Existing Home Sales Dip to Lowest Level since May

The National Association of Realtors® reported that sales of existing homes dropped to a seasonally-adjusted annual rate of 4.93 million as compared to expectations of a 5.18 million existing homes sold. Projections were based on October’s reading of 5.25 million. November’s reading showed a 6.10 percent dip in sales of existing homes and was the lowest reading since May.

Fed Chair Janet Yellen said last week that the less than robust housing recovery is due in part to tight lending standards. Lawrence Yun, chief economist for the National Association of Realtors®, said that November’s reading was likely an aberration due to volatility in the stock market, which could have dampened home buyer enthusiasm.

Analysts expect easing of mortgage guidelines and an improved job market to help increase home sales. The national median price for existing homes rose to $205,300 in November, which represented a year-over-year increase of five percent. Inventories of used homes rose to a 5.10 month supply, which was more than double the 2.01 month supply of existing homes for sale in November 2013.

FHFA Reports Year-Over-Year Increase in Home Prices

The Federal Housing Finance Agency (FHFA) reported a monthly gain of 0.60 percent for home prices associated with mortgages owned or backed by Fannie Mae and Freddie Mac. FHFA said that home prices rose 4.50 percent year-over-year in October as compared to the October 2013 reading of 4.40 percent year-over-year. The increase in FHFA home prices was likely connected to a decrease in foreclosure rates and fewer distressed sales.

FHFA house prices encompass the nine census divisions. On a month-to-month basis, FHA home prices rose by 0.60 percent in October. Month-to-month home prices by census division ranged from -0.30 percent for the Pacific division to +1.50 percent for the Atlantic division. On a year-over-year basis, home prices increased for all nine regions and ranged from +0.80 percent in the Mid-Atlantic division to +6.00 percent in the Pacific division.

Good News! Existing Home Sales Up And FHFA Home Prices Rise

After months of reports of slowing home price momentum and forecasts of a lagging housing market, we are pleased to report an increased volume of existing home sales as reported by the National Association of REALTORS®.

The Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac, reported rising prices for homes connected with Fannie Mae and Freddie Mac mortgages. Here are the details.

Pedal to the Metal: Existing Home Sales Achieve Fastest Rate in a Year

September sales of previously owned homes reached a seasonally adjusted annual rate of 5.17 million sales against expectations of 5.10 million sales and August’s reading of 5.05 million sales.

The National Association of REALTORS® reported that the national reading for sales of previously owned homes rose by 2.40 percent to a seasonally-adjusted annual rate of 5.17 million sales.

Analysts had expected September’s reading for existing home sales to reach 5.10 million based on August’s reading of 5.05 million existing homes sold.

Three of four regions posted month-to-month gains in existing home sales for September; only the Midwest showed a decline. Overall, September’s sales pace for existing homes was 1.70 percent lower year-over-year.

Steady home prices and lower mortgage rates contributed to a higher pace of existing home sales, but obstacles remain. Lawrence Yun, chief economist for the National Association of REALTORS® said that September’s reading for existing home sales reflected ongoing economic uncertainty; he said that labor markets will need to strengthen in order to maintain the pace of existing home sales.

Mr. Yun also said that restoration of more “normal” lending standards would allow more first-time and moderate income buyers to qualify for mortgage loans and could potentially increase home sales by 10 percent.

FHFA: Home Prices Rise, Mortgage Credit Standards May Ease

FHFA reported that home prices of properties connected with Fannie Mae and Freddie Mac mortgages rose by 0.5 percent in August as compared to a month-to-month revised increase of 0.20 percent in July. August’s reading represents a year-over-year increase of 4.80 percent as compared to July’s year-over-year increase of 4.60 percent.

In related news, FHFA Director Mel Watt hinted at some welcome news during a meeting on October 21 in Las Vegas.

Strict mortgage requirements are frequently cited as a cause of lukewarm home sales, but there is some hope that mortgage credit requirements may return to pre-housing bubble standards. Mr. Watt said that the agency is working on relaxing certain rules affecting how and when mortgage lenders are required to repurchase loans that they’ve sold to Fannie Mae and Freddie Mac.

These changes are designed to clarify FHFA regulations and to narrow the criteria for when repurchasing loans is required. Lenders have been using strict mortgage approval standards as a protection against Fannie and Freddie requests to repurchase loans categorized as “early defaults.”

What’s Ahead For Mortgage Rates This Week – July 7, 2014

Last week’s economic news was mixed, but economic reports for Non-Farm Payrolls and the National Unemployment rate suggest a strengthening labor sector. Pending Home Sales surpassed expectations in May and conversely, construction spending was lower than expected. Here are the details.

Pending Home Sales Reach Highest Level in Eight Months

The National Association of REALTORS® reported that pending home sales in May rose by 6.10 percent over April’s reading. May’s reading was 5.20 percent lower than for May 2013. The index reading for May reached 103.9 as compared to April’s index reading of 97.9. Results for all regions were positive for May:

– Northeast: 8.80%

– West 7.60%

– Midwest 6.30%

– South 4.40%

An index reading of 100 for pending home sales is equal to average contract activity in 2001; pending home sales are a gauge of upcoming closings and mortgage activity.

CoreLogic Home Price Index Reflects Slower Price Gains

National home prices rose by 1.40 percent in May and 10 states posted new month-to-month highs, while year-over-year reading slipped from 10.00 percent in April to 8.80 percent in May. Home prices remain about 13.50 percent lower than their 2006 peak.

The overall rate of construction spending slowed in May to an increase of 0.10 percent from April’s reading of 0.80 percent and against expectations of 0.70 percent. Residential construction spending dropped by 1.50 percent in May.

Freddie Mac’s weekly survey of average mortgage rates brought good news as the rate for a 30-year fixed rate mortgage dropped by two basis points to 4.12 percent. The average rate for a 15-year fixed rate mortgage was unchanged at 3.22 percent, as was the average rate for a 5/1 adjustable rate mortgage at 2.98 percent. Discount points were unchanged at 0.50 percent for a 30-year fixed rate mortgage and 15-year fixed rate mortgages. Discount rates rose from 0.30 to 0.40 percent for 5/1 adjustable rate mortgages.

Jobs Up, Unemployment Rate Lower

ADP payrolls, which measures private-sector job growth, reported 281,000 new jobs in June as compared to a reading of 179,000 new private-sector jobs in May. The Bureau of Labor Statistics’ Non-Farm Payrolls report for June surpassed expectations of 215,000 jobs added with an increase of 288,000 jobs against May’s reading of 224,000 jobs added.

The national unemployment rate fell to 6.10 percent against predictions of 6.30 percent and May’s reading of 6.30 percent. 

No news was released on Friday, which was a national holiday.

What’s Ahead

This week’s scheduled economic is lean with no events set for Monday. Job Openings, the minutes from the most recent FOMC meeting, along with regularly scheduled weekly reports on mortgage rates and new jobless claims round out the week’s economic news.

What’s Ahead For Mortgage Rates This Week – June 30, 2014

Last week brought several economic and housing sector reports including Existing Home Sales, Case-Shiller and FHFA home prices for April, as well as New Home Sales. Freddie Mac’s weekly mortgage rates survey and the weekly report on new jobless claims were released on Thursday, and Consumer Sentiment for June rounded out the week on Friday.

Existing Home Sales Stronger than Expected! 

Good news came from the National Association of REALTORS® Existing Home Sales report for May, which reported 4.89 million previously owned homes sold on a seasonally-adjusted annual basis. Analysts had projected a seasonally-adjusted annual figure of 4.75 million existing homes sold based on April’s reading of 4.65 million existing homes sold; April’s reading was later adjusted to 4.66 million. May’s reading represented a monthly increase of 4.90 percent over April’s reading and was the second consecutive monthly increase in previously owned home sales.

The median sales price for existing homes sold in May was $213,400, which represented a 5.10 percent increase year-over-year.

May’s reading for existing home sales was the highest in seven months, and mortgage rates trended down during May, but strict lending standards were cited as a significant obstacle to first-time homebuyers.

Federal Reserve Chair Janet Yellen recently said in a press conference that mortgage lenders “need more clarity” as to their potential liability for failed mortgages. Mortgage lenders and loan servicing companies can be required to repurchase defaulted loans or to reimburse Fannie Mae and Freddie Mac for losses associated with mortgage defaults and foreclosures.

Case-Shiller, FHFA Report Slower Pace for Home Price Growth

The S&P Case-Shiller Home Price Index and FHFA’s House Price Index for April documented slowing rates of home price growth. Case-Shiller reported a 10.80 percent year-over-year growth in home prices for April, and FHFA reported a year-over-year gain of 5.90 percent rate of appreciation for home sales associated with mortgages owned by Fannie Mae and Freddie Mac.

Analysts noted that home price growth is leveling out after last year’s steep appreciation in home prices. While homeowners may disagree, economists say that a slower rate of home price growth can actually bode well for housing markets. More buyers can afford a home, which adds stability to housing markets. First-time buyers provide a foundation for home sales; if they cannot buy homes, then homeowners can’t sell existing homes and buy new homes. A slower but consistent rate of home price growth allows homeowners to build home equity, but won’t likely lead to housing “bubble.”

New Home Sales Blast Past Expectations, Mortgage Rates Fall

The U.S. Department of Commerce reported that new home sales for May reached a six-year high with a reading of 504,000 new homes sold on an annual basis. April’s reading exceeded expectations of 440,000 new homes sold as well as April’s adjusted reading of 425,000 new homes sold. The month-to-month increase in new home sales from April to May was the largest monthly increase in home sales in 22 years.

Although analysts caution that month-to-month seasonally-adjusted sales reports are volatile, this uptick in new home sales may help bolster builder confidence in housing markets. May prices for new homes also rose with the median home price at $282,000. This reading represents a year-over-year increase of 6.0 percent for new home prices.

The Northeast led regional results for new home sales with its reading of 54.50 percent; The West reported an increase of 34.00 percent. New home prices in the Southeast rose at an annual rate of 14.20 percent, and the Midwest region reported a 1.40 percent increase in new home prices. While analysts characterized the Northeast region’s May reading as exaggerated, overall results for new home prices indicate a comeback for new home prices.

Freddie Mac put some icing on the good news cake with its weekly mortgage rates report. Average rates for a 30-year fixed rate mortgage dropped to 4.14 percent with discount points lowered to 0.50 percent. The average rate for a 15-year fixed rate mortgage fell by eight basis points to 3.22 percent with discount points unchanged at 0.50 percent. The average rate for a 5/1 adjustable rate mortgage fell by two basis points to 2.98 percent with discount points lower at 0.40 percent.

Thursday’s Weekly Jobless Claims Report reading fell by 2000 new claims to a seasonally adjusted reading of 312,000 new claims filed. Analysts had expected a reading of 310,000 new jobless claims. 214,000 per month have been added to the economy from January to May 2014.

Positive economic developments were not lost on consumers. The Consumer Sentiment Index for June posted a reading of 82.5 against an expected reading of 81.9 and May’s reading of 81.2.

This Week’s News

Scheduled economic news includes Pending Home Sales, Construction Spending, the ADP Employment report, and the Non-farm Payrolls Report. The National Unemployment Rate report along with Freddie Mac’s PMMS and Weekly Jobless Claims round out the week. No news is scheduled for Friday’s Independence Day holiday.

What’s Ahead For Mortgage Rates This Week – May 27, 2014

Last week’s economic news was dominated by speeches given by Federal Reserve presidents, the minutes from April’s FOMC meeting and commencement address given by Fed Chair Janet Yellen. The latest readings for new and existing home sales were also released.

Federal Reserve Speeches Suggest Concerns Over Monetary Policy Dependence, Low Inflation

Here are highlights of comments made by each of the Fed presidents’ speeches. Richard Fisher, president of the Dallas Fed, and John Williams, President of the San Francisco Fed, spoke at a conference held at the Bush Institute.

Mr. Fisher said that 98 percent of jobs lost during the recession had been recovered, and that other jobs had been added. He also cited “bad fiscal policies,” and said he is worried about dependence on the Fed’s monetary policy when “Congress and the Executive Branch have put on the brakes.” 

John Williams, president of the San Francisco Fed, said that he was concerned about slowing momentum in housing markets, although he noted that housing had driven economic recovery in the aftermath of the recession.

The inflation rate has remained well below the Federal Reserve’s target rate of 2.00 percent, and Mr. Williams said that the Fed is paying close attention to this. His remarks were supported in Wednesday’s release of the FOMC minutes of its April meeting.

Charles Plosser, the Philadelphia Fed’s president, took an optimistic tone at a speech given before the Women in Housing Foundation on Tuesday. He said that the national unemployment rate could fall below 6.00 percent by the end of 2014 and that he expects the housing market to bounce back as well.

This makes sense, as strong labor markets are known to influence consumer decisions to buy a home.

New York Fed President William Dudley spoke before the New York Association for Business Economics, and said that there would be “a considerable period of time” between when the current asset purchase program ends and the first Fed rate hike would occur.

He also indicated that he expected longer-term interest rates (which include mortgage rates) to be “well below” a historical average of 4.25 percent.

Minneapolis Fed President Narayana Kocherlakota said that the Fed should consider targeting price levels rather than the current policy of targeting the inflation rate. He said that this was not likely to occur any time soon, but noted that current Fed policy is “undershooting” the central bank’s goals for unemployment and inflation.

Fed Chair Janet Yellen cited her predecessor, Ben Bernanke as a positive example when she spoke at New York University’s commencement. She noted that he took “courageous actions unprecedented in ambition and scope” and that his “grit willingness to take a stand” had directed his decisions during the recession.

Mortgage Rates Down, Existing Home Sales Up

Freddie Mac reported that average mortgage rates dropped last week. The average rate for a 30-year fixed rate mortgage fell to 4.14 percent, a drop of six basis points. The rate for a 15-year fixed rate mortgage fell by four basis points to 3.25 percent.

The average rate for a 5/1 adjustable rate mortgage dropped by five basis points to 2.96 percent. Discounts were unchanged at 0.60 percent for 30-year mortgages and 0.40 for 5/1 adjustable rate mortgages, but dropped to 0.50 percent for 15-year mortgages.

Sales of existing homes rose to their highest level in four months according to the NAR. Month-to-month sales of previously-owned homes rose by 1.63 percent in April to a seasonally adjusted annual rate of 4.65 million sales as compared to March’s reading of 4.59 million sales. This was the first rise in sales of existing homes in 2014, and nearly met expectations of 4.66 million sales.

This Week

After the Memorial Day holiday, this week’s economic news includes the Case-Shiller Home Price Index, FHFA’s house price index and consumer confidence index.

Pending home sales, jobless claims and Freddie Mac’s mortgage rates report along with the University of Michigan consumer sentiment index round out the week’s scheduled events.

Existing Home Sales Rise As Home Inventory Shrinks

Home sales rose for the 11th consecutive month according to the National Association of REALTORS® Existing Home Sales Report for January.

This is the first time this has occurred since the period between July of 2005 and May of 2006.

National Average Home Price Up Over 12% Annually

The national average home price in January was $173,600, which is 12.3 percent higher than for January 2012. 

Calculated on a seasonally-adjusted annual basis, Existing Home Sales data is compiled using completed sales of single family homes, condominium units and co-ops.

January’s existing home sales rose by 0.4 percent to 4.92 million sales nationally as compared to December’s revised annual rate of 4.90 million sales nationally.

National sales of existing homes increased by 9.1 percent as compared to January 2012.

Regional Home Sales Support Housing Recovery

Regional home sales for January suggest more good news for housing markets. Seasonally- adjusted annual home sales rose in all regions of the U.S. except in the West, while median home prices rose for all regions.

Northeast: Home sales were up by 4.8 percent in January to 650,000 sales, which is 12.1 percent more homes sold than for January 2012. The median home price rose by 2.4 percent from January 2012 to $230,500.

Midwest: Annual home sales in January increased by 3.6 percent to 1.16 million; this is 17.2 percent higher than for January 2012. The median home price in the Midwest rose to $131,800, an increase of 8.6 percent as compared to January 2012.

South: Home sales were up by 1 percent to 1.96 million sales in January; this represents a 14.0 percent increase in annual sales as compared to one year ago. The average home price for the South was $152,100, an increase of 13.4 percent over January 2012.

West: Home sales fell by 5.7 percent to an annual rate of $1.15 million. This represents a 5.7 percent decrease in sales from one year ago. The median home price in January was $239,800 and was 26.6 percent above the region’s median sale price for January 2012.

A falling inventory of homes for sale may be holding back buyers; the inventory of homes for sale fell to a 4.2 month supply from December’s 4.5 month supply of homes. A 6-month supply of homes is considered average.

Home Prices May Rise Quickly

While the spring home buying season will likely see more homes come on the market in Phoenix and the surrounding area , economists caution that home prices could rise faster than expected due to increasing demand. A seller’s market could be in the making.

Mortgage rates also appear to be rising; now may be your best time for gaining the advantage of relatively low home prices and mortgage rates.

Existing Homes For Sale At Lowest Point In 11 Years

Home sales dropped last month, but not because demand was lacking. There are fewer homes for sale than at any time in the last 11 years.

According to the National Association of REALTORS®, Existing Home Sales for December 2012 fell to a seasonally-adjusted, annualized rate of 4.94 million homes from November’s tally of 4.99 million existing homes.

The Existing Home Sales report is based on the number of closings for previously-owned, single-family homes, townhomes, condominiums and co-ops. It’s estimated that existing homes account for 85 to 90 percent of all home sales nationwide.

2012 was a good year for housing. Sales of existing homes climbed 12.8 percent as compared to the December 2011 tally, which may be a strong indicator of future mortgage originations and short-term demand for home-related goods.

Based on preliminary sales figures, the number of home resales in 2012 grew 9.2 percent to 4.65 million homes as compared to 4.26 million homes sold during 2011. This marks the highest number of home resales sold in 5 years — a time which predates the recession of last decade.

In addition, the median price of a homes resale read $180,800 in December, which is a 11.5 percent increase as compared to December 2011, and the tenth consecutive month of year-over-year median price growth.

Not since November 2005 has the median home resale price climbed this quickly

Furthermore, the supply of existing homes fell to 4.4 months in December, down 0.4 months from November. At the current pace of sales, the national home resale inventory will be sold by June. This is an important statistic because home supply of less than 6.0-months is thought to represent a “seller’s market”.

There are also just 1.82 million existing homes for sale nationwide — the fewest since January 2001, and a 22 percent reduction from one year ago. With buyer demand high and home inventory down, home prices are likely to rise in Las Vegas and nationwide throughout 2013.

Pending Home Sales Index Cruises To Multi-Year High

Home buyers continue to push the U.S. housing market forward.

In November, for the second straight month, the Pending Home Sales Index eclipsed its benchmark reading of 100, posting a value of 106.4.

The Pending Home Sales Index (PHSI) is published monthly by the National Association of REALTORS®. It tracks homes under contract to sell, but not sold. The PHSI is relative index, comparing current contract activity to the activity of 2001 — the first year for which “pending homes” were tallied for an index.

The Pending Home Sales Index has posted an average score of 100.2 from January 2012 through November 2012, the most recent month for which there’s data. This is a significant data point because it means that the 2012 housing market is performing better than the 2001 housing market; one which is widely considered a strong one for housing.

It’s also meaningful because it foreshadows a strong market for 2013. With an increasing number of homes under contract to sell, it can be assumed that “closed units” will increase in the future, too.

The National Association of REALTORS® says that 80% of U.S. homes under contract go to closing within 60 days, and that many of the remaining homes go to closing within days 61-120.

The monthly Pending Home Sales Index, therefore, can foreshadow to today’s buyers and sellers what’s ahead for the housing market.

The Pending Home Sales Index is a forward-looking indicator.

Based on November Pending Home Sales Index, we should expect to the home resale market to remain strong, and to pick up strength, through the first quarter of 2013. Demand for homes is high, mortgage rates are low, and buyers are looking to get a good deal.

The first few months of the year are often thought to be “slow” for the housing market. This year, however, that may not be the situation. If you’re actively looking for homes in Phoenix , the best prices may be the ones you get this winter.

What’s Ahead for Mortgage Rates This Week: December 24, 2012

Mortgage markets worsened last week amid ongoing discussions budget and tax conversations in Washington, D.C., and the release of key housing and economic data.

Mortgage rates climbed in California and nationwide.

Freddie Mac reported the average 30-year fixed rate mortgage rate at 3.37 percent nationwide for borrowers willing to pay an accompanying 0.7 discount points at closing, plus closing costs — an increase of 0.05 percentage points from the week prior.

The average 15-year fixed rate mortgage rate was listed at 2.65 percent nationwide with an accompanying 0.7 discount points plus a full set of closing costs.

With certain government funding and tax reductions set to expire December 31, legislators appear unlikely to avoid what’s been called the “Fiscal Cliff”. Some economists believe that reaching January 1 with no agreement in place will set the economy in to recession.

Mortgage rates tend to improve on “negative” news for the economy, which partially explains why mortgage rates made a small comeback late in the week.

In other news, according the National Association of REALTORS®, Existing Home Sales reached their highest point since November 2009, climbing to 5.04 million homes sold on a seasonally-adjusted, annualized basis. In addition, the real estate trade group reports that the Existing Home Supply has dropped to 4.8 months — a figure firmly suggesting a “seller’s market”.

Separately, the Commerce Department reported single-family housing starts rising, too; down 4.1 percent in November but up nearly 23 percent as compared to November 2011.

This week, Fiscal Cliff discussions are likely to dominate mortgage markets. The trading week will be holiday-shortened and volume will be lighter-than-normal. This may lead to volatile pricing and rapid interest rate movements.

Markets close early Monday and remain closed through Tuesday. Wednesday, markets re-open with no new data set for release. Then, Thursday, scheduled economic news events resume Thursday with New Home Sales, Jobless Claims and Consumer Confidence due.

Friday, the Pending Home Sales Index is released.