Housing Analysis Archives - Shoreline Mortgage

30 04, 2014

Warmer Weather Brings In The Buyers, Is There Inventory?

Warmer Weather Brings In The Buyers, Is There Inventory? After three consecutive months of decline, the S&P Case-Shiller 20-City Composite Index remained nearly unchanged in February. Year-over-year home prices rose by 12.90 percent in February as compared to 13.20 percent in January.

20 Percent Below Their 2006 Pre-recession Peak

Analysts note that in spite of recent slowdowns in home prices, the year-over-year rates of home price growth remain close to peak price growth attained in 2006. National home prices remain approximately 20 percent below their 2006 pre-recession peak.

13 cities posted lower rates of price gains in February. The Case-Shiller 10 and 20 city indices showed year-over-year price gains of 13.10 and 12.90 percent respectively. Only five cities posted year-over-year gains in price appreciation.

Las Vegas, Nevada continues to lead home price growth but its year-over-year rate of home price growth slowed from January’s reading of 24.9 percent to February’s reading of 23.10 percent. Washington, D.C. posted its eighth consecutive month of home price gains with a year-over-year reading of 9.10 percent, its highest rate of price increases since May 2006.

Dallas, Texas posted a year-over-year rate of 10.10 percent and a month-to-month increase of 0.20 percent, which continues the city’s record home price growth.

Home Price Gains Expected To Slow In Coming Months

Analysts said that more homes are expected to come on the market and also noted that the rapid increase in home prices for some areas likely sidelined some buyers. As inventories of homes increase, home prices are expected to rise at more modest rates. Job markets continue to experience ups and downs and incomes are relatively flat.

These factors can cause would-be homeowners to take a “wait-and-see” stance. Price increases in other sectors can also impact home prices, as buyers adjust their home purchase plans to what they can afford to spend.

Pending Home Sales Rise In March

The NAR reported that its pending home sales index rose by 3.40 percent in March as compared to a decrease of -0.80 percent for February. The March reading showed the first increase in pending home sales in nine months, and was the highest reading since November.

Warmer weather allowed more buyers shop for homes, but remains 7.90 percent lower than in March 2013. Higher home prices and low inventories of available homes were cited as reasons for the lower reading.

Pending home sales by region showed mixed results, and suggested the impact of severe winter weather on potential home buyers.

Northeast: +1.40 percent

Midwest: -0.80 percent

South: +5.60 percent

West: +5.70 percent

Based on a slow start during the first quarter of 2014, the NAR forecasts 2014 sales of existing homes at 4.9 million as compared to 5.1 million existing homes sold in 2013.

24 04, 2014

Existing Home Sales Show Improvement In The Northeast And Midwest Region

Existing Home Sales Show Improvement In The Northeast And Midwest Region March sales of existing homes exceeded expectations at a seasonally adjusted annual rate of 4.59 million sales according to the NAR. Analysts projected that existing home sales would reach 4.55 million based on February’s reading of 4.50 million sales.

The pace of existing home sales declined by 0.20 percent as compared to February’s reading.

Headwinds Cause Slower Pace Of Home Sales

Analysts cited poor winter weather and rapidly rising home prices as factors that kept buyers away, although the Northeast and Midwest regions reported improvements in home sales in March. NAR said that the national average home price increased to $198,500, which was a year-over-year increase of 7.90 percent.

New mortgage regulations, which have caused mortgage lenders to take a conservative position with their lending policies, are also seen as a discouragement to buyers with less-than-perfect credit, first-time and moderate income home buyers.

Experts expressed concerns that current home prices and tight lending standards could create a shortage of first-time buyers.

Home sales to investors have fallen as higher home prices and fewer distressed (foreclosure and short sale) properties cause deals on cheap homes to dry up.

Fannie And Freddie Revise Construction, Housing Market Forecasts

Fannie Mae reduced its forecast for home construction started in 2014 from 1.55 million to 1.05 million. Doug Duncan, Fannie Mae’s chief economist, said that constraints on credit and labor contributed to the revised forecast.

Freddie Mac reduced its forecast of homes sold in 2014 from 5.60 million to 5.50 million. Frank Nothaft, Freddie Mac’s chief economist, said that tight inventories of homes in some areas could cause significant challenges for home buyers.

FHFA Home Price Index Posts March Gain

FHFA, the agency that oversees Fannie Mae and Freddie Mac, reported that February home prices related to mortgages that Fannie and Freddie own or guarantee, gained 0.60 percent as compared to a revised January reading of a 0.40 percent gain.

Year-over-year, home prices rose by 6.90 percent as compared to January’s year over year reading of 7.20 percent.

Analysts said that smaller month-to-month dips in home prices could indicate a turnaround for lagging housing markets and also noted that sales lost during severe winter weather may be recouped as the spring buying season gains momentum.

27 03, 2014

S & P Case-Shiller Shows Home Prices Down For Third Consecutive Month

S & P Case-Shiller Shows Home Prices Down For Third Consecutive Month Harsh winter weather conditions contributed to home prices falling in January. The S&P Case-Shiller 20-City composite index reported that home prices dropped by 0.10 percent in January, but after seasonal adjustments, home prices increased by 0.80 percent in January as compared to December. 12 of 20 cities posted declines in home prices in January.

There’s no cause for alarm, as year-over-year home prices increased by 13.20 percent as compared to year-over –year readings of 13.40 percent in December and 13.70 percent in November. David Blitzer, chair of the S&P Dow Jones index committee, said “The housing market is showing signs of moving forward with more normal price increases.” Home prices remain about 20 percent below a peak reached in 2006.

Housing Markets Face Challenges

Analysts expect home prices to grow at a slower pace in 2014. Factors impacting home prices include higher mortgage rates that make homes less affordable, new mortgage rules that may affect some homebuyers’ ability to qualify for a mortgage.

A shortage of available homes overshadowed housing market growth in 2013; there just weren’t enough homes available to meet demand in some areas. The Federal Reserve’s Federal Open Market Committee (FOMC) noted in its statement last week that it was difficult to determine the exact scope of winter weather on recent economic reports.

Regional Markets Show Discrepancies In Recovery

The S & P Case-Shiller 10 and 20-city home price index reports shed light on a “patchwork quilt” housing recovery. While some areas have seen a higher than average rate of year-over-year home price growth, other areas are underperforming.

Here is a sampling of Case-Shiller’s January data throughout the U.S:

Las Vegas, Nevada +24.90 percent

San Francisco, California +23.10 percent

Chicago, Illinois +10.80 percent

Washington, D.C. +9.20 percent

New York, New York +6.70 percent

Cleveland, Ohio + 4.00 percent

The S & P Case Shiller 10 and 20 city home price indices posted year-over-year gains of 13.50 and 13.20 percent respectively.

FHFA Data Shows Similar Trend

The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, released its House Price Index (HPI) for January with similar results for homes mortgaged or backed by Fannie Mae and Freddie Mac. The House Price Index indicated that home prices rose by a seasonally-adjusted rate of 0.50 percent from December to January. According to the FHFA HPI, home prices increased by 7.40 percent year-over-year.

January’s HPI was 8.00 percent below the index’s April 2007 high.

The FHFA HPI data is seasonally adjusted and is based on home purchases only.

FHFA month-to-month data for the nine census bureau districts reflects the differences in housing markets throughout the U.S.

FHFA month-to –month home price growth December 2013 to January 2014:

Middle Atlantic division: + 1.30 percent

New England + 1.00 percent

West North Central + 1.00 percent

Pacific + 0.80 percent

East South Central + 0.70 percent

Mountain + 0.50 percent

South Atlantic + 0.30 percent

East North Central + 0.10 percent

West South Central – 0.30 percent

Along with warm weather’s arrival is the potential for regional housing markets sidelined over the winter to recover.

25 03, 2014

FOMC Statement Shows “Moderate” Economic Growth

FOMC Statement Shows The Federal Reserve’s Federal Open Market Committee met last week and Janet Yellen held her first press conference as Fed chair. According to the FOMC statement released after the meeting, the Fed cited severe winter weather conditions as a reason for slow economic growth in recent months.

FOMC members will continue to monitor economic conditions and developments as part of any decision to change the Fed’s change monetary policy. Highlights included:

“Moderate” Economic Growth; Asset Purchases Reduced For April

FOMC made the predicted cut to its asset purchase program and reduced April’s purchase of mortgage-backed securities and Treasury bills to $55 billion. Citing moderate economic growth and modest improvement in labor markets, the FOMC expects to continue tapering the Fed’s monthly asset purchases in the coming months.

The FOMC statement indicated that the committee’s policy concerning asset purchases is not set in stone and can be adjusted in response to economic developments

Monthly asset purchases are part of the Fed’s economic stimulus program and are intended to hold down longer-term interest rates such as mortgage rates. If the Fed tapers its asset purchases too quickly, mortgage rates could potentially rise too quickly.

The FOMC statement noted that the U.S. housing market recovery has slowed. It is likely that FOMC members will continue to monitor mortgage rates as part of their “forward guidance” for tapering monthly asset purchases.

FOMC members also voted to maintain the federal funds rate at 0.000 to 0.250 percent. The FOMC said that inflation rates consistently below the committee’s target rate of two percent could pose risks to economic growth, but that the committee will wait and see if inflation moves closer to FOMC’s target reading over the medium term.

Unemployment Benchmark Removed

FOMC members voted to remove the previously established benchmark of 6.50 percent national unemployment rate as a criterion for changes to its stimulus programs. Going forward, the committee will rely on “forward guidance,” which indicates that the FOMC will change monetary policy according to global and domestic economic news and developments.

Chair’s Press Conference

FOMC and Federal Reserve Chair Janet Yellen gave her first press conference after the FOMC meeting statement was released. Ms. Yellen said that the FOMC decision to remove the benchmark unemployment rate was not an indication of change in the Fed’s monetary policy, but said that it would clarify how FOMC would evaluate its monetary policy after the national unemployment rate falls below 6.50 percent.

FOMC expects the national unemployment rate to fall between 6.10 and 6.30 percent by the end of 2014.

Chair Yellen said that weather conditions in January and February interfered with FOMC’s ability to assess the underlying strength of the economy. She added that economic conditions were broadly in line with the committee’s expectations in December 2013. Stronger economic conditions were seen as supporting growth in labor markets.

Chair Yellen said that the committee expected to maintain the federal funds rate at current levels “well past” the time the national unemployment rate falls below 6.50 percent. Inflationary pressures and expectations, labor market conditions and readings on financial developments.

20 03, 2014

NAHB Housing Market Index Ticks Upward

NAHB Housing Market Index Ticks Upward Spring is almost here, and the National Association of Home Builders Housing Market Index (NAHB HMI) thawed slightly in March.

The current reading of 47 is one point higher than for February, but still indicates pessimism among a majority of builders surveyed. Analysts expected a March reading of 50.

The gauge of builder confidence stayed near its lowest level since May.

March’s NAHB HMI reading remained below the benchmark reading of 50, which indicates that an equal number of builders are positive about housing market conditions as those who are negative.

A reading over 50 indicates that more builders are positive than negative. Last August the NAHB HMI reading reached 58, its highest level since 2005.

Kevin Kelly, NAHB’s chairman said that builder concerns included a lack of land available for development, the lagging effects of severe winter weather and labor shortages.

NAHB HMI Details Show Regional Variances

The NAHB HMI national reading is based on builders’ views of three aspects of housing markets. The March reading of 47 is based on three components. The reading for prospective buyer traffic in new home developments rose by two points to 33.

Builder expectations for present sales of single-family homes rose from 51 to 52. Builder confidence in home sales in coming months fell from a reading of 54 to 53.

Rising mortgage rates and home prices along with inconsistent labor markets influenced builder confidence concerning future home sales.

March Readings For Regional Home Builder Confidence Were Varied:

Northeast: March’s reading was five points lower at 29.

Midwest: Builder confidence gained three points in March for a reading of 52.

West: Builder confidence dropped by five points to a reading of 53.

South: March’s reading rose by two points to 48.

In related news, the Department of Commerce reported housing starts for February dropped to 907,000 as compared to January’s reading of 909,000 housing starts and expectations of 908,000 housing starts.

Building permits for February rose by 7.70 percent to their second highest level since the recession for a total of 1.02 million permits. The rise in building permits was attributed to construction plans for condominium complexes and rental units.

5 03, 2014

Highest Year-Over-Year Increase In Home Prices Since 2005

Highest Year-Over-Year Increase In Home Prices Since 2005 Two major indicators of home price trends showed a slowing momentum for home prices in December. The S&P Case Shiller 10 and 20 city indices reported that of 20 cities tracked, home prices were lower in December than for November.

Case-Shiller’s seasonally adjusted month-to month reading showed that home prices rose by 0.8 percent as compared to 0.90 percent in November.

David Blitzer, chairman of the index committee at S&P Dow Jones Indices, said that “Gains are slowing from month-to-month and the strongest part of home price recovery may be over.” He also noted that seasonally adjusted data was showing a loss of momentum for home prices.

December home prices posted a year-over-year gain of 13.40 percent, down from November’s year-over-year reading of 13.70 percent. December’s reading reflected the highest year-over-year increase in home prices since 2005.

Analysts note that a slower pace of increasing home prices may allow more buyers to enter the market, and may also encourage more buyers to list their properties for sale.

This would increase inventories of available homes and relieve pent-up demand for homes. Although home price growth is cooling off, average home prices remain 20 percent below their pre-recession peak in 2006.

Home Prices Face Challenges In 2014

Another factor in slower growth of home prices is regional differences in the rate of economic recovery. Cities including Dallas, Texas and Denver, Colorado recently set records for escalating home prices.

Five states including Florida and Michigan accounted for almost half of foreclosures completed during 2013. Slow job growth and poor winter weather were also blamed for slower gains in home prices.

New mortgage rules and relatively strict mortgage lending standards may continue to dampen housing markets, but there is some good news as some lenders are easing credit standards.

FHFA: Home Prices Higher For 10^th Consecutive Quarter

The Federal Housing Finance Administration reported similar trends in December home price data for properties either financed or owned by Fannie Mae or Freddie Mac. Home prices rose by a seasonally adjusted rate of 0.80 percent in December as compared to November’s reading.

Home prices were 7.70 percent higher for the fourth quarter of 2013 than for the same period in 2012. Adjusted for inflation, this reading indicates an approximate year-over-year increase of 7 percent.

FHFA reported higher readings for 38 states in its fourth quarter 2013 Home Price Index, as compared with 48 states in in the third quarter of 2013. In order of home price appreciation, the top five states with highest growth in home prices were Nevada, California, Arizona, Oregon and Florida.

These calculations were seasonally adjusted and based on home purchases only.

27 02, 2014

Case Shiller Price Index Shows That It’s A Buyers Market

Case Shiller Price Index Shows That It's A Buyers Market Two major indicators of home price trends showed a slowing momentum for home prices in December. The S&P Case Shiller 10 and 20 city indices reported that of 20 cities tracked, home prices were lower in December than for November.

Case-Shiller’s seasonally adjusted month-to month reading showed that home prices rose by 0.8 percent as compared to 0.90 percent in November.

Analysts note that a slower pace of increasing home prices may allow more buyers to enter the market, and may also encourage more buyers to list their properties for sale. This would increase inventories of available homes and relieve pent-up demand for homes.

Although home price growth is cooling off, average home prices remain 20 percent below their pre-recession peak in 2006.

Home Prices Face Challenges In 2014

Five states including Florida and Michigan accounted for almost half of foreclosures completed during 2013. Slow job growth and poor winter weather were also blamed for slower gains in home prices.

New mortgage rules and relatively strict mortgage lending standards may continue to dampen housing markets, but there is some good news as some lenders are easing credit standards.

FHFA: Home Prices Higher For 10^th Consecutive Quarter

The Federal Housing Finance Administration reported similar trends in December home price data for properties either financed or owned by Fannie Mae or Freddie Mac.

Home prices rose by a seasonally adjusted rate of 0.80 percent in December as compared to November’s reading. Home prices were 7.70 percent higher for the fourth quarter of 2013 than for the same period in 2012. Adjusted for inflation, this reading indicates an approximate year-over-year increase of 7 percent.

FHFA reported higher readings for 38 states in its fourth quarter 2013 Home Price Index, as compared with 48 states in in the third quarter of 2013.

In order of home price appreciation, the top five states with highest growth in home prices were Nevada, California, Arizona, Oregon and Florida. These calculations were seasonally adjusted and based on home purchases only.

25 02, 2014

Existing Home Sales Lowest Since 2012

Existing Home Sales Lowest Since 2012 Sales of existing homes fell by 5.10 percent in January according to the National Association of REALTORS.

Pre-owned home sales slowed to a seasonally-adjusted annual rate of 4.62 million homes against an expected reading of 4.65 million and December’s reading of 4.87 million existing homes sold.

Rising home prices are reducing the number of affordable homes and a shrinking inventory of available homes were said to be underlying causes to January’s slump in existing home sales.

Severe winter weather also contributed to lower sales.

January’s reading was the lowest for existing home sales since July of 2012. The national inventory of available pre-owned homes was 1.90 million, which represents a 4.90 month supply at the current sales pace.

Real estate pros look for a 6 to 6.50 month supply of existing homes to balance demand and availability between buyers and homes for sale.

High demand against a low supply of available homes suggests that some home sales weren’t completed due to a bottleneck between willing buyers and a low supply of available homes. Rising home prices also limit affordability for first-time and moderate income home buyers.

Regional Sales Of Existing Homes Lower

Existing home sales fell across all four regions:

Northeast: -3.10 percent
Midwest: -7.1 percent
South: -3.5 percent
West: 7.3 percent

Slow job growth, new mortgage rules and high loan approval standards were also reported as causes for slower sales. Short supplies of existing homes in high demand locations are causing multiple offers on homes, and in some areas, cash offers are in play. High competition for homes can eliminate home buyers with a limited range of purchasing power.

Reports on new construction and home builder confidence in housing market conditions supported the slower rate of existing home sales in January

Home prices, while still increasing, are not growing at the rapid rates seen in 2013. The national median home price in January rose to $188,900, which represents a 10.70 percent increase year-over-year. Analysts said that existing home sales that weren’t completed due to the winter weather can be expected to recover as warmer weather arrives.

Distressed Home Sales Impact Average Home Price

Distressed sales of existing homes including foreclosed properties and short sales represented 15 percent of January sales of existing homes, down from 24 percent in January 2013, and higher than December’s reading of 14 percent.

Sales of foreclosed homes averaged 16 percent below market value and short sales were completed at an average of 13 percent below market value. Discounted home prices impact home prices in areas that have larger numbers of distressed homes for sale.

As warmer weather approaches, new home construction will pick up and more homeowners will be likely to put their homes on the market.

30 01, 2014

Case Shiller Price Index Shows Homeowners A Rise In Home Equity

Case Shiller Price Index Shows Homeowners A Rise In Home Equity According to the S&P/Case-Shiller 10 and 20-City Home Price Indices released Tuesday, the U.S. Housing Market is on a roll based on year-over-year increases in average home values, but month-to-month results were mixed.

The 10 and 20-City Home Price Indices showed year-over-year growth of 13.80 and 13.70 percent respectively.

Highlights Include:

Dallas, Texas posted its highest rate of annual growth since 2000.
Chicago’s average home price rose by 11.00 percent, its highest annual gain since December 1988.
The 10 and 20-City Indices posted their best November home prices since 2005.

Top year-over-year gains in home prices included Las Vegas, Nevada at 27.30 percent, San Francisco, California at 23.20 percent, Los Angeles, California at 21.60 percent and San Diego, California at 18.70 percent. Atlanta, Georgia rounds out the top five cities with a year-over-year increase in home prices of 18.50 percent.

The annual readings for the S&P/Case-Shiller 10 and 20-City Housing Market Indices in November suggests that U.S. markets are strong enough to sustain momentum in spite of rising mortgage rates. The month-to-month results show that both indices decreased by an incremental 0.10 percent in November, 2013.

Keeping in mind the traditional slump in home sales during the winter and holiday season, lower month-to-month readings were neither unexpected nor disappointing.

Eight of the nine top cities posting the highest month-to-month growth in home prices were located in the Sun Belt. San Diego, California and Minneapolis, Minnesota home prices remained nearly flat after decreasing in October.

Nine of the 20 cities surveyed posted positive month-to-month growth in home prices. Of the nine cities, only Boston, Massachusetts and Cleveland, Ohio were not located in the Sun Belt.

S&P/ Dow Jones Index Committee Chairman Expects Slower Growth In 2014

David Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices, noted that November’s month-to-month readings for the 10 and 20-city home price indices indicated that Phoenix, Arizona, Los Angeles California and Las Vegas, Nevada had each posted 20 or more consecutive months of rising home prices.

While positive in his remarks about increasing home prices, Mr. Blitzer also noted that indicators suggested a slower rate of growth during 2014.

This aligns with previously released economic news citing uncertainty about mortgage rates that may continue to rise as the Federal Reserve continues tapering its monthly asset purchases under its quantitative easing program.

The Fed’s FOMC meeting is scheduled to end Wednesday, January 29, at which time the committee’s customary statement will indicate whether or not the Fed’s monthly asset purchases will be reduced from their current level of $75 billion.

On the positive side, Chairman Blitzer said that the low inflation rate (1.50 percent in 2013) and rising home prices are helping homeowners accumulate home equity at a faster pace.

28 01, 2014

Existing Home Sales Reach Highest Level In 7 Years

Existing Home Sales Reach Highest Level In 7 Years The NAR provided great year-end news as existing home sales in December pushed 2013 sales of existing homes to a 7 year high. December’s reading of 4.86 sales of pre-owned homes came in at 4.87 million on a seasonally adjusted annual basis.

Although projections had been for 4.89 million sales, the December reading topped November’s revised sales of 4.82 million pre-owned homes.

December’s reading showed the first gain in existing home sales in three months. NAR reported that existing home sales for 2013 reached 5.09 million, which represented a 9.10 percent increase over 2012.

More Good News: Median Price Of Existing Homes Rises

NAR reported that the national median price for pre-owned homes increased to $198,000, a year-over-year increase of 9.90 percent. The average price of an existing home for all of 2013 was $197,100. This was the strongest growth in existing home prices since 2005 and represented an increase of 11.50 percent.

There were 1.86 million pre-owned homes for sale in December. At current sales rates, this represents a 4.60 month inventory. Real estate pros like to see a minimum of a six-month supply of available homes, so existing homes remain in short supply.

Analysts attributed rising home prices to improving economic conditions and a persistent shortage of homes for sale.

FHFA: Slower Gain for Home Prices In November

FHFA, the agency that oversees Fannie Mae and Freddie Mac, reported that November prices of homes financed with mortgages owned or guaranteed by the two agencies rose by a seasonally adjusted 0.10 percent as compared to October’s increase of 0.50 percent and an expected growth rate of 0.40 percent.

November’s reading brought year-over-year home sales to an increase of 7.60 percent, but is still 8.90 percent below their April 2007 peak.

Analysts noted that recent reports of increasing new home construction and rising new home sales as reasons why prices of existing homes are seeing slower growth.

7 01, 2014

Case Shiller Price Index Shows Highest Year-Over-Year Gains Since 2006

Case Shiller Price Index Shows Highest Year-Over-Year Gains Since 2006 The Case-Shiller 10 and 20-City Home Price Indices for October were released on December 31. Although home prices in most cities continued to show year-over-year gains, the pace of home price appreciation is expected to slow in 2014.

Year-over-year increases have been in double digit territory since March 2013, but month-to-month readings suggest that the rate of increasing home prices is slowing.

According to David Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices, “…the monthly numbers show that we are living on borrowed time and the boom is fading.”

The 10 and 20 city indices are showing that home prices some cities that were showing little or no growth in 2013 are posting higher rates of appreciation, while growth in cities that have shown very high increases in home prices are beginning to lose momentum.

Year-over-Year Growth In Double Digits

The 10-and 20-city indices each posted year-over year gains of 13.60 percent between October 2012and October 2013. These were the highest year-over-year gains since February of 2006.

Home prices recovered to mid-2004 levels in October, but remained 20 percent lower than peak home prices seen in June and July of 2006.

Here are figures for 10 cities showing the highest increases in home prices year-over-year in October 2013:

City Y-O-Y Growth Rate

Las Vegas, NV 27.10 %

San Francisco, CA 24.60%

Los Angeles, CA 22.10%

San Diego, CA 19.70%

Atlanta, GA 19.00%

Phoenix, AZ 18.10%

Detroit, MI 17.30%

Miami, FL 15.80%

Tampa, FL 15.20%

Seattle, WA 13.10 %

Home prices in the 10 and 20-city indices have gained 23.10 percent and 23.70 percent since home prices reached their lowest points in March 2012.

Month-To-Month Readings Indicate Slower Growth

Month-to-month readings show a slowing trend in home price growth. 18 of 20 cities included in the S&P Case-Shiller Home Price Indices showed slower growth in October as compared to September’s readings.

The Federal Reserve will begin tapering its asset purchases this month and will continue doing so unless economic conditions slow to a point where the Fed considers tapering counter-productive to economic growth.

Concerns over the tapering of “quantitative easing” and higher mortgage rates are seen as contributing to slower gains in home prices.

Although some analysts have identified indicators of economic growth, most seem to agree that home prices are likely to increase by single-digit percentages in 2014.

31 12, 2013

New Home Sales Show Healthy Year-Over-Year Increase

New Home Sales Show Healthy Year-Over-Year Increase The holiday season and winter weather slowed home sales in November. Last week, the NAR reported that sales of existing homes had slumped to their lowest level in nearly a year, but this was not unexpected.

Short supplies of available homes and rising mortgage rates have increased pent-up demand for homes have kept some buyers on the sidelines.

Improvement In The Labor Market

4.90 existing homes were sold in November; this was lower than the 5.13 million existing homes sold in October, as well as lower than expectations of 5.00 million existing home sales in November.

Existing home sales for November 2013 were also 1.20 percent lower than for November 2012; this is the first time in 29 months that existing home sales were lower year-over-year.

Lawrence Yun, chief economist for NAR, described the slow-down in sales as a “clear loss of momentum.” The outlook for 2014 is better, as analysts expect continued improvement in the labor market.

The pent-up demand for homes will ease as homeowners begin to list their homes for sale as home prices increase. Mr. Yun also noted that prices for existing homes are increasing at their highest rate in eight years.

The national median home price of existing homes rose to $196,000 in November, which represents a year-over-year increase of 9.40 percent. There was a 5.1 month supply of previously homes available at the current sales rate.

Housing Market Continues To Progress Over Long Term

The Census Bureau and HUD report that 464,000 new homes were sold in November. This was 2.10 percent lower than October’s rate of 474,000 new homes sold. This represents an increase of 16.60 percent as compared to the 398,000 new homes sold in November 2012.

The national median home price for new homes in November was $270,900; with an average new home price of $340,300. The seasonally-adjusted estimate of new homes for sale in November was 167,000; this reading represents a 4.30 month supply of new homes for sale.

While home builder confidence is up and recent labor reports indicate improving job markets, the Fed’s decision to taper its quantitative easing program in January is generating some uncertainty as mortgage rates will likely rise as the Fed winds down the QE program.

18 12, 2013

Housing Market Index Shows Builder Confidence Up 23 Percent Year-Over-Year

Housing Market Index Shows Builder Confidence Up 23 Percent Year- Over- Year According to the National Association of Homebuilders/Wells Fargo Homebuilders Market Index for December, builder confidence recovered in with a reading of 58. This surpassed both expectations of 56 and last month’s reading of 54.

Analysts noted that builder confidence has steadied after the government shutdown. December’s reading was the highest in four months. Dave Crowe, NAHB chief economist, said that his organization was expecting a “gradual improvement in the housing recovery” in 2014.

Any reading above 50 indicates that more builders are confident about overall housing market conditions than not.

Builder Confidence – Highest Reading Since 2005

Pent-up demand for housing is driving housing markets in spite of higher mortgage rates. Three components of builder confidence used to calculate the overall reading also rose in December. Builder confidence in current home sales rose to 64 from a reading of 58 in November; this is the highest reading since 2005.

Confidence levels in housing markets over the next six months rose to 62 from last month’s reading of 60. Builder confidence also grew in the area of buyer foot traffic in new developments and gained three points to a reading of 44.

All of this is good news, but the NAHB said that a gap remains between higher home builder confidence and the rate of new home construction. A seasonal lull in home construction is not unusual especially in areas experiencing harsh weather.

More Jobs, Low Refinance Numbers Could Mean More Mortgages Available

MarketWatch analysts suggest that if the economy continues to add jobs “at a brisk pace” and mortgage lenders ease lending requirements next year, the demand for homes could further strengthen the U.S. housing market next year.

Low numbers of refinance mortgages in 2013 may cause some lenders to loosen mortgage credit requirements, which were tightened after the housing bubble burst.

Economic News scheduled for today may provide a broader picture of economic health and likely trends for 2015. The Federal Reserve’s Federal Open Market Committee will provide its expected statement after its meeting, and Fed Chairman Ben Bernanke will give his last press conference as Fed chair as well.

Any indication of plans to reduce the Fed’s current quantitative easing program could upset financial and mortgage markets, but most economic analysts don’t expect an announcement of tapering the Fed’s asset purchases before next year.

Data on November Housing Starts and Building Permits will also offer clues as to how housing markets and the general economy are doing.

3 12, 2013

Case Shiller Price Index Shows A Spike In Home Prices In The West

Case Shiller Price Index Shows A Spike In Home Prices In The West According to the S&P Case-Shiller 10-and 20-City Housing Market Indices for September, home prices grew at an average of 13.30 percent year-over-year and achieved the highest growth rate for home prices since February 2006.

On a month-to month basis, home prices are slowing in most areas with 19 cities included in the S&P 20-City Housing Market Index showing lower rates of growth in home prices. September’s average month-to-month growth rate was 1.0 percent for the 20-City HMI as compared to 0.90 percent in August, and 1.90 percent posted earlier in 2013.

Home prices increased by 0.70 percent in September for the combined 20-City and 10-City Housing Market Indices tracked by Case-Shiller.

Rapidly Rising Home Prices In The West: Another Housing Bubble On Tap?

Home prices continued rising in the West, with Las Vegas leading the pack with a 29.10 percent gain year-over-year although average home price in Las Vegas, Nevada remains 46 percent than its peak in February of 2006.

California also showed double-digit year-over-year growth for home prices with San Francisco at 25.70 percent, Los Angeles at 21.80 percent and San Diego posting 20.90 percent growth in home prices year-over-year.

Rapidly increasing home prices in the West are largely due to demand exceeding supply, but buyers may be sitting on the sidelines due to concerns over another housing bubble in the making.

Buyers in this scenario are aware of increasing home prices, but aren’t buying now to avoid higher prices later. Instead they are waiting to see what happens with current home prices and housing market conditions in the longer term.

Chicago, Illinois posted its highest year-over-year growth rate since 2005 while Cleveland, Ohio posted a growth rate of 5.00 percent for September as compared to a month-to-month growth rate of 3.70 percent.

This was the second lowest month-to-month growth rate for home prices, with New York City posting a month-to-month home price growth rate of 4.00 percent from August to September.

FHFA Reports Slight Gain In Home Prices

The Federal Housing Finance Agency reported stronger gains in home prices for properties financed with mortgages owned or guaranteed by Fannie Mae or Freddie Mac. In September, home prices reported by FHFA rose by 0.30 percent as compared to August’s growth rate of 0.40 percent.

On a year-over-year basis, FHFA reported a gain of 8.40 percent between the third quarter of 2012 and the third quarter of 2013. Adjusted for inflation, home prices as reported by FHFA have risen approximately 7.20 percent. FHFA noted that home prices are growing at a rate far above the rate of 1.20 percent reported for other “goods and services.”

Lower numbers of foreclosed homes are seen as a boost for home prices in general; as mortgage lenders tend to offer foreclosed homes for sale at low prices in order to reduce inventories of real estate owned.

26 11, 2013

Get The Low Down On Pending And Existing Home Sales This Month

Get The Low Down On Pending And Existing Home Sales This Month The National Association of REALTORS reported Monday that pending home sales dropped by -0.60 percent in October after falling at a revised rate of -4.60 percent in September. According to Lawrence Yun, chief economist for NAR, 17 percent of real estate agents reported delays in loan closings due to the government shutdown in early October.

Lenders were unable to verify borrower income through the IRS, which was closed during the shutdown. October was the fifth consecutive month with fewer pending home sales reported.

Homeowners who owe more on their mortgages than their homes are waiting to sell, and recent spikes in mortgage rates were cited as factors contributing to fewer pending sales.

Pending home sales are defined as homes for which signed purchase offers have been received and are considered an indicator of future home sales. The NAR notes that most pending sales close within 30 to 60 days of an offer being signed.

High Demand And Low Supply Of Homes Thwarts Buyers

Would-be homebuyers may be including their dream homes on their wish lists for the holidays as many areas continue to experience a short supply of homes against high demand. In desirable areas this can lead to bidding wars and homes being sold before they are listed for sale.

Cash buyers are benefitting from these situations, while first-time and moderate income buyers may be sidelined due to affordability issues and the inability to compete with cash buyers.

Mortgage rates fell last week and the previous week. While a recovering housing market has been causing home prices to rise, economists described current readings for pending sales as a “pause” in the housing market recovery and said that a significant decline in home sales could adversely impact overall economic recovery.

Regional Pending Sales Mixed

Pending sales for the Northeast and Midwestern regions increased slightly and declined in the South and West. This suggested to some economists and analysts that the formerly hot housing market is cooling off along with the weather. Some decline in home sales is expected during fall and winter months.

Sales Of Existing Homes Better Than Expected

October sales of existing homes surpassed expectations of 5.10 million sales with a reading of 5.12 million existing homes sold. Again, the government shutdown and related concerns of consumers and home builders were cited as reasons for sales falling shy of September’s reading of 5.29 million existing homes sold.

19 11, 2013

Housing Market Index Shows Builder Confidence Remains Above 50

Housing Market Index Shows Builder Confidence Remains Above 50 The National Association of Home Builders released its Housing Market Index for November on Monday. This month’s HMI reading was 54 against expectations of a reading of 55. October’s reading was also 54 after being downwardly revised.

Readings over 50 generally indicate that a majority of builders surveyed are confident in current housing market conditions, but the current pause came after two months of decline in home builder confidence. While the short term index readings are lower than in past months, the HMI is currently 20 percent higher than last year.

David Crowe, chief economist for NAHB said that “the fact that builder confidence remains above 50 is an encouraging sign.” Mr. Crowe also cited federal debt and budget issues as factors that keep builders and consumers from building and buying homes.

Fluctuating Mortgage Rates Of Concern To Builders, Home Buyers

Home builders are also subject to the impact of volatile mortgage rates, which can create affordability issues for first time and moderate income home buyers. There is some good news concerning mortgage rates as the Federal Reserve announced its plant to keep its quantitative easing program in effect in the coming months.

QE was implemented in 2012 and consists of the Fed purchasing $85 billion per month is treasury and mortgage-backed securities with the goal of keeping long-term interest rates and mortgage rates low.

Home builder confidence readings are not in synch with construction rates, as builder confidence was rapidly driven by excessive demand for homes against minimal inventories of available homes in many areas.

Components of November’s HMI provide more precise indications of builder confidence. November’s reading for confidence in sales of single family homes within the next six months fell from 61 in October to 60 in November.

Builder sentiment for current home sales was unchanged at 58 and the November reading for builder confidence in buyer foot traffic fell by one point from 43 in October to 42.

Regional Home Builder Confidence Readings Mixed

Regional builder confidence readings for November were as follows:

Northeast: This region gained 14 points with a reading of 44 for November.

South: Builder confidence rose by one point to a reading of 55.

Midwest: November’s reading declined by eight points to 54.

West: The reading for November was one point lower at 58.

Home sales are typically slower during the holiday season and winter months.

4 11, 2013

What’s Ahead For Mortgage Rates This Week – November 4, 2013

What's Ahead For Mortgage Rates This Week November 4, 2013 Last week’s economic news came from a variety of sources. Most significant was the Fed’s Federal Open Market Committee statement after its meeting ended Wednesday. The statement indicated that the Fed saw moderate economic growth. FOMC did not taper its purchase of MBS and Treasury securities.

The FOMC statement announced the committee’s intention to closely monitor economic and financial developments “in the coming months,” which suggested that the FOMC is taking a wait-and-see position on reducing its $85 billion monthly asset purchases.

Mortgage Rates, Jobless Claims Fall

The Fed’s asset purchase program, also known as quantitative easing, was implanted in 2012 with a goal of stabilizing mortgage rates and other long-term interest rates.

The National Association of REALTORS® reported that pending home sales fell by 5.60 percent in September. Uncertainty over the FOMC’s decision concerning tapering its asset purchases during its September meeting and concerns over a then potential government shutdown.

These were noted as primary reasons for the drop in pending home sales, which are measured by signed real estate contracts. Pending Home Sales are used for estimating future closings and mortgage loan activity.

Tuesday’s economic reports included the Case-Shiller Home Price Indices for August. Home prices increased by 12.80 percent year-over-year in August as compared to 12.30 percent year-over-year for August 2012. August’s reading shows a dampened pace of rising home prices.

The Conference Board, a research organization, reported that consumer confidence fell from a reading of 80.2 in September to 71.2 in October. A reading of 75.00 was expected, but consumer confidence crashed as the government shutdown and its consequences diminished consumer and investor confidence.

According to ADP, a payroll administration firm, private-sector payrolls came in well shy of the expected 150,000 new jobs with a reading of 130,000 jobs. October’s reading was also lower than September’s reading of 145,000 new jobs.

Weekly jobless claims brought good news; new jobless claims came in at 340,000 and fell by 10,000 new claims from the previous week’s 350,000 new jobless claims. Expectations had been for 335,000 new jobless claims.

Freddie Mac reported that average mortgage rates fell. The rate for a 30-year fixed rate mortgage dropped by three basis points to 4.10 percent, with discount points down from 0.80 percent to 0.70 percent.

The average rate for a 15-year mortgage fell by four basis points to 3.20 percent, with an uptick in discount points from 0.60 percent to 0.70 percent. The rate for a 5/1 adjustable rate mortgage dropped by four basis points to 2.96 percent with discount points unchanged at 0.40 percent.

What‘s Coming Up

There is no housing or mortgage economic news scheduled this week other than Freddie Mac’s PMMS due on Thursday.

Reporting for this week includes Leading Economic Indicators, Weekly Jobless Claims, Non-farm Payrolls and the National Unemployment Rate will be posted. The University of Michigan’s Consumer Sentiment Index will be released Friday.

This week’s economic reports are expected provide a general gauge of the economy and information about how consumers are responding to recent economic events and news.

31 10, 2013

Fed Meeting Minutes Release Hope Of A Stronger Economy With New Measures

Fed Meeting Minutes Release Hope In A Stronger Economy With New Measures The Federal Reserve’s Federal Open Market Committee released its customary after-meeting statement on Wednesday. In the context of meeting its dual mandate of stabilizing pricing and achieving maximum employment.

The FOMC statement indicated that although the economy has improved in areas including household spending and labor market conditions, the national unemployment rate remains high and the housing market recovery has slowed.

Fed Says Fiscal Policy Restraining Economic Growth

The FOMC statement said that current fiscal policy and “retrenchment” is restraining economic growth as evidenced by failure to achieve benchmarks set by FOMC as indicators of a healthy economy. Benchmarks include a national unemployment rate no higher than 6.50 percent and achieving an inflation rate of 2.00 percent.

September’s unemployment rate was 7.20 percent and inflation has run consistently below the FOMC objective. Not to be confused with the FOMC statement’s references to monetary policy, the term fiscal policy refers to the government’s budgetary policy.

Committee Sees “Moderate“ Economic Growth, Seeks Improvement

While the Fed cited “moderate economic growth,” the FOMC statement clearly indicated that the committee is not ready to alter its current policy of quantitative easing and estimates that it will maintain the target federal funds rate at between 0.00 percent and 0.250 percent for a considerable time after the QE bond-buying program is phased out.

The Federal Reserve currently purchases $40 billion per month in mortgage-backed securities and $45 billion in Treasury securities as part of its QE program. The Fed will also continue its existing policy of reinvesting principal payments it receives on holdings of agency debt and MBS, as well as selling maturing Treasury securities at auction.

These activities are part of FOMC’s strategy for supporting low mortgage rates and mortgage markets while making “broader financial conditions more accommodative.” The Fed expects these measures to assist with a stronger economic recovery and stabilizing inflation at the Fed’s target rate.

Fed To Continue Monitoring Economic, Financial Developments

FOMC reasserted its position that any decision to alter current QE policy is not solely subject to economic benchmarks, but will be based on the Committee’s close review of labor market conditions, inflation pressures, and financial developments.

FOMC commented in its statement that it will continue to review economic and financial conditions in the “coming months” and will decide when to taper its monthly asset purchase according to what is learned.

This suggests that changes to the present QE policy are not anticipated for several months, and that the effects of QE combined with dampened speculation may help with keeping mortgage rates lower.

29 10, 2013

What You Should Know About Pending Home Sales This Month

What You Should Know About Pending Home Sales This Month Pending home sales fell in September by -5.60 percent, and were 1.20 percent lower year-over-year. This is the first time in more than two years that pending home sales have fallen below year-earlier readings. September’s reading was below August’s reading of -1.60 percent.

The National Association of REALTORS, which released the report, expects lower home sales for the fourth quarter of 2013 and flat sales into 2014. NAR provided good news in its forecast of 10 percent growth in existing home sales in 2013 as compared to 2012.

A spike in mortgage rates in August coupled with rapidly rising home prices were seen as major factors leading to lower pending sales.

Real estate analysis firm CoreLogic has reported that August home prices were 12.4 percent higher than for the previous 12 months; this was the fastest annual growth rate for home prices since February 2006.

While positive news for homeowners and housing markets, rapidly rising home prices can cause some buyers to postpone or cancel their plans for purchasing a home.

Economic, Government Policy Challenges Reduce Buyer Enthusiasm

In addition to higher mortgage rates and home prices, recent concerns of investors and consumers about the government shutdown and its consequences were noted as factors contributing to lower pending home sales.

High unemployment rates are a lingering influence, as would-be home buyers waver in their decisions to take on a long-term obligation when unemployment rates remain higher than normal and job security is questionable.

Fed Expected To Maintain Bond–Buying At Current Level

The Federal Open Market Committee of the Federal Reserve meets this week and is expected to maintain its current level of $85 billion per month in Treasury securities and mortgage-backed securities. The fed’s program is intended to keep long-term interest rates, including mortgage rates, low as a means of supporting the economic recovery.

Mortgage rates are affected by bond prices; if the fed reduces its monthly bond purchases, demand for bonds would fall, and mortgage rates would be expected to rise.

Mortgage rates spiked in August on expectations that the FOMC would taper its monthly bond-buying, but have since trended lower.

28 10, 2013

What’s Ahead For Mortgage Rates This Week – October 28, 2013

What’s Ahead For Mortgage Rates This Week – October 28, 2013 Federal government agencies issued reports that were delayed by the government shutdown; and Freddie Mac reported that average mortgage rates fell for all types of loans it reports. The National Association of REALTORS issued its Existing Home Sales report on Monday. While 5.30 million home sales were expected an annual basis, September’s reading fell short at 5.29 million sales.

August’s reading was adjusted from an original reading of 5.48 million, which equaled July’s reading. Higher mortgage rates and home prices were cited as contributing to the slip in September’s sales.

The Bureau of Labor Statistics issued the Nonfarm Payrolls report for September on Tuesday. September’s reading indicated that only 148,000 jobs were created as compared to economists’ expectations of 185,000 jobs and August’s reading of 173,000 new jobs.

National Unemployment Rate Dropped

Analysts indicated that the modest reading for September was caused by uncertainty over the government shutdown, and also indicated that the economy is growing, but continues to experience ups and downs. The national unemployment rate for September fell from August’s reading of 7.30 percent to 7.20 percent.

According to the Commerce Department, construction spending rose by 0.60 percent in August as compared to expectations of 0.50 percent and July’s revised reading of 1.40 percent, of which 1.20 percent represented spending on residential construction. The Federal Reserve characterized residential construction as growing at a “moderate pace” in September.

The Federal Housing Finance Agency reported that August sales of homes connected with Fannie Mae and Freddie Mac grew by 8.50 percent on a seasonally adjusted year-over-year basis. This represented monthly growth of 0.30 percent and was the smallest rise since September 2012.

Good News! Mortgage Rates Fall

Thursday brought encouraging news with Freddie Mac’s Primary Mortgage Market Survey. Average mortgage rates fell across the board with the average rates for a 30-year fixed rate mortgage falling from last week’s 4.28 percent to 4.13 percent.

The rate for a 15-year fixed rate mortgage dropped from 3.33 percent to 3.24 percent, and the rate for a 5/1 adjustable rate mortgage dropped from 3.07 percent to 3.00 percent. Discount points rose to 0.8 percent for 30 and 15-year fixed rate mortgages and stayed steady for 5/1 adjustable rate mortgages at 0.4 percent.

Weekly Jobless claims were higher than expected at 350,000 new claims; analysts had expected 337,000 new claims. The latest reading was below the prior reading of 362,000 new jobless claims.

The University of Michigan’s Consumer Sentiment Index was released Friday with some telling results. October’s reading 73.2 from September’s revised reading of 77.5. A reading of 74.8 had been expected based on September’s original reading of 75.2. Consumers interviewed for the October CSI indicated that the federal government was the major factor in lower confidence in the economy.

What’s Coming Up

A number of federal agencies are still delaying their reports. Next week’s scheduled economic news includes the Case-Shiller Housing Market Index, Consumer Confidence report and ADP’s Employment Report. Weekly Jobless Claims and the Freddie Mac PMMS will be issued Thursday.

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