Daily News 6/24/2015
June 24, 2015
Wednesday – June 24
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.