in 2013, which follows a 1.7% gain and 2% growth in 2012 and 2011, respectively. Fannie sees improvements in home purchase demand. Fannie Mae was founded in 1938 and guarantees and purchases loans from mortgage lenders to ensure families can buy homes, refinance, or rent a home.

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Existing and New Home sales will be released this week

May 20, 2013

This week the economic calendar is light with readings on the housing sector the highlight. Existing and New Home sales will be released this week and comes after Housing Starts fell 16.5% in April. The fall in starts was due largely in part to a plunge in apartment construction.

The summer driving season unofficially kicks off this Friday with Memorial Day Weekend. The national average price for a regular gallon of gasoline has risen slightly in the past few weeks to $3.65, up from $3.51 a month ago as oil prices have begun to push a bit higher. Gas prices usually tick up headed into the summer driving season, but AAA says that analysts are projecting that prices should average between $3.20 to $3.40 per gallon by mid-summer.

Over in the capital markets, the closely watched S&P 500 Index closed at a record high of 1,667 on Friday and it was the fourth straight week that the index closed higher. The Stock market’s rise has been attributed towards a recovery in U.S. economic conditions, better than expected corporate earnings and due in a large part to the continued stimulus programs enacted by the U.S. Federal Reserve.

Federal Reserve Chairman Ben Bernanke will be on Capitol Hill on Wednesday in front of the Joint Economic Committee testifying on the current state of the U.S. economy. Mr. Bernanke will most likely weigh in on the recent mixed indications on the strength of the economic recovery and will also discuss the current Quantitative Easing programs that are geared towards fostering maximum employment and ensuring that inflation, over time, is at the rate consistent with the Fed’s projections.

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Economic data was plentiful this morning

May 16, 2013

Economic data was plentiful this morning, but tilted towards the weaker side as the reports streamed in, while inflation at the consumer level declined. The weaker than expected data gave a boost to the Bond markets as investors shifted over to more safer assets.

The Commerce Department gave a mixed reading on the housing market as the sector continues to recover. Building permits, a sign of future construction, surged by 14.3% in April, but housing starts declined by 16.5%. It was a minor setback on the road to recovery and one report doesn’t constitute a trend. The breakdown showed that single-family starts fell 2.1% while multi-family dwellings plunged by 37% from March to April. From April of 2012 to April 2013, housing starts were up 13%…the long-term upward trend continues, but there will be bumps in the road along the way.

The labor markets also received a bit of bad news this morning as Weekly Initial Jobless Claims rose by 32,000 in the latest week to 360,000, the highest level since late March. A spokesman from the Labor Department said there was no unusual activity for the survey and that the sequester had no effect on the numbers.

The Last economic data point today was a report from the Philadelphia Fed showing that manufacturing in the region weakened in May and all of the components were also negative. The Philly Fed Index decreased from 1.3 in April to -5.2 this month. The employment component fell 2 points to -8.7, its second consecutive negative reading. The weak report comes after yesterday’s worse than expected manufacturing data from New York.

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National Association of Home Builders (NAHB) reported this morning that its Housing Market Index rose to 44 in May

May 15, 2013

The Bond markets got a boost this morning after tame inflation data and weaker than expected manufacturing data hit the wires. Throw in continuing debt woes in Europe and France falling back into a recession and you have a recipe for rising yields. Stocks, as measured by the closely watched S&P 500, closed at yet another record level yesterday of 1,650 due to the ongoing stimulus programs enacted by the U.S. Federal Reserve and a recovering economy.

The Bureau of Labor Statistics reported this morning that prices at the wholesale level as measured by the Producer Price Index fell by 0.7% in April due in a large part to falling energy prices. This was below the -0.5% expected and adds to the notion that as long as inflation remains tame, the Federal Reserve will continue with its easy money policies and continue to stimulate the economy.

Over in the housing markets, the National Association of Home Builders (NAHB) reported this morning that its Housing Market Index rose to 44 in May, up from the 41 reading in April and was the first increase in 2013. The improvements were seen in current sales conditions, sales expectations and traffic of prospective buyers. The NAHB noted that builders are seeing an increased sense of urgency among potential buyers as a result of thinning inventories of homes for sale, continuing affordable mortgage rates and strengthening local economies. However, readings below 50 generally indicate that builders are pessimistic about sales trends – there hasn’t been a 50 reading since April of 2006.

Manufacturing data continues to weaken and remains a sore spot for the U.S. economy. The New York Federal Reserve reported this morning that the New York State Manufacturing Index fell by 1.43 in May, down from the 3.1 reading in April and lower than the 3.5 that was expected. The general business gauge and the employment component also declined. Any readings below zero indicate that respondents see conditions getting worse than better.

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