June 30, 2015
The Case Shiller 20-city Home Price Index saw gains of 4.9% from April 2014 to April 2015, though the gains are not accelerating. The 4.9% is just below the March annual number of 5%, and well below the double digit gains seen in 2013 and early 2014. “We’ve moved from something we couldn’t sustain to something that’s a lot more reasonable,” said David Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices. Within the report it showed that the numbers for the entire nation were up 4.2% in the year ended in April, just below the 4.3% expected. Month-over-month, the 20-city index saw a gain of 1.1%.
The Conference Board reported on Tuesday that Consumer Confidence in June surged to 101.4, above the May reading of 94.6 and better than the 97.5 expected. The improving job markets was a key reason for the uptick in Consumer Confidence. “Over the past two months, consumers have grown more confident about the current state of business and employment conditions,” said Lynn Franco, director of economic indicators at the Conference Board. Within the report it showed that business conditions are good, while the employment situation saw an increase of those stating that jobs are plentiful.
Equifax reports that due to low mortgage rates in the fourth quarter of last year, total mortgage originations have risen by 75% from the same time a year ago. The big increase came from first mortgages, which rose nearly 80% from the first quarter of 2014. Within the report it also revealed that home equity lines of credit rose 30% in the same time period. Home loan rates have increased in June, but with rates just above 4%, they are still historically low.
June 29, 2015
Monday – June 29
The National Association of REALTORS® reported on Monday that singed contracts to purchase exiting homes slid in May as home loan rates edged higher. Pending Home Sales rose 0.9% in May from April, below the 1.4% expected, and down from the 2.7% registered in April, which was revised lower from the original reading of 3.4%. The big gains were seen in the Northeast climbing 6.3% month-over-month and are up nearly 8% from a year ago. The Pending Home Sales Index is based on signed real estate contracts for existing single-family homes, condos and co-ops.
Home prices were up modestly in April from March, while year-over-year also experienced gains. Black Knight’s Home Price Index report for April showed a modest 1% increase from March, while year-over-year prices were up nearly 5%. In addition, home prices are up 3% from the beginning of the year and are up just under 24% since the market hit bottom in the beginning of 2012. At $248,000, the national Home Price Index is now just 7.6% off its June 2006 peak of $268,000.
Global Stock markets plunged overnight and the carnage has pushed into the Stock markets here in the U.S. after a failure by creditors to reach a bailout deal in Greece. The fear now is that Greece may become the first country to exit the euro zone. After a big run on the banks over the weekend, Greek officials have closed the banks as well as the Stock market in Greece for at least a week. Bank customers will be limited to ATM withdrawals of only 60 euros per day. Here in the U.S., the popular Dow Jones Industrial Average is down over 200 points as of this writing.
June 26, 2015
The crisis surrounding Greece and its creditors may be getting kicked down the road as a possible extension may be struck to avert the troubled country from defaulting on debt payments. Greece has until Tuesday, June 30 to reach a deal to make a $1.7 billion payment to the International Monetary Fund. Rumors are swirling that if no agreement is reached, a form of bridge financing may be granted that will extend Greece a few more months. The sides will be meeting in Brussels on Saturday to avert a default by Greece.
Consumer Sentiment rose to its highest level since January in the final reading in June, signaling that spending will continue to bolster the U.S. economy. The University of Michigan’s Consumer Sentiment Index rose to 96.1 for June, from the 90.7 recorded in May. Within the data, consumer optimism hit its highest level in June and improved at the fastest pace since 2004. In addition, consumer spending shows growth of 3% in 2015. Recent economic data in May has been on the positive side, which is fueling the optimistic tone for U.S. consumers.
The recent talk of home buying for millennials has taken center stage in the housing market world. A recent report from Realtor.com revealed that millennials are now looking seriously into purchasing their first homes and are set to gain market share in the second half of the year. Realtor.com said a metric is showing that in mid-June, 65% of 25 to 34-year-olds intend to purchase a home within the next three months, up from 54% in January. The millennial sector is large and can be just what is needed to bolster the housing market.
June 25, 2015
Consumers across the nation spent their hard earned dollars on cars and trucks in May, while they paid more for gas at the pumps. The Commerce Department reported on Thursday that Personal Spending surged by 0.9% in May, the fastest pace in six years and above the 0.7% expected. A key reason behind the upswing in spending comes as the job market continues to improve, while wages have edged higher. Personal Incomes rose by 0.5% in the last two months, fueling the solid spending in May.
A disturbing report surfaced this week … Americans throw out $165 billion worth of food each year. A recent report shows that 76% of Americans say that at least once a month leftovers go right into the garbage and not in the refrigerator. Of that 76%, 70% report being bothered that they waste that much food. The report broke it down to reveal that individual households waste $640 in food every year. One big reason that so much food is wasted is because many consumers misinterpret expiration dates. There are 160 billion pounds of food thrown away each year in the U.S. alone, which puts food waste as the single largest contributor of solid waste in landfills.
Motor club AAA reported on Thursday that the upcoming July 4th holiday will see an estimated 41.9 million Americans traveling over the holiday weekend. The 4th falls on a Saturday this year, which will extend the weekend, since many are off that Friday. It is further estimated that 85% of the near 42 million that say they will travel, will drive by car to the destinations. The good news this year is that filling up the car at the gas pumps will be the cheapest in five years. The national average price for a regular gallon of gasoline is at $2.78, 88 cents less than last year.
June 24, 2015
The Bureau of Economic Analysis reported on Wednesday that the final reading for first quarter Gross Domestic Product (GDP) showed that economic growth contracted by 0.2%, though less severe from the -0.7% from the second reading. In addition, the negative reading for the quarter was the fifth time in the six-year recovery that the economy couldn’t’t produce at least an anemic reading of 1%. Growth in the first quarter was stunted by a negative trade balance due to the stronger dollar, harsh weather and the West Coast port closing.
Government sponsored entity Freddie Mac released its U.S. Economic and Housing Market Outlook for June showing that with low debt servicing costs and improving household balance sheets, more Americans may be at a point where they are ready to start taking on more mortgage debt. Freddie Mac said that this is yet another sign the economy and housing markets are moving to more normal levels. However, Freddie Mac is now forecasting that Gross Domestic Product for all of 2015 will come in at 2.0%, down from the original forecast of 2.3%.
The latest Existing Home Sales data for May showed that first time home buyers made up 32% of sales, the largest share since September 2012. There are a few factors for the rise … the government is trying to lower mortgage costs for first time buyers and for other borrowers with less than stellar credit ratings. In addition, down payment requirements are easing a bit, which opens up the pool of would be buyers. However, the recent rise in home prices have curtailed some buyers as the rise is outweighing the increase in wages.
June 23, 2015
Housing news continues to be on the positive side this week as the sector continues to improve. The Commerce Department reported that May New Home Sales rose 2.2% from April to an annual rate of 546,000, the fastest pace in seven years. Economists were expecting sales to rise to 525,000, while April was revised to 534,000 from 517,000. The May rate is up nearly 20% from the same period last year. Within the report it showed that the median price declined by 1% from last year to $282,000.
Getting a new job “ain’t” what it used to be as far as how much time it takes from the initial interview until the time you are seated at your new desk. The interview process took up to 23 days in 2014, up from nearly 13 days five years ago. Companies are looking for more than the right person for the right job, they are also looking for loyalty traits. Candidates who have the right character to fit in with the company culture also goes a long way.
The cost of renting continues to edge higher across the country due to financial pressures and a still rather pessimistic view on the housing sector. Rents have risen 4.3% in May from a year ago and are rising at double digit rates in Denver, San Francisco and San Jose, California as increased job opportunities lure in Americans, a faster pace than construction can match. The rise in rentals is also weighing on what would-be buyers can save for a down payment to purchase a home. This is exacerbated by cities with a higher amount of both technology and financial related jobs. For instance, a one bedroom apartment in New York City averaged $3,521 last month.
June 22, 2015
The National Association of REALTORS® reported on Monday that May Existing Home Sales rose 5.1% from April to an annualized rate of 5.35 million units, the highest pace in nearly six years. The biggest gains were seen in the Northeast, while all major regions experienced sales increases in May. The gains were due in part by an increase in the share of sales to first time home buyers. “Solid sales gains were seen throughout the country in May as more homeowners listed their home for sale and therefore provided greater choices for buyers,” said Lawrence Yun, NAR chief economist.
Home sales in May revved up as reported by the RE/MAX National Housing Report. Completed transactions rose by nearly 9% in May from April’s level and 3.5% higher than May 2014. Across the nation, 38 of the 53 metro areas tracked by RE/MAX reported higher sales year-over-year, with 11 reported as double digit increases. Reasons cited for the positive numbers include both job growth and slowly wages, rents are quickly increasing, while mortgages are becoming more accessible.
According to a recent report released by the Economic Policy Institute, chief executive officer (CEOs) made 303 times as much as the average worker in 2014. CEO salaries for the largest firms on average rose to $16.3 million in 2014, up nearly 4% from last year and up a whopping 55% since the end of the Great Recession in 2009. Within the report it showed that since 1978, inflation adjusted CEO pay soared 997%, while the average worker saw an 11% increase in the same time period.
June 19, 2015
The Greek tragedy continues as no deal has been reached for another lifeline, as the country inches closer to a default. The European Central Bank has raised emergency funds of $3.7 billion (3.3 billion euros) after there were large withdrawals this past week at Greek banks. There was also a rumor that the banks may not open for business on Monday, but that rumor has been denied. Withdrawals from banks hit 1 billion euros on Thursday.
Home builder KB Home reported on Friday that the company reported earnings that beat both revenue and earnings expectations due in part to positive momentum being generated across its business. The builder said that at the end of the second quarter there were higher backlogs in each of its four regions of the country compared to last year. KB Home said it had net income of $9.6 million or 10 cents per share in the quarter, better than the 8 cents expected. The company expects “measurable” growth in revenue and deliveries in the second half of 2015.
A recent survey shows that 66% of Americans across the country have seen an increase in their commuting costs, spending $2,600 annually to get to and from work. The highest costs were seen in Los Angeles, at $16, with Chicago and San Francisco the lowest at $11 per day. But it doesn’t end just in the wallet, as the average worker spends 200 hours commuting each year. The longest commute is seen by New Yorkers at an average of 73 minutes, with Chicago second at 64 minutes per day.
June 18, 2015
Higher gasoline prices pushed consumer prices to their fastest pace since early 2013, according to data collected in May. The May Consumer Price Index (CPI) rose by 0.4%, versus the 0.5% expected, and has risen four straight months after declining from November to January due to plunging oil prices. Gas prices rose by nearly 11% in May, the largest gain in six years. When stripping out volatile food and energy, the Core CPI was up 0.1%, below the 0.2% expected. However, in the past 12 months, the CPI was unchanged, signaling muted inflation.
The long awaited roll out for the Consumer Financial Protection Bureau’s (CFPB) TILA-RESPA Integrated Disclosure rule will now be delayed until October 1. The CFPB said that an administrative error occurred, which is holding up the new rule, originally planned to go into effect on August 1. The “Know Before You Owe” rule will also allow consumers more time to go over the cost of their mortgage.
Americans filing for first time unemployment benefits fell to a 15-year low in the latest week as the job market continues to improve. Weekly Initial Jobless Claims fell by 12,000 in the latest week to 267,000, below the 276,000 expected. Applications for first time claims have remained below the 300,000 level for weeks,. This is a sign that indicates employers are confident that consumers will continue to spend, thus retaining staff is a top priority.
June 17, 2015
Fannie Mae released its second quarter 2015 Mortgage Lender Sentiment Survey with the main thrust being that lenders are feeling more positive on purchase demand, profit margins and credit standards. The report went on to reveal that lenders’ near term outlook for both purchase and profit margins are at high levels, and above the 2014 results. In addition, more lenders feel that credit is loosening a bit rather than tightening.
Homeowners who owe more than their home is worth received some good news today as analytics firm CoreLogic reported that the underwater mortgage share was down to 10.2% in the first quarter of 2015. More than 254,000 properties regained positive equity in the first three months of this year. Negative equity, often referred to as “underwater” or “upside down,” refers to borrowers who owe more on their mortgages than their homes are worth. Negative equity can occur because of a decline in value, an increase in mortgage debt or a combination of both.
The Mortgage Bankers Association (MBA) said today that mortgage rates increased again in the latest week, hitting highs for 2015. The MBA said that the 30-year rate mortgage with conforming loan balances of $417,000 or less, increased to 4.22% from 4.17% with 0.46 in points. Though mortgage rates have been edging higher, historically, they are still near the lower end of the range dating back to 1971, when Freddie Mac began tracking rates.