Pat Hill Realtor

Housing Market Update

>> Market Update

INFO THAT HITS US WHERE WE LIVE There wasn't a ton of housing news last week, but one can always find a few significant items. For example, foreclosure filings in February were down 2% from January and up just 6% from a year ago -- their smallest increase in four years. Most significantly, in the six states that made up 61% of the national total for February, foreclosure filings were down 15% from a year ago. We're definitely heading in the right direction. On the mortgage front, the Mortgage Bankers Association reported applications for purchase loans were up a seasonally adjusted 5.7% from the week before. It looks like people are trying to take advantage of today's historically low rates before the end of the month. That's when the Fed stops buying mortgage bonds, which has helped keep rates low, and no one knows what will happen once that Fed buying program ends. Mortgage applicants also have their eye on the homebuyer's tax credit, which requires a signed contract by April 30. Finally, current buyers are getting today's great prices, which may not be headed much lower. One property search site announced that sellers had lowered prices on less than 20% of their listed homes, for the first time since they started tracking price reductions last April.

>> Review of Last Week SLOWLY RISING...

Like bread dough in the pan, the markets kept rising, though ever so slowly, last week. Basically, investors remained positive if not exactly exuberant. There were no big market moves to speak of, the result of no big news coming out of a fairly sparse economic calendar. Economic readings included January's trade deficit shrinking to $37.3 billion, with the total volume of imports plus exports finally falling after months of rebounding. But experts weren't worried, since this happens in normal times and total trade volume remains up at a 26% annual rate since last Spring's bottom. We had new unemployment claims down by 6,000 last week. Continuing claims increased 37,000, but the four-week average stayed at its lowest level in around fourteen months. Some observers expect a large payroll increase in March. Let's hope they're right. Friday's February Retail Sales report was a stunner. Overall retail sales were UP 0.3% -- way better than expected -- and sales excluding autos were UP 0.8% -- way WAY better than expected! These are amazingly strong numbers, considering they're for the year's shortest month, whose shopping days were shortened even more by record snow storms and other forms of harsh weather in several regions of the country. Those worried about the consumer's participation in this recovery, please take note! For the week, the Dow headed UP 0.6% to 10624.69; the S&P 500 hiked UP 1.0%, to 1149.99; while the Nasdaq climbed UP 1.8%, to 2367.66. A ton of supply hit the bond market last week, but demand was pretty strong too. Treasuries did well selling at lower-than-expected yields. There were also successful offerings in the municipal and corporate markets. The FNMA 30-year 4.5% bond we watch ended the week down just a tad, 31 basis points, closing at $100.88. On average, mortgage rates remain at their historically low levels, dipping slightly in last week's Freddie Mac Survey.

>> This Week’s Forecast HOME BUILDING, MANUFACTURING, INFLATION AND, OH YES, THE FED...

A few useful economic indicators this week, highlighted by the Fed's latest pronouncement on the funds rate come Tuesday. No one expects any movement on the rate just yet. Also Tuesday will be another take on the mindset of homebuilders, with Housing Starts and Building Permits. Lots of data on the manufacturing sector that's been leading the recovery, with the Empire State and Philadelphia Fed indexes bracketing Industrial Production and Capacity Utilization. Finally, let's keep an eye on inflation, with PPI wholesale numbers on Wednesday and CPI consumer figures the next day.

by Pat Hill | 0 Comments

Housing Market Last Week

>> Market Update 

INFO THAT HITS US WHERE WE LIVE  New home sales fell 11.2% in January to a record low level. Existing home sales weren't very pretty either, down 7.2%, though they're UP 11.5% over a year ago. Let's remember that last Fall we all thought the tax credit was going away at the end of November. Many sales got pushed into October and November, causing sales drops the next two months. But the median new home price is down just 2.4% year over year and the average price is now UP 3.7%. For an existing home, the median price is unchanged from a year ago and the average price is UP 2.6%. More evidence home prices are stabilizing, with some analysts expecting modest gains for the year. Supporting this, the Case-Shiller home price index was UP 0.3% in December, its seventh straight monthly rise. 

Even more interesting was the news that this has actually been a very good decade for home prices. From January 2000 to December 2009, prices were UP 46%, making residential real estate a clearly profitable investment. And that's not even factoring in the mortgage interest and real estate tax deductions homeowners get!

Finally, we've reported that the Fed will stop buying mortgage bonds at the end of this month and experts feared rates may edge up. Now analysts say mortgage rates might not move much at all. This stems from the fairly calm market reaction to last week's hike of the Fed's discount lending rate (which is NOT the key Fed funds rate). Seeing little or no move in today's low mortgage rates is good news for the near term.

>> Review of Last Week

MINOR SLIP... Another volatile week on Wall Street, as investors drove stock prices down two days, then up two days, with all three major indexes slipping just slightly for the week. Things got off to a weak economic start with Consumer Confidence dropping sharply in February, much like the temporary drop in January 1996 when, curiously, there was another big blizzard on the East Coast.

Folks didn't much like the drop in new home sales either, but good news did come with the Richmond Fed Index, which showed that manufacturing in the mid-Atlantic region went from -2 in January to +2 in February. Then there was Fed Chairman Ben Bernanke's monetary policy report to Congress, which he serves up every six months. Bernanke assured everyone rates will remain low, a message loved by investors.

The up-and-down news continued with durable goods UP a solid 3.0% for January, showing business is investing in equipment, usually a precursor to their investing in jobs. Not just yet, though, as weekly unemployment claims edged up a tad. Then Friday we had the blockbuster news that real GDP for Q4 was revised UP to a 5.9% annual growth rate. People who still can't see a recovery should also look at the Chicago PMI. This gauge of Midwest manufacturing hit a five-year high of 62.6 for February.

For the week, the Dow was down 0.7%, to 10325.26; the S&P 500 was down 0.4%, to 1104.49; while the Nasdaq skidded down 0.3%, to 2238.26.

Bonds ended the week pretty nicely as investors sought safety in a week featuring strong Treasury auctions. The FNMA 30-year 4.5% bond we watch ended UP 87 basis points, closing at $101.09. As a national average, mortgage rates inched up a little, but still remain at very low levels.

>> This Week’s Forecast

INFLATION, MANUFACTURING, HOMES, JOBS... This week has everything! We start off with PCE, the Fed's favorite reading on inflation, followed by the ISM take on the state of manufacturing, a sector that's been leading the recovery. Thursday, Pending Home Sales looks to the near future of the housing market. Then the week ends with the all-important February jobs report. We will be looking for some encouraging signs on that front.

by Pat Hill | 0 Comments

Open House in Lionsgate on Tuesday

March 2010
Su	Mo	Tu	We	Th	Fr	Sa
28	1	2	3	4	5	6
7	8	9	10	11	12	13
14	15	16	17	18	19	20
21	22	23	24	25	26	27
28	29	30	31	1	2	3
4	5	6	7	8	9	10

Lionsgate, Overland Park  -  We invite everyone to visit our open house at 14718 OUTLOOK Street on March 2 from 11:00 AM to 1:00 PM.

Property information

by Pat Hill | 0 Comments

Housing Market

>> Market Update 

INFO THAT HITS US WHERE WE LIVE  The National Association of Realtors last Thursday reported existing home sales UP 27.2% for the last three months of 2009 versus a year earlier. This amounted to a seasonally adjusted annual rate of 6 million homes. -- a 13.9% increase over the third quarter's annual rate of 5.29 million homes. Clearly, buyers are taking advantage of the low mortgage interest rates and the tax credit that was extended and expanded by Congress.

The existing home sales increase from Q3 to Q4 occurred in 48 states and D.C., with 32 of those states showing double-digit gains. Year-over-year, sales were higher in 49 states and D.C., up by double digits in all but 3 states. And distressed property made up just 32% of Q4 sales versus 37% of sales a year ago. The national median price of an existing single-family home, at $172,900, was down 4.1% year-over-year -- but that was the smallest price decline in over two years. Even better, out of the 151 metropolitan statistical areas studied, 67 of them showed a RISE in the median home price!

>> Review of Last Week

ROCK 'N ROLL... It was another raucous week in the stock markets, but this time the festivities ended with all three major averages headed UP! There wasn't a lot of US economic news to stir things up, so investors instead fretted over Greece. Stock prices went up and down with the news, but when all was said and done, Greece was promised the support of the European Union (EU), the International Monetary Fund (IMF), the European Central Bank and the European Commission. Sure sounds like enough help. We note there is no major US bank exposure in Greece. Investors also got shook about China tightening its credit situation, but, hey, they're just trying to prevent their double-digit economic growth from getting out of hand. 

Wednesday saw the trade deficit for December come in at $40.2 billion, an increase of $3.8 billion over the prior month, but still $1.7 billion smaller than last year. Exports are actually up eight months in a row, growing at a 27.1% annual rate. Total international trade -- imports and exports --is up at a 31% annual rate since bottoming in April last year, and up at a 42% annual rate in the last three months.

The week ended on more good news. Retail sales were UP 0.5% in January (UP 0.8% including upward revisions to previous months). In the past six months retail sales are UP 7.9% at an annual rate and since September they've blasted UP 10.9%. Observers put this to personal incomes on the rise, a substantial reduction in consumer debt and the beginning signs of improvement in the job market. In line with this last point, initial unemployment claims fell to 440,000, with the four-week moving average now down to 469,000 -- around 100,000 lower than six months ago. Continuing claims are now down to 4.538 million.

For the week, the Dow was UP 0.9%, to 10099.14; the S&P 500 was also UP 0.9%, to 1075.51; while the Nasdaq surged UP 2.0%, to 2183.53.

Bonds endured an up-and-down week too, mimicking stocks but finally ending in the opposite direction -- down for the week. The FNMA 30-year 4.5% bond we watch ended down 50 basis points, closing at $100.91. Nevertheless, mortgage rates continued at their historically low levels. But homebuyers and owners looking to refinance should remember the Fed says it will stop buying mortgage bonds March 31. Experts feel this will send rates up a bit.

>> This Week’s Forecast

NEW READS ON HOMEBUILDING, THE FED AND INFLATION...Markets are closed Monday for Presidents' Day, then Wednesday we get a look at the mindset of homebuilders, with Housing Starts and Building Permits. The day will also reveal the FOMC Minutes from the Fed's last meeting in January. Thursday's PPI measures wholesale inflation. Then Friday we get the CPI consumer inflation reading that the Fed pays such close attention to.  

by Pat Hill | 0 Comments

Breaking News

Breaking News

HUD TAKES ACTION TO SPEED RESALE OF FORECLOSURES

With certain exceptions, FHA currently prohibits insuring a mortgage on a home owned by the seller for less than 90 days. This temporary waiver will give FHA borrowers access to a broader array of recently foreclosed properties.

The waiver will take effect on February 1. 2010 and is effective for one year, unless otherwise extended or withdrawn by the FHA Commissioner.

Limits to waiver:

1. All transactions must be arms length.
2. In cases in which the sales price of the property is 20% or more above the seller’s acquisition cost, the waiver will only apply if the lender meets certain specific conditions.
3. The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program. Specific condition and other details are in the text of the waiver at www.hud.gov

by Pat Hill | 0 Comments

Housing Market Update 1-18-2010

>> Market Update

INFO THAT HITS US WHERE WE LIVE Our hearts go out to the people of Haiti recovering from the terrible tragedy of last Tuesday's earthquake. We know everyone's thoughts are with the Haitians. It has been inspiring to see the American people support the relief efforts in so many ways. Last week, housing market news was thin on the ground. It was good to see that fixed-rate mortgage rates dropped again, according to Freddie Mac's weekly survey of conforming mortgages, which came out Thursday. The report was accompanied by encouraging words from Freddie Mac's chief economist Frank Nothaft, who said: "The Federal Reserve recently reported positive news in both the housing market and the overall state of the economy in its January 13 regional economic report....Economic activity improved in 10 of its 12 districts. Home sales...increased due in part to the home-buyer tax credit and house prices appeared to have changed little since its last report." The bottom in home pricing appears to have formed in many areas of the country.

>> Review of Last Week

DOWN FOR THE WEEK, UP FOR THE YEAR... Things weren't very pretty in the stock markets on Friday, the drop in prices offsetting earlier gains, so all market indexes ended down for the week, though still UP for this very young year. Let's hope the overall economy stays UP as well! There certainly were some encouraging signs in last week's economic reports. The trade deficit in November grew by $3.2 billion, a little more than expected. But the key part of the report showed the total volume of trade has been shooting upward for the past several months. Exports, since bottoming in April, are UP seven straight months, growing 24.4% annually. December retail sales were down 0.3%, which disturbed some people who apparently missed the big upward revisions to November's numbers. If we put in these revisions, sales gained 0.3% overall, 0.5% excluding autos. Over the last three months, retail sales are up at an 11.3% annual rate (7.1% excluding autos). Of course, jobs continue to be a concern and Initial Unemployment Claims were up slightly for the week, but the four-week moving average dropped to its lowest level since August 2008. Continuing Claims are now down to 4.6 million. The week ended with a tame inflation number, the Consumer Price Index (CPI) up just 0.1% for December. We also had industrial production UP 0.6% for December, bringing it to a 9.6% annual rate over the past six months. The influential Empire State Index zoomed from 4.5 to 15.9 in a single month, showing a nice rebound for manufacturing in the New York region. For the week, the Dow was down 0.1%, to 10609.65; the S&P 500 was down 0.8%, to 1136.03; while the Nasdaq was down 1.3%, to 2287.99. A benign inflation reading and a sliding stock market helped bond prices end the week headed in the right direction. The FNMA 30-year 4.5% bond we watch ended UP 66 basis points for the week, closing at $100.75. Mortgage rates should stay at their historically low levels for a while longer and, as noted above, average rates dropped in the most recent Freddie Mac report.

>> This Week’s Forecast

NEW HOMES NEWS... The markets will be closed Monday for Martin Luther King Jr. Day. The four days remaining will give us a few interesting indicators. Wednesday we'll have another look at the market for new homes, with December figures for Housing Starts and building Permits. We'll also have the PPI reading on wholesale inflation. Q4 corporate earnings season continues and we'll keep an eye out for more signs of economic recovery. There will be lots of action, from Bank of America and Goldman Sachs, to IBM and Google, and from Starbucks to McDonald's.

by Pat Hill | 0 Comments

Housing Market for Week of December 13, 2009

Market Update

INFO THAT HITS US WHERE WE LIVE

Last week gave us more proof the country's housing market is heating up. According to Freddie Mac's quarterly national Conventional Home Price Index (CMHPI), home prices were UP 0.9% in Q3 for their second quarterly increase in a row! And the Q2 number was revised upward to 2.0%! These rises have taken back about two-fifths of the price declines seen in Q4 of 2008 and Q1 of this year. Freddie Mac's chief economist said, "the home-price gains of the past two quarters reflect improving existing-home sales.... Sales volume was up 15% between the first and third quarters of this year." He also added: "The lowest average fixed-rate mortgage rates in a half-century, lower house prices, incentives to encourage first-time buyers, and loan modification efforts to stem foreclosures have worked together to support sales and reduce the inventory of unsold homes." The Standard & Poor's/Case-Shiller Home Price Index also reported a second consecutive quarterly price increase, theirs at 3.1%! A separate study came in with inventory declines for the 17th straight month, showing listings down 2.42% for November versus October and down 27.64% from last year! A monthly Foreclosure Market Report showed an almost 8% decrease for November, down 15% from the July peak. We're still above last year's numbers, but finally trending in the right direction!

Review of Last Week

KEEPING ON KEEPING ON... For the fourth week in a row the markets moved sideways, with one index slightly up, one a bit down and the third flat. Recently, there haven't been any extreme weekly market moves in the indexes, up or down. Investors aren't quite ready to believe things are as good as some indicators suggest, but they're also not buying into any of the bleak scenarios some pundits still proffer. Those pundits jumped all over Fed Chairman Ben Bernanke's reference in a speech to "formidable headwinds" for the economy. He was actually cautioning us to not expect economic expansion to be too dramatic. His also said: "...our economy has made important progress during the past year....the financial system and the economy have moved back from the brink of collapse, economic growth has returned, and the signs of recovery have become more widespread." Why didn't those experts focus on this observation of "more widespread recovery"? They were probably too busy ignoring the good news of a decreasing trade deficit, with exports UP six months in a row, at a 26.4% annual rate! We also saw the four-week moving average of unemployment claims fall to 474,000, its lowest level since September 2008. In fact, for the last six months, the decline in initial claims is faster than the declines during the "jobless" recoveries of 1991-92 and 2002, a signal this recovery may not be jobless. The week ended with November Retail Sales UP a way-better-than-expected 1.3%. So it came as no surprise that University of Michigan Consumer Sentiment also blew past consensus expectations! For the week, the Dow went UP 0.8%, to 10471.50; the S&P 500 was up just 0.43 points, to 1106.41; while the Nasdaq went down 0.2%, to 2190.31. Bonds ended the week under downward pressure. The recovery is looking better and the Fed seems to be holding to its low rates, with any tightening some way off in the future. The FNMA 30-year 4.5% bond we watch was down 31bp for the week, finishing at $101.22. Mortgage rates inched up a little, but still remained at historically low levels.

This Week’s Forecast

THE WORD FROM THE FED... This week, the big focus will be on the Fed's policy statement coming out of their meeting on Wednesday. No one expects a rate hike now, but the experts will be scrutinizing the language of the statement to see if the Fed still expects their exceptionally low rate levels to remain for "an extended period." We'll have new data on inflation, with the Fed's favorite CPI reading coming in and another good look at manufacturing with the Philadelphia Fed Index. Folks who share our economic interests will be watching Housing Starts and Building Permits for November to see if home builder optimism continues to grow.

by Pat Hill | 0 Comments

Housing Market for Week of December 7, 2009

>> Market Update 

INFO THAT HITS US WHERE WE LIVE  Positive economic reports on housing continue, with October Pending Home Sales UP 3.7%. This was the ninth month in a row Pending Home Sales rose and the index is now 31.8% over October last year. Since this tracks the level of contracts on existing homes, Existing Homes Sales should continue their impressive rise for the next couple of months. 

The National Association of Realtors also predicted sales of previously owned homes would go UP 4.8% this year, reversing the downward sales trend of the previous two years. For 2010, the NAR projects existing home sales UP 10.8%, with a 3.6% hike in the median price. For new homes, the median price is expected to rise 3.9%. Of course, smart homebuyers will act now to avoid these anticipated price increases AND take advantage of the newly extended and expanded tax credits. High net worth individuals are already showing up--in a recent survey, 35% said they planned to increase their investments in real estate. 45% of them contend there are significant opportunities in residential markets, with many bargains to be had.

Anyone need further incentive? Freddie Mac reported mortgage rates down for the fifth straight week, now at record lows! The 30-year fixed-rate mortgage averaged 4.71%, with an average 0.7 point, for prime borrowers with 20% down payments. That's a new low for the survey which has been tracking rates since 1971.

>> Review of Last Week

GOOD-BYE, DUBAI--HELLO, JOBS!... What a difference a week makes. Friday after Thanksgiving, investors were fretting over Dubai's inability to pay back its debt. Those fears subsided early last week, then Friday, euphoria broke out among investors over an unexpectedly good jobs report. This included the first drop in the unemployment rate in a long time and job losses at their lowest level in nearly two years. The markets responded with all three indexes registering gains.

The week began with continued good news in manufacturing, the Chicago PMI UP almost 2 points. Tuesday, the ISM Manufacturing index was down slightly from its big October gain, but still well over 50, signaling industrial expansion for the fourth month in a row. Then we had strong Pending Home Sales covered above. Friday's encouraging employment report was set up nicely on Wednesday when Chicago-based job placement firm Challenger, Gray & Christmas said November job cuts were down 72.3% from last year. New unemployment claims were at their lowest level since September 2008 and the four-week average of Continuing Claims hit its lowest level in eight months.

Friday's jobs report showed a dramatic improvement in the employment situation for November. Payrolls declined only 11,000 for the month, but they were in fact UP by 148,000 after revisions to September and October added 159,000 jobs. Most surprising, the Unemployment Rate went DOWN to 10.0%, a turn-around not forecast until Q1 next year. Economists do not expect a decline every month, but many feel the unemployment rate will be significantly lower by late next year. And get this--total hours worked in the private sector was up 0.6%. But if the hours per worker had stayed the same, the increase in labor demand could have boosted payrolls by 650,000! Interesting.

For the week, the Dow went UP 0.8%, to 10388.90; the S&P 500 was UP 1.3%, to 1105.98; while the Nasdaq shot UP 2.6%, to 2194.35.

The bond market got clobbered thanks to the way-better-than-expected jobs data, which strongly pulled investors back into stocks. The FNMA 30-year 4.5% bond we watch dropped almost 100bp for the week, finishing at $101.53. Mortgage rates, as reported above, went to record low levels, but may not stay there for long if mortgage bond prices continue to slide.

>> This Week’s Forecast

RETAIL RULES... The king of the economic reports coming out this week will be Friday's Retail Sales figures for November. These should give us an indication of how well the consumer will be contributing to the economic recovery during the holiday buying season. We also get a preliminary read on the Michigan Consumer Sentiment Index and the weekly updates on Unemployment numbers. Fed Chairman Bernanke will be speaking early in the week and it will be interesting to see whether he thinks the improving jobs situation may result in a rate hike sooner than most experts expect.

by Pat Hill | 0 Comments

Housing Market - Week of November 16, 2009

>> Market Update 

INFO THAT HITS US WHERE WE LIVE  Thursday the Wall Street Journal reported Q3 home sales at an annual rate of 5.3 million units. That was an 11.4% gain over Q2's 4.76 million units. Experts put much of the rising sales to the tax credit of up to $8,000 for first-time homebuyers. A week ago Friday, the President signed a bill extending that tax credit well into next year and expanding it to first-time buyers with higher incomes as well as to existing homeowners, with a $6,500 limit. National Association of Realtors chief economist Lawrence Yun feels "rising sales from the expanded tax credit should stabilize home prices by next spring."

That same tax credit bill also created a new tax break for businesses. The bill lets large firms claim cash refunds on taxes they paid going back five years, to offset current losses. The carry-back period had previously been just two years. Experts estimate this could improve the cash positions of big home builders by hundreds of millions of dollars to further help the recovery. Luxury home builder Toll Brothers is doing just fine already. Tuesday they announced their fiscal Q4 had a 42% jump in contracts over last year. And the value of those contracts was 62% higher than a year ago.

Finally, the NAR's report on home prices said most U.S. cities saw gains in the median price of single-family homes for Q3--the second quarter in a row of price gains. Prices were still down from Q3 a year ago, but the pace of the decline has been slowing. Many experts feel the shrinking supply of unsold homes suggests the housing market is edging closer to price stabilization. Even foreclosure fillings fell in October for the third straight month.

>> Review of Last Week

HOLDING AT 10,000... We've now had two weeks in a row in which investors were confident enough in the recovering economy to keep the Dow Jones Industrial average north of that magic 10,000 number. The S&P 500, a broader indicator of business health, was also up nicely for the week, as well as the tech-heavy Nasdaq, which posted the biggest jump of all.

The week got off to a great start on the news that finance ministers and central bankers from 20 major world economies--the "G-20"--will keep their financial support coming until the global recovery is certain. Investors also liked the news that Hewlett-Packard made a deal to buy 3Com to expand its networking business and increase its position in China. Wal-Mart reported a better-than-expected 3.2% boost in Q3 profits and an improved outlook for the year, although it gave a cautious forecast for Q4.

The Trade Balance showed exports UP five months in a row since bottoming in April. This is a 24.1% annual growth rate, with imports up at a 32.6% rate. The discrepancy makes for a deficit, but it's billions smaller than last year. The reality is, the spike in imports and continued export gains signal to many that the economy is getting better. Meanwhile, initial jobless claims fell again last week to 502,000 and the four-week moving average was the lowest in almost a year.

For the week, the Dow finished UP 2.5%, to 10270.47; the S&P 500 was also UP 2.3%, to 1093.48; while the Nasdaq went UP 2.6%, to 2167.88.

It was another week of stocks moving up AND bond prices doing well too. This was helped by the Fed stepping in with their buying progra. The FNMA 30-year 4.5% bond we watch ended up from the previous week's close, finishing at $101.75. Not surprisingly, mortgage rates fell again last week, with Freddie Mac reporting long-term rates at the lowest levels in five weeks! 

>> This Week’s Forecast

PLENTY TO PONDER... The week begins with the October Retail Sales report giving us another look at the consumer mindset. The Producer Price Index looka at the inflation situation for business but Wednesday's Consumer Price Index is the inflation reading the Fed looks at to see if they need to raise rates. On Wednesday we also get Housing Starts and Building Permits. Friday's Philadelphia Fed Index is another important measure of manufacturing. 

by Pat Hill | 0 Comments

Housing Market for the Week of November 1, 2009.

>> Market Update 

INFO THAT HITS US WHERE WE LIVE  Last week September New Home Sales were reported down 3.6% for single-family units. But the supply of unsold new homes is just 7.5 months and inventories, at 251,000, are down 56.1% from their mid-2006 peak and at their lowest level since 1982. The sales drop followed five straight months of sales increases and some observers felt the decline may have come from more aggressive pricing by sellers, actually a bullish sign for the housing market.

Indeed, the median new home price was UP 2.5% for September, a bigger than usual gain for the time of year. The average price went UP 10.2%, the biggest September rise on record. Finally, the average price of new homes sold -- $282,600 -- was only 1.6% lower than last year. Speaking of prices, the Case-Shiller index reported home prices up in August for the fourth month in a row. The average of the 20 metro areas measured showed a 1.2% gain.

Finally, we had the good news covered in last week's Inside Lending Bulletin that the Senate passed an extension of the first-time homebuyer $8000 tax credit, with higher qualifying income limits and adding a $6500 credit to buyers who have owned their homes at least 5 years. Let's hope the House passes it too. Finally, the House and Senate extended the ability of Fannie Mae, Freddie Mac and the Federal Housing Administration to back conforming loans in high-cost areas, up to $729,750 through all of 2010. These higher limits would have expired at the end of this year.

>> Review of Last Week

CAUTIOUSLY RECOVERING... The government reported our first quarter of positive economic growth last week, indicating the recovery has begun. Yet investors kept the Dow moving up and down over 100 points four out of the five days, ending the week with a startling 249-point drop. Was this a bull market correction, or the return to a bear market? Who knows? The only thing certain is that investors aren't quite sure the economy is back on track.

Makes you wonder what it will take to convince them. The initial estimate for Q3 real GDP revealed the economy growing at a 3.5% annual rate -- way better than expected and the first rise in GDP in over a year. Happily, most of the advance was driven by consumption. Q3 GDP also showed home building UP at a 23.3% annual rate, its fastest rise since the '80's. Plus, Q3 corporate earnings reported so far show over 80% of the companies beating estimates, the highest rate in history.

On the jobs front, Initial Unemployment Claims dropped and the 4-week moving average hit a new low in the recovery of 526,000. Continuing Claims fell to 5.8 million. Positive news also included Durable Goods Orders UP for September, their fourth boost in six months. Most impressive of all, the Chicago PMI measuring Midwest manufacturing, shot up to its highest level in over a year. And the Richmond Fed index for Mid-Atlantic manufacturing logged its sixth straight month in expansion territory. All are favorable signs for U.S. manufacturing.

For the week, the Dow finished down 2.6%, to 9712.73; the S&P 500 was down 4.0%, to 1036.19; while the Nasdaq fell 5.1%, to 2045.11.

The bond market closed the week with a rally, helped in no small measure by the slide in stocks. The FNMA 30-year 4.5% bond we watch ended up from the previous week's close, finishing at $101.19. Mortgage rates inched up a bit but remain in historically low territory. For this year, the Freddie Mac survey of mortgage rates reported its lowest 10-month average going back to 1971.

>> This Week’s Forecast

FOCUS ON THE FED... Almost no one expects a rate change coming out of this week's Fed meeting, but economists will be looking at the Fed policy statement for any signs of when things may change. Other items of interest this week include Pending Home Sales on Monday and Friday's Employment Report, where we'll search for signs of a turnaround on the jobs front. 

by Pat Hill | 0 Comments

Housing Market for Week of October 26, 2009

>> Market Update 

INFO THAT HITS US WHERE WE LIVE  The week ended with the terrific news that Existing Home Sales shot UP 9.4% in September to a 5.57 million annual rate. This was almost twice the increase the consensus expected and a nice boost coming off the slight drop we saw in August. Best of all, the inventory is now down to a 7.8 month supply, getting us closer and closer to the 6-month level of a normal housing market.

Earlier in the week, Housing Starts for September were UP 0.5% to an annual rate of 590,000 units. The consensus expected more, but the drag on the number all came from a drop in those volatile multi-unit starts. Single-family starts were up a strong 3.9%, their sixth gain in the last seven months and UP 40.3% since the January-February bottom. The rate of building is well below underlying demand, which some put at about 1.6 million units per year, based on population growth and the need for replacement because of fires, disasters and knock-downs.

The Mortgage Bankers Association reported that for 30-year fixed-rate mortgages, the average contract interest rate was 5.07% with 1.13 points (including the origination fee) for 80% loan-to-value ratio loans to borrowers with good credit. First time buyers have just five weeks to get in on these still great rates AND the $8,000 tax credit set to go away at the end of November.

>> Review of Last Week

CAN'T STAY ABOVE 10,000... It was a strange week in the stock markets, as the Dow shot past the "magic" 10,000 mark two days in a row, but a freaky Friday hammered that benchmark back down below 10,000. All three major indexes saw modest drops for the week. Some analysts said the seven-month rise in stock prices made us ready for a dive. Even analysts who are bullish long-term hinted we were due for a temporary pullback. We can be grateful these experts' wishes were fulfilled in such a modest way.

The negative yak was extra strange because Q3 corporate earnings continued to impress investors. We saw what some called "blowout results" from Apple and Amazon.com, while a long list of companies had very nice upside surprises -- outfits like American Express, AT&T, Capital One, Caterpillar, McDonald's, Texas Instruments, UPS and Yahoo! And let's not forget the strong single-family Housing Starts and very strong Existing Home Sales that show the housing recovery is moving along.

Initial Unemployment Claims inched up a bit last week, but Continuing Claims continue to fall, now down to 5.9 million. Gloomy pundits say this just shows people's unemployment benefits are expiring, but a few folks surely must be getting jobs to support the now recovering and growing economy! These pundits might want to consider Treasury Secretary Tim Geithner's prediction that we'll see "...positive growth in 2010 at a level that will begin to gradually bring down the unemployment rate."

For the week, the Dow ended down 0.2%, to 9972.18; the S&P 500 was down 0.7%, to 1079.60; while the Nasdaq fell just 0.1%, to 2154.47.

It was an up-and-down week in the bond market, which ultimately ended down. Friday, investors were anticipating this week's record auctions, which could squeeze prices some more. The FNMA 30-year 4.5% bond we watch fell again from the previous week's close, ending at $100.59. Still, mortgage rates stay in historically low territory.

>> This Week’s Forecast

HOUSING? GDP? INFLATION?... We'll have new answers to all three questions, beginning Wednesday with New Home Sales, then Thursday we get our initial look at GDP for Q3, the first quarter that's expected to show the economy expanding again. Friday we get numbers for PCE and Core PCE, which are the Fed's favorite inflation indicators.

by Pat Hill | 0 Comments

Housing Market for Week of October 19, 2009

>> Market Update 

INFO THAT HITS US WHERE WE LIVE  For the third week in a row, rates on 30-year fixed-rate mortgages remained below 5% in Freddie Mac's Primary Mortgage Market Survey. The average for conforming mortgages was 4.92% with an average of 0.7 point (including the origination fee) for 80% loan-to-value ratio loans to borrowers with good credit.

The Mortgage Bankers Association reported applications down 1.8% for the week, although re-financings were up, as more people took advantage of historically low mortgage rates. The MBA also projected double-digit growth for home sales next year. They see 2010 existing home sales up 11.2% to 5.57 million and new home sales up a healthy 21% from 2009 levels. Another encouraging stat came from the National Association of Realtors which reported 3.6 million existing homes for sale at the end of August, nicely down from 4.3 million 12 months ago.

First time buyers may still be able to get the $8,000 tax credit expiring at the end of November. That's six weeks away, which is not a lot of time, but not impossible. Fence-sitters should get pre-qualified now.

>> Review of Last Week

FLIRTING WITH 10,000... Investors focused on corporate earnings saw enough encouraging signs to push the Dow past 10,000 on Wednesday. It was last at that magical mark on October 7 a year ago. The market closed above 10,000 again on Thursday, but Friday was a different story. GE and IBM reported quarterly results that were less than expected and University of Michigan Consumer Sentiment fell 3.9 points, after a 7.8 point rise in September, so the week ended below 10,000, but still with an overall gain.

But don't fret over consumers -- they're clearly showing up at the stores. Retail sales for September fell just 1.5%, way less than expected after the end of the Cash for Clunkers program. In fact, "core" retail sales (take out autos, building materials and gas) were UP 0.5% and are UP three of the last four months. Ignore the pundits -- consumers ARE participating in this recovery. Other good indicators included the Empire State Manufacturing Index rising to its highest level in over five years and initial unemployment claims falling to 514,000, their lowest level since the start of the year.

But the best news for investors was on the earnings front, with JPMorgan Chase, Goldman Sachs and Citigroup all beating estimates. Tech darling Google blew everyone away with earnings of almost $6 a share and an optimistic economic outlook. The week ended with Treasury Secretary Tim Geithner telling CNBC: "... you're going to see the economy growing at a significant rate...the rest of this year. [And] Positive growth in 2010 at a level that will begin to gradually bring down the unemployment rate."

For the week, the Dow ended UP 1.3%, to 9995.91; the S&P 500 was UP 1.5%, to 1087.68; while the Nasdaq rose 0.8%, to 2156.60.

The bond market saw prices under pressure in the shortened week. This included the FNMA 30-year 4.5% bond we watch, which dropped a tad from the previous week's $100.91 close, ending at $100.72. But, as reported above, mortgage rates stayed low, keeping us in "the golden age of mortgage rates", as one observer described it.

>> This Week’s Forecast

HOME SWEET HOMES... This week is full of news on the subject we love most. Tuesday we get Housing Starts and Building Permits for September, Friday delivers Existing Home Sales. For a gauge of the broader economy, the PPI looks at producer prices, while the LEI consolidates a group of indicators. We will all keep watching Initial and Continuing Unemployment numbers as we wait for Secretary Geithner's prediction to come true.

by Pat Hill | 0 Comments

Housing Market Week of October 12, 2009

>> Market Update 

INFO THAT HITS US WHERE WE LIVE  At the end of September, the supply of homes for sale was reported down 1.8% from the previous month in 27 major metropolitan areas. We all know the factors. Home prices are very affordable, mortgage rates and very favorable and first-time homebuyers are taking advantage of the $8,000 tax credit set to expire at the end of November, now just seven weeks away.

The Mortgage Bankers Association saw loan applications for home purchases rise 13.2% last week, as the MBA's Purchase Index hit its highest level since last January. The average rate on 30-year fixed rate mortgage slid to 4.89% with an average 1.13 points (including the origination fee) for 80% loan-to-value ratio loans to borrowers with good credit. Freddie Mac's weekly survey of conforming mortgage rates put the average 30-year fixed rate mortgage at 4.87% with an average 0.7 point for 80% loan-to-value ratio loans to borrowers with good credit.

>> Review of Last Week

BOUNCING BACK... The markets had lost ground for two weeks straight, but last week they got back on track with a vengeance. Hints at good Q3 corporate earnings helped. Some retailers also reported September sales that indicate the consumer is ready to step up to the plate and contribute to the recovery.

We also had the ISM Services index increasing to 50.9 in September, putting it in territory that signals expansion for the non-manufacturing part of our economy. Corporate earnings season got off to a nice start with Alcoa breaking its string of three straight quarterly losses with a surprise profit for Q3, and not just from cost cutting but also from higher sales. We even had good news from retailers encouraged by better-than-expected September numbers. Target, Kohl's, J.C. Penney and TJX all raised their Q3 or second half profit outlooks.

Initial claims for unemployment came in at 521,000, their lowest level since the first week of the year and continuing claims dropped 72,000, to 6.04 million. There are now economists who expect at least one month with net payroll gains before the year is out. The week ended with the trade deficit declining to $30.7 billion for August. Experts feel this solid showing for U.S. exports supports the case for a strong global recovery, with the U.S. helping supply capital goods to the rest of the world.

For the week, the Dow ended UP 4.0%, to 9864.94; the S&P 500 was UP 4.5%, to 1071.49; while the Nasdaq also rose 4.5%, to 2139.28.

The soaring stock market and a weak auction of Treasuries sent the bond market reeling, putting pressure on prices, including some mortgage backed securities. This included the FNMA 30-year 4.5% bond we watch, which was hammered down from the previous week's $101.66 close, dropping to $100.91. But, as reported above, mortgage rates stayed in super low territory.

>> This Week’s Forecast

MORE ON CONSUMERS, INFLATION AND MANUFACTURING... In spite of everything being squeezed into three days, it's a pretty full week of economic reports. Retail Sales give us an update on the consumer's willingness to contribute to the recovery and CPI readings keep an eye on inflation. The Philadelphia Fed Index, Industrial Production and Capacity numbers gauge manufacturing. The FOMC Minutes give us more on the Fed's view of the economy from their meeting on September 23.

by Pat Hill | 0 Comments

Housing Market Week of October 5, 2009

>> Market Update 

INFO THAT HITS US WHERE WE LIVE  Another good week for the housing market. The S&P/Case Shiller home price index was up for the third month in a row and the rate of annual decline fell for the sixth month in a row! Price increases were reported in 18 of 20 metro areas measured. Many now feel this data indicates the worst of the price declines are behind us. David M. Blitzer, chairman of the index committee at Standard & Poor's, said: "These figures continue to support an indication of stabilization in national real estate values."

Later in the week, Pending Home Sales came in UP 6.4% for August, their seventh straight monthly gain, UP 12.4% from a year ago and at their highest level since March 2007. Many see this boost in sales coming from first-time homebuyers rushing to make the deadline for their $8,000 tax credit which expires at the end of next month! 

On the mortgage front, Freddie Mac's weekly survey showed the 30-year fixed-rate mortgage below 5% for the first time since May. The average rate was 4.94% with an average 0.7 point (including the origination fee) for 80% loan-to-value ratio loans to borrowers with good credit. Finally, residential construction spending also rose in August, UP 4.7%!

>> Review of Last Week

CORRECTION?... Friday ended with the stock markets down for the second week in a row, so pundits wondered if the bull market is over, or just correcting itself as it does after the kind of big run-up it's had. Or maybe investors were fearing the recovery's in jeopardy, given a few disappointing economic indicators, capped by a still problematic employment report for September.

Yes, we did get lower than expected numbers for Consumer Confidence and ISM Manufacturing. But that manufacturing number is now above 50 two months in a row, showing expansion. The business media jumped all over a rise in initial claims for unemployment, but ignored the fact that the four-week moving average dropped to 548,000, its lowest level since January, and continuing claims dropped another 70,000, to 6.09 million, the lowest level since April. The major placement firm of Challenger, Gray, & Christmas reported that layoffs announced in September were down 30.2%, compared to last year. Some economists see unemployment falling by the end of the year.

But for the moment employment lags the rest of the recovery. Non-farm payrolls fell more than expected in September and unemployment inched up 0.1% from the month before. Yet we are clearly in recovery. Personal income increased 0.2% in August and small business earnings were up 0.7%, hitting a 7.6% annual rate for the past three months. Final Q2 GDP was revised upward to –0.7% and virtually all economists expect Q3 to show positive growth.

Nevertheless, for the week, the Dow ended down 1.8%, to 9487.67; the S&P 500 was off 1.8%, to 1025.21; while the Nasdaq fell 2.0%, to 2048.11.

Once again, as stock prices sank, bonds soared. The FNMA 30-year 4.5% bond we watch finished up decisively from the previous week's $101.12 close, moving to $101.66. As detailed above, mortgage rates slid down a bit more, back to the super low territory they were in last May. Fence-sitters should take note.

>> This Week’s Forecast

PRETTY QUIET... Not much going on this week on the economic front. We'll get the ISM reading on how the services sector is recovering, plus our weekly look at the jobs story. The week ends with the Trade Balance figure showing the state of our export-import situation.

by Pat Hill | 0 Comments

Housing Market for the week of September 21, 2009

>> Market Update 

INFO THAT HITS US WHERE WE LIVE  Housing starts for new single-family homes and apartments continued their steady rise, up 1.5% for August, their strongest pace in nine months. This puts housing starts at a seasonally adjusted annual rate of 598,000, their highest level since November of last year. This sign of steady improvement in home building made economists even more confident Q3 growth will be positive, signaling the recession is over. 

Mortgage rates continue to remain at three-month lows. Freddie Mac's weekly Primary Mortgage Market Survey showed average long-term mortgage rates down for the third week in a row! The 30-year fixed rate mortgage is just above 5% with an average 0.7 point (including the origination fee). And the average rate for 15-year fixed rate mortgages hit a new record low in the Survey. These rates are for prime borrowers with an 80% or lower loan-to-value ratio on loans eligible for purchase by Freddie Mac.

Finally, please remember the $8,000 tax credit for first-time homebuyers is set to expire in just over two months. Those eligible need to close by November 30!

>> Review of Last Week

HAPPY DAYS ARE NEAR AGAIN... The stock markets continued their upward moves last week, posting gains in four of five sessions and for the week overall. The big news of the week was Fed chief Ben Bernanke announcing, "From a technical perspective, the recession is very likely over." This was followed by billionaire Warren Buffet effectively calling the recession's end, commenting that the economy has "sort of plateaued at the bottom right now." The world's most successful investor added: "I think we're certainly... through the worst of it in residential real estate in all probability."

In addition to these positive pronouncements, investors had some solid economic developments to ponder. Tuesday we had August Retail Sales shooting up 2.7%, easily beating expectations. Excluding the auto sales boost from the government's Cash for Clunkers program, we still had a 1.1% hike for the rest of retail. Retail in fact is up at a 14.3% annual rate over the last three months and up 5.1% if you take out auto sales.

Initial claims for unemployment fell again last week, this time by 12,000, to 545,000. The four-week average of continuing claims dropped too. Meanwhile, the Philadelphia Fed Index, which gauges manufacturing in that region, shot up to +14.1 in September from 4.2 in August. This harmonized nicely with Industrial Production now up two months in a row, at a 10.4% annual rate.

For the week, the Dow ended UP 2.2%, at 9820.20; the S&P 500 shot UP 2.5%, to 1068.30; while the Nasdaq also pushed UP 2.5%, to 2132.86.

Bond prices declined in thin trading, with the market anticipating the record supply that will be on tap at next week's Treasury auctions. The FNMA 30-year 4.5% bond we watch finished down from the previous week's $100.78 close, settling at $100.44. Nonetheless, mortgage rates inched down a bit more, continuing at their historically low levels.

>> This Week’s Forecast

THE FED AND HOUSING WEIGH IN... The Fed meets this week and although there's no drama around whether they'll raise the rate (they won't), there's will be more than the usual interest in their FOMC statement, coming out Wednesday at 2:15. That's all because of Fed chief Bernanke's recession-ending comments last week. More key housing data comes with the Federal Housing Finance Agency's July Housing Price Index Tuesday, then August Existing Home Sales Thursday and New Home Sales Friday.

by Pat Hill | 0 Comments