Tuesday, June 30, 2015

Pending Home Sales Hit 9-Year Highs

Pending home sales hit their highest level in over nine years in May, indicating that the strong existing and new home sales announced last week are likely to be repeated again for June and maybe even July activity. The National Association of Realtors® (NAR) said that its Pending Home Sales Index (PHSI) rose 0.9 percent from April's level of 11.6 to 112.6 in May. The report came in ahead of one survey's expectations of a 0.6 percent increase, but behind the Reuters poll of 1.2 percent.

The rise in the PHSI put it 10.4 percent higher than in May 2014 and marked its ninth straight year-over-year gain. It is now at its highest point since April 2006 when it hit 113.7.

It was also the fifth straight month-over-month increase and NAR's chief economist Lawrence Yun said this increases the likelihood the home are heading into their best year since the housing crisis began. "The steady pace of solid job creation seen now for over a year has given the housing market a boost this spring," said Yun. "It's very encouraging to now see a broad based recovery with all four major regions showing solid gains from a year ago and new home sales also coming alive."

The PHSI is a leading indicator based on contract signings for home purchases including single family homes, condos, co-ops, and townhouses. These contracts general result in a sale within 60 days.

Yun does warn that this year's stronger sales amidst similar housing supply levels from a year ago have caused home prices to rise to an unhealthy and unsustainable pace. "Housing affordability remains a pressing issue with home-price growth increasing around four times the pace of wages," adds Yun. "Without meaningful gains in new and existing supply, there's no question the goalpost will move further away for many renters wanting to become homeowners."

Month-over-month performance was mixed by region but all four areas scored year-over-year growth. The index increased in the Northeast by 6.3 percent for the month and 10.6 percent on an annual basis while the Midwestwas down 0.6 percent from April but remained 7.8 percent above the May 2014 level.

Pending home sales in the South decreased 0.8 percent to an index of 127.8 in May but are still 10.6 percent above last May. The index in the West rose 2.2 percent in May to 104.5, and is 13.0 percent above a year ago.

Bloomberg said that solid momentum appears to be building inside of the housing market. "Today's report points to further strength for the existing home sales report which surged in data posted last week. Housing is getting a boost from the strong jobs market together perhaps with the prospect of rising mortgage rates which may be pushing buyers into the market."

Saturday, June 27, 2015

Mortgage Rates Hit New 2015 Highs

Mortgage rates were already hovering near 2015 highs as of yesterday. Today's spike sent them easily above the previous annual high, set on June 10th. Normally, day to day market movement isn't big enough to cause a change in the actual contract rates being quoted. In other words, it's usually the upfront costs (or rebate) that's changing for any given rate. Today's movement was enough to make a new contract rate more prevalent when it comes to conventional 30yr fixed loans for top tier scenarios. While there still are plenty of quotes going out for lower rates, 4.25% now takes over as the most common.

But wait... Didn't Freddie Mac just yesterday announce it's weekly rate survey showing 4.02%?! Indeed they did, and there's no reason to doubt the long term accuracy of those numbers, but there are a few major caveats. First of all, quoted rates often include points. There's nothing wrong or deceptive about that and Freddie clearly conveys associated points in its report. But it's important to understand that the presence of points can make comparisons between two sources of info much more difficult.

Were we to assume the 0.7 points conveyed in the Freddie survey, today's most prevalent rate would easily be 4.125%, and the average effective rate would be around 4.09%. If Freddie had the luxury of instantly re-conducting its survey this afternoon, the 4.02% reported yesterday would likely be very close to 4.09% today. Herein lies the other caveat: Freddie's data is from survey responses that come in from Monday through Wednesday. That's not a problem when markets are flat, but rates went higher all week. All of Freddie's survey responses from Monday were in a completely different reality compared to today.

The bottom line is that rates are not as low as they were yesterday. Rates are not as low as they were earlier this week. And for the average mortgage applicant with flawless credit, rates are never as low as most reports indicate. The bigger question always is: are they going higher? Definitely maybe! If you've been following along for any length of time, you know we've been in heavy 'defense' mode since early May, and even as early as late April. Nothing about that has changed. There continues to be more risk than reward when it comes to holding off on locking, and next week brings tremendously increased volatility. In fact, much of today's weakness was a defensive preparation on the part of financial markets for that potential volatility.

Wednesday, June 24, 2015

5 Places Where You Should Never Give Your Social Security Number

With rampant stealing of personal information by other countries, and regular criminals, we need to be more careful than ever. Who has a right to your social security number? Some entities do, but read on:

Monday, June 15, 2015

Thinking Of Downsizing?

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If you are thinking of downsizing, here is an interesting article. If you would like more information, please contact me! I'm always willing to answer your questions. Thanks!

Friday, June 12, 2015

A Relatively Light Week...

In a relatively light week for economic data, the biggest market moving news seemed to come from international events.  Greece, which has long been struggling financially and has been making plans to remove itself from the Eurozone currency, has seemed to relent on that plan for the time being.

The international community has been doing everything possible to place tremendous pressure on Greece to stop their plan.  With Greece last week missing a payment due to the IMF (International Monetary Fund) it appears that Greece has finally recognized that attempting to go on its own currency would be devastating to not only their own economy, but possibly impacting the world economy as well.

Last week the labor department reported that the economy added 280,000 new jobs which is 60,000 more than most analyst’s expectations. The national unemployment rate rose by 1/10th up to 5.5 percent for the month of May.  At first glance the increase would be considered negative, however the reason for the increase is a significant inflow of people attempting to re-enter the workforce.  In the past increases in unemployment were due to people losing their jobs.  In this case it appears that workers are believing stronger in employment opportunities and once again attempting to start working again.

Last week’s much stronger than expected employment report was bolstered once again by this past Tuesday’s JOLTS data.  (The JOLTS data measures job openings)  The JOLTS Report released for April showed a very large jump in available job openings rising from 5,109 million all the way up to 5.376 million.  This is the highest number of job openings since the data started being tracked in 2000.  The current level is 22 percent higher than the same time last year.

The recent rise in mortgage rates over the last few weeks has certainly taken its toll on reducing mortgage applications.  However, last week, with a slight drop in rates, applications for purchases and refinances both jumped.  Applications for purchases, after having declned 3.0 percent in the prior week, increased 10.0 percent according to the Mortgage Bankers Association of America.  Refinances also leaped 7.0 percent after plummeting 12.0 percent in the prior week.

In other news, consumers finally started showing signs of returning to the stores with the retail sales data indicating an increase of 1.2 percent for the month of May.  This positive report comes after most of the year sales reports have been for the most part stagnant.

Lastly, first time jobless claims continue to run at very healthy economic level.  Claims for the week ending June 6th were at 279,000.  This is only slightly higher than the prior week’s 277,000.  Claims below 300,000 are considered a very healthy indication for the labor force.

Next week’s potential market moving reports:

·        Monday June 15th – Industrial Production
·        Tuesday June 16th – Housing Starts
·        Wednesday June 17th - MBA Applications, FOMC Announcement & FOMC Forecasts
·        Thursday June 18th - First Time Jobless Claims & Consumer Price Index

As your mortgage professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends.  I welcome the opportunity to serve you in any way I possibly can.  Please feel free to reach me at (707) 455-7070.

Tuesday, June 9, 2015

Despite Improvements, Foreclosures Still Double Pre-Crisis Pace

It continues to be clear that the foreclosure crisis is winding down while ongoing elevated levels of mortgage distress mean it could be a long time before it actually ends. CoreLogic's April 2015 National Foreclosure Report shows dramatic year-over-year declines in both delinquencies and completed foreclosures and a foreclosure inventory that has shrunk to less than a third of its peak level. It also shows these statistics remain at levels far above historic "norms."

The company said that there were 40,000 completed foreclosures nationwide in April compared to 50,000 in April 2014, a decline of 19.8 percent year-over-year and down 65.8 percent from the foreclosure peak in September 2010.

The rate of completed foreclosures in April was nearly identical to the previous month. Both were reported at 40,000 although CoreLogic said there was a month-over-month decline of 1.1 percent. As a basis of comparison completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006.

Read on HERE

Saturday, June 6, 2015

Sputtering Activity

Application activity is sputtering based upon the Mortgage Bankers Association’s most recent application index for the week ending May 29th.  It is not surprising that mortgage applications have slowed given the recent rise in mortgage rates.  Applications for purchase loans declined 3.0 percent.  Refinances, which are far more interest rate sensitive, plummeted 12.0 percent.  Although purchase applications are down, they remain ahead of last year by 14 percent.

Construction spending is once again showing signs of life.  April’s reading indicates spending is up 2.2 percent which is well above many analyst’s expectations.  Spending on residential construction rose 0.6 percent with strong gains posted for both single-family and multi-family homes. It does not come as much of a surprise that spending has increased based upon April’s jump in housing starts and permits.

Construction spending in the private non-residential area looks very strong with a jump of 3.1 percent.  The increase was led by gains in the power and office sectors. The public sector is also spending strongly on highways, streets, and educational building. The gain in public spending came entirely from the state and local governments as federal construction spending declined for a second straight month.

On Wednesday ADP released their monthly estimate on employment.  ADP’s latest estimate showed that private payrolls rose a moderate 201,000 in May.   ADP unfortunately has a spotty track record on accurately predicting payroll numbers.  Just last month ADP missed the April numbers by a long shot.  ADP forecast only 169,000 new jobs, however the actual jobs numbers showed a healthy 213,000 increase.  On Friday the national employment figures will be released.  Stay tuned to see how accurate ADP is this month.

First time jobless claims continue to run very low, down 8,000 in the May 30 week to 276,000.  The 4-week average is up slightly to 274,750.  Overall the 4 week average is running about 5,000 lower than the same time last month.  Continuing jobless claims are telling the same story.  They are down by 30,000.

Catching the markets by surprise on Thursday, the International Monetary Fund (IMF) managing director Christine Lagarde, announced at a Washington briefing that the Fed should wait until the first half of 2016 to raise interest rates.  The IMF making a statement or recommendation is virtually unheard of.

Ms. Lagarde in her speech stated that there are many indications of a potential U.S. economic slowdown as well as a worldwide one.  The IMF believes that raising interest rates in the U.S. would not only negatively impact the U.S. economy, it could impact global markets as well.

Next week’s potential market moving reports:

·        Wednesday June 10th - MBA Applications
·        Thursday June 11th - First Time Jobless Claims & Retail Sales
·        Friday June 12th – Producer Price Index

As your mortgage professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends.  I welcome the opportunity to serve you in any way I possibly can.  Please feel free to reach me at (707) 455-7070.

Wednesday, June 3, 2015

Housing Reports Dominated

Housing reports dominated the market this week with the Federal Housing Finance Agency Report kicking things off.  The FHFA house price index rose a lower-than-expected 0.3 percent in March. The gain for FHFA is below most analyst’s expectations however the year-on-year rate in at a moderate 5.2 percent higher.  This is only down 0.1 percent from February's revised 5.3 percent.
When you look at the breakdown for the FHFA report there are considerable positives to take away from it.  7 of 9 regions showed increases led by the East North Central, East South Central, and the Middle Atlantic. Unfortunately a second straight monthly decline was reported in the West South Central with New England also in the minus column. The year-on-year comparisons for the West North Central and Middle Atlantic area are the weakest at only a plus 3.2 percent and plus 3.5 percent respectively.  The Mountain region came in the strongest at plus 7.2 percent followed by the Pacific at plus 6.8 percent.

Home prices continue to show solid gains according to the Case-Shiller Home Price Index.  The Case-Shiller for the adjusted 20 city report showed solid gains with a 1.0 percent increase.  Annualized that is 12.0 percent which is considered quite healthy for real estate appreciation.  Year-on-year prices are 5.0 percent higher.

More great news for housing came from the new home sales data that showed sales increased 6.8 percent in April.  Strength in the report came from the South which is the largest and a very important housing region and where sales rose 5.8 percent.

Supply of new homes rose slightly in the month, to 205,000.  Supply on the other hand fell to 4.8 months from 5.1 based upon current purchasing volume.  Hopefully low supply will encourage builders to bring more homes on the market.  Prices are mostly favorable indicating a 4.1 percent rise in the median price to $297,300 for a strong 8.3 percent year-on-year gain.

Of all the housing reports this week, pending home sales are sending off the most consistently positive signals of the housing market.  Pending sales are up for four straight months.  Sales jumped a much higher than expected 3.4 percent in April following an upward revised 1.2 percent gain in March. April gains were concentrated in the Northeast and Midwest with the South up slightly and the West up fractionally.  Overall pending home sales are up 14.0 percent from the same time last year.  Reports from real estate and mortgage professionals from around the country indicate that next month’s reports will likely will be even stronger.

This week’s potential market moving reports:

·        Wednesday June 3rd - MBA Applications & ADP Employment Report
·        Thursday June 4th - First Time Jobless Claims
·        Friday June 5th – National Employment Situation

As your mortgage professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends.  I welcome the opportunity to serve you in any way I possibly can.  Please feel free to reach me at (707) 455-7070.