July 13, 2024
Well, well, well – last week saw yet another encouraging indicator for the housing market. Pending sales of existing homes, based on contracts signed in February, rose 2.1% over January. Compared to February 2008, the pending home sales index is down a scant 1.4%! The National Association of Realtors expects the median price of existing homes to decline just 5.1% this year, with sales up 1% over 2008. Next year, they see the median price going up 4.1% and sales on a 5.8% climb. On top of that good news, the Federal Housing Finance Agency’s House Price index had US home prices RISING a seasonally adjusted 1.7% from December to January. This is for homes bought with mortgages that fall within Fannie Mae and Freddie Mac’s limits. This was interesting, as it followed the S&P/Case-Shiller Home Price Index which showed a 19% price drop in January compared to a year ago. What gives? Case-Shiller tracks only 20 metro areas, including several in the three or four states with the steepest price declines. In addition, critics point out that indexes like Case-Shiller, which rely on repeat sales, consistently overstate price declines because they include a higher percentage of distressed properties. Finally, we can report the California housing market is showing signs of recovery.
Low prices, combined with today’s historically low mortgage rates, have created a level of affordability that is attracting buyers in droves. 600,000 homes were sold this February – 80% more than in February 2007. Agents in some markets see investors returning and the strong sales have left existing home inventories at 6.5 months, a normal market level that’s now ahead of the rest of the country’s 9.7-month supply!
Review of Last Week UP AGAIN… The market boom continued last week as stocks gained for their fourth week in a row, reaching new seven-week highs, with the Nasdaq hitting its highest level in three months. Experts say the stock market recovers first, then the housing market, then the economy in general and finally the jobs market. Investors began the week unhappy with the government’s auto task force, which fired General Motor’s CEO Rick Wagoner, then gave GM 60 days to come up with a better restructuring plan and Chrysler 30 days to cut a deal with Fiat. The big negative news was Friday’s March employment report, which saw unemployment inch up to 8.5% with the loss of another 663,000 jobs. But these numbers were no worse than expected and investors know employment is a lagging indicator. Economic highs included durable goods orders up for the first time in six months and ISM Manufacturing also up. Add recent good news in housing, retail and factory orders, and many are saying the depth of the downturn is behind us. We aren’t turned around yet, but some experts feel we will go no lower. Let’s hope they’re right. The best news came Thursday when the Financial Accounting Standards Board (FASB) voted to relax mark-to-market accounting rules. Now banks can value securities using the cash flows they generate. This should reduce banks’ writedowns, freeing up their ability to lend, which should help housing, business and jobs.
The G-20 meeting in London was neither a big success nor a big disappointment. The group agreed to $1.1 trillion in loans to support developing countries and international trade. For the week, the Dow continued UP a nice 3.1%, to 8017.59; the S&P 500 was UP 3.3%, to 842.50; and the NASDAQ ended UP 5.0%, to 1621.87. Bonds ended the week with Treasury prices getting hammered a bit, but it wasn’t as bad as it might have been. The yield on the benchmark 10-year Treasury, which runs counter to price, creeped up to 2.891%. But with the Fed’s trillion dollar commitment to buy mortgage-backed securities to keep rates low, 30-year fixed rate conforming mortgages continue at historically low levels.
This Week’s Forecast SHORT, MAYBE SWEET… The coming holiday-shortened week holds little economic news, but does start another earnings reporting season with Alcoa getting things going on Tuesday. Thursday’s February Trade Balance report could be a focal point, as January showed a drop that could create concerns around our global economic growth. Bond markets close early Thursday and both stock and bond markets will be closed in observance of Good Friday.
The Week’s Economic Indicator Calendar Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates. Economic Calendar for the Week of Apr 06 – Apr 10 Date Time (ET) Release For Consensus Prior Impact W Apr 8 10:30 Crude Inventories 4/3 NA 2840K Moderate Th Apr 9 08:30 Initial Jobless Claims 4/4 NA 669K Moderate Th Apr 9 08:30 Trade Balance Feb –$36.5B –$36.0B Moderate Federal Reserve Watch Forecasting Federal Reserve policy changes in coming months. Economists believe the Fed will keep the fed funds rate down for an extended period. Current Fed Funds Rate: 0%–0.25% After FOMC meeting on: Consensus Apr 29 0%–0.25% Jun 24 0%–0.25% Sept 23 0%–0.25% Odds of change from current policy: After FOMC meeting on: Consensus Apr 29 1% Jun 24 5% Sept 23 5%      This post information was provided by: Greg Brooks southwest area manager San Diego Mortgage Network (800) 287-8292 x 225        San Diego real estate

3 thoughts on “Existing Home Sales Rise

  1. I do see a slight decrease in inventory and an increase in sales over 90 days but I’m not buying it yet…it’s too early to see if the cycle continues. It is good to see that the market may be making its way back to equilibrium though..

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  2. All this said, in a way I think the tough times might have been good for our nation, free market capitalism has been of limited success, in which the already prosperous for the most part have managed to increase that prosperity disproportionately in relation to the rest of our society. And the current wealth gap is clearly indicative proof of this. Hopefully, no matter what the course and consequences of our current economic situation our country and society will be made better by the challenges presented by it.

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