Pat Hill Realtor

Last Week in the Housing Market, August 30, 2010

Market Update 

INFO THAT HITS US WHERE WE LIVE  You can't sugar-coat last week's housing reports, but they don't necessarily foretell a "double-dip" recession in real estate. July Existing Homes Sales were off 27.2%, at an annual rate of 3.83 million, well below the expected 4.65 million rate. The months' supply went from 8.9 to 12.5 and there was also a rise in inventories. The truth is, the expectation was a bit high. An annual rate below 4 million for July makes sense, given that the home buyer tax credit was slated to end in June.Getting an $8,000 check from the government certainly encouraged lots of people to move up their purchases. For the same reason, experts also predict weak August numbers, but after that, some feel existing home sales will start heading back to about 5.5 million units annually. For the year, inventories are down 2.0%, while the median price is UP 0.7%.

July New Home Sales were down 12.4% to a 276,000 annual rate, below the expected 330,000 pace. The months' supply went to 9.1, but inventories were unchanged at 210,000, their lowest level in decades. Part of the sales drop was because the now expired tax credit required a signed contract by April 30. New homes sales are counted at contract and the April number hit 414,000. In the three months since then, sales are averaging only 291,000 annually. New home buyers may also be going for recently built homes, now at attractive prices. New homes, typically about 15% of sales, are now around 7%!

The Mortgage Bankers Association's weekly survey showed purchase loan applications UP 1% from the week before, refinance applications UP 6%, and mortgage rates at record low levels. 

>> Review of Last Week

THANK YOU, BEN... Ben, of course, is Chairman Bernanke, head of the Federal Reserve. Friday he said the Fed has no triggers set for further easing of monetary policy and he sees continued economic growth. These comments at a central bank summit in Jackson Hole, Wyoming, were all the Wall Street bulls needed to hear to push stocks up Friday after a week of declines. The big rally wasn't quite big enough, though, as the three major indexes still ended down for the week just a tad.

There were other decent economic signs. The August Richmond Fed index of manufacturing in the mid-Atlantic region was +11, down from July's +16, but higher than expected and showing that the factory sector still continues its strong growth. Durable Goods orders were UP 0.3% for July, but disappointed because 3.0% was forecast. Nonetheless, Durable Goods are UP 9.3% over a year ago. Initial unemployment claims dropped by 31,000 to 473,000 for the week, a nice sign after last week's surge. Continuing claims also fell, by 62,000 to 4.46 million.

Friday featured two big news items. First, Q2 GDP was revised lower, from 2.4% to 1.6% growth, but this was measurably better than what many economists had expected and significant parts of the report showed improvement. Personal spending and business Investment were both revised UP, with domestic purchases UP 4.3%. Corporate profits continued their strong growth in Q2, UP at a 20% annual rate and UP 39% over a year ago. Then we had Chairman Bernanke reassuring investors he expects growth to pick up in 2011 and the Fed is ready to use "unconventional measures if it proves necessary." Again, thank you, Ben!

For the week, the Dow ended down 0.6%, to 10150.65; the S&P 500 was down 0.7%, to 1064.59; and the Nasdaq was down 1.2%, to 2153.63.

Bonds had a bit of a rocky week, ending with investors heading back into stocks on Friday, willing to take on more risk after listening to Bernanke. The FNMA 30-year 4.0% bond we watch still ended UP 5 basis points for the week, closing at $102.20. Freddie Mac's survey showed national average fixed rates for conforming mortgages at historically low levels for yet another week. 

>> This Week’s Forecast

INCOME, JOBS, INFLATION, JOBS, MANUFACTURING, JOBS, HOME SALES, JOBS...There will be important economic reports to ponder, but rest assured, everyone will have Friday's August Jobs Report on their minds the whole week. Experts project a smaller loss of payrolls than the prior month, with the jobless rate about the same. Leading up to the biggie, Monday features July Personal Income, forecast up, and July PCE readings, which should show inflation remaining pretty much in check. Tuesday's Consumer Confidence is projected up a little, but manufacturing is predicted down a tad, as measured by Tuesday's Chicago PMI and Wednesday's ISM Index. Tuesday afternoon we'll have the minutes from the Fed's August 10 meeting and see if they add any insight to Bernanke's comments last Friday.

by Pat Hill | 0 Comments

Housing Market Information for the KC Metro Area

>> Market Update 

INFO THAT HITS US WHERE WE LIVE  Some analysts feel the homebuyer tax credits artificially boosted the housing market by pushing forward home sales that would have happened later. Others feel most buyers would have bought anyway. In any case, there's now concern about a coming drop in sales. Well, June sales figures should still benefit from activity spurred on by the tax credits. And tax credit sales should even help monthly reports through September, now that buyers in contract on April 30 have been given until September 30 to close. 

Nonetheless, we ought to keep an eye on monthly Pending Home Sales, which track signed contracts that turn into sales a few months out. Even though we may have a sales dip after the tax credit, the fact remains that near historic low mortgage interest rates are getting people back into the market. These rates, combined with today's prices, have made homes more affordable than they've been in years, letting many buyers move up to better neighborhoods with more choices.

But buyers shouldn't wait. The National Association of Realtors chief economist sees the median home price rising nationally 2% to 3% this year. The NAR's CEO feels sales will pick up in the fall and that the down-cycle has run its course. The chief economist at Moody's Economy.com also believes the housing crash is nearly over. And we all know mortgage rates won't stay at their current levels indefinitely. In other words, this could be one of the best times to buy a home in decades.

>> Review of Last Week

UP AND DOWN... The stock market indexes were up nicely through Wednesday, continuing last week's rally, then slipped slightly on Thursday before plunging more than 261 points Friday. For the week, the declines hovered around 1%, not too bad considering the volatile atmosphere of the proceedings on Wall Street.

The problems Friday centered on a drop in the University of Michigan Consumer Sentiment number and soft top-line Q2 revenues from Bank of America, Citigroup, and GE, even though bottom-line earnings from these behemoths beat expectations. The big disappointment came from Google, which missed earnings estimates even though revenue grew a faster than expected 25% for the quarter. But Google was the ONLY major company reporting last week that did not BEAT earnings forecasts.

We also heard complaints about some of the economic data. The trade deficit increased in May, but exports are UP 21.0% in the past year. Yes, May retail sales were off half a percent, but the annual growth rate for retail in the last nine months remains a respectable 6.7%. The Producer Price Index (PPI) and Consumer Price Index (CPI) showed wholesale and consumer inflation down a tad in June. This got analysts fretting about deflation, but both PPI and CPI are actually up from a year ago.

Nonetheless, negative feelings prevailed, so for the week, the Dow ended down 1.0%, to 10097.90; the S&P 500 was down 1.2%, to 1064.88; and the Nasdaq was down 0.8%, to 2179.05.

As stocks slid, the bond market attracted a slew of investors on the proverbial flight to safety. Prices headed north, as the FNMA 30-year 4.0% bond we follow cruised UP 41 basis points for the week, ending at $101.91. Freddie Mac's weekly survey reported that national average rates for conforming mortgages remain at record low levels.

>> This Week’s Forecast

BACK TO HOUSING... Last week's tsunami of economic data lacked any info on the housing market. This week's reports make up for that, beginning with June Housing Starts and Building Permits on Tuesday. Starts are expected to be down slightly, with permits virtually flat. Thursday we'll see June Existing Home Sales, which may be down a bit. We'll also look at the Leading Economic Indicators (LEI) Index, which could be a tad off for the month.

Q2 corporate earnings reports continue, including: Amazon.com, AT&T, Caterpillar, Coca-Cola, Goldman Sachs, IBM, PepsiCo, and Texas Instruments.

by Pat Hill | 0 Comments

New Info about the Housing Market in the Kansas City Area

>> Market Update 

INFO THAT HITS US WHERE WE LIVE  Last Thursday pending home sales, a measure of contracts signed for existing homes, were reported off 30% in May compared to the prior month. This of course was simply the result of the end of the homebuyer tax credit, which required a signed contract by April 30. Common sense tells us many of those April contracts would have happened in May or even later if it weren't for the pressure to qualify for the tax credit.

More good news on the price front, as the Case-Shiller home price index was UP 0.4% in April, seasonally-adjusted, and up a comfortable 3.8% versus a year ago. Case-Shiller tracks home prices in the 20 largest metro areas. This follows the prior week's FHFA home price index, which was UP 0.8%  for April for homes financed with conforming mortgages. Buyers take note.

Friday, the President signed into law a bill that extends the closing deadline for claiming the federal homebuyer tax credit to September 30. The National Association of Realtors estimated that up to 180,000 homebuyers in contract by April 30 could have missed the June 30 closing because of processing delays due to the huge volume of buyers seeking the tax credit.

>> Review of Last Week

OFF AGAIN... Investors were back in worry mode last week, still concerned about European debt and the speed (or lack thereof) of our own economic recovery. At the Group of Twenty meeting in Toronto, the financial leaders of the world's largest economies didn't say or do much to raise spirits on Wall Street. So stocks slid another week, as investors sold off their equity holdings and sought safer places to put their money.

The week began with May personal income UP 0.4% and personal spending UP 0.2%. For the last six months, personal income is UP 4.6% annually and spending UP 3.8% annually. Overall PCE (consumer inflation) was flat for May, up only 0.9% annually for the last six months. Thursday brought the pending home sales data covered above. This was followed by the ISM index showing manufacturing still grew strongly in June, though slightly below May's reading.

Friday's employment numbers showed a drop of 125,000 jobs for June but April/May revisions added 25,000, so the net loss was 100,000. Furthermore, as the President himself pointed out that morning, the report "...reflected the planned phase out of 225,000 temporary Census jobs, but it also showed the sixth straight month of job growth in the private sector. All told, our economy has created nearly 600,000 private sector jobs this year." Finally, the unemployment rate, expected to edge up a tad, dropped from 9.7% in May to 9.5% for June. 

For the week, the Dow ended down 4.5%, to 9686.48; the S&P 500 was down 5.0%, to 1022.58; and the Nasdaq was down 5.9%, to 2091.79.

Bond prices continue to benefit as economic nervousness about the slowness of the jobs part of our recovery has investors seeking the safe haven of bonds. The FNMA 30-year 4.0% bond we follow did well, UP 47 basis points for the week, ending at $101.28. National average rates on three of the four mortgage types tracked by Freddie Mac's weekly survey reached record lows for the second week in a row.

>> This Week’s Forecast

QUIET AFTER THE HOLIDAY... The shortened post-4th-of-July week will allow us to quietly recover from the pyrotechnic celebrations without a lot of economic data to distract us. Tuesday's ISM Services is expected to show the services part of our economy continuing to expand. Initial and Continuing Unemployment Claims figures will hold our interest after last week's monthly Employment report, and they are expected to drop.

by Pat Hill | 0 Comments

New Housing Market Information for this Week, 6-7-10

>> Market Update 

INFO THAT HITS US WHERE WE LIVE  The National Association of Realtors (NAR) reported the Pending  Homes Sales index rose in April for the third month in a row, registering a 6% increase over the upwardly revised March figure. This index measures the number of homebuyers signing purchase contracts. April Pending Home Sales hit their highest level since October 2009 and are UP 22.4% year-over-year. Like Existing and New Home Sales the week before, a good part of the gain was put to the tax credit expiration that required a signed contract by April 30. The NAR also forecast new home sales will be UP 18.5% for the year.

April construction increased 2.7%, its fastest gain in a decade. This includes commercial, government, and home construction. Home improvements led the residential gain, but new single-family homes were up as well, showing increased confidence among home builders. 

>> Review of Last Week

SUMMER SLUMP... Summer fun starts with Memorial Day but the holiday-shortened trading week ended with a slump in stocks on Friday. This was driven by concerns that Hungary may default on its debt, followed by the May Employment Report, whose payroll numbers were lower than expected and had investors selling off big time. The Dow lost over 300 points on the day and all three major indexes were down for the week.

The facts did not actually justify such extreme investor reaction. No U.S. bank has major exposure to European debt and Europe accounts for only a minor percentage of our export business. Yes, the employment report showed a headline payroll number below expectations, with the private sector adding just 41,000 jobs. But the average workweek went from 34.1 to 34.2 hours. If hours per worker had remained the same, that extra labor demand would have created 315,000 more private sector jobs. For the moment, employers are clearly preferring to meet rising labor needs with more hours for existing workers, rather than new hires. Ignored in all the negative hoopla was the DROP in the unemployment rate to 9.7%, which beat expectations.

Before Friday's market slide, other economic data had sent stock prices up. We had the great Pending Home Sales gain covered above. The ISM Manufacturing index continued to show strength in that sector, hitting levels not seen since 2004, while the ISM Services index showed non-manufacturing business at its highest level in almost four years. And final Q1 productivity came in at a 2.8% annual growth rate, UP 6.1% from a year ago.

For the week, the Dow ended down 2.0%, to 9931.97; the S&P 500 was down 2.3%, to 1064.88; and the Nasdaq was down 1.7%, to 2219.17.

Bonds blasted skyward on Friday fueled by the goulash coming out of Hungary, then boosted further by the lower than expected payroll numbers. The flight to safety benefited the FNMA 30-year 4.5% bond we watch, which closed UP 66 basis points for the week, ending at $102.69. National average mortgage rates held at their historic levels for another week, according to Freddie Mac's weekly survey. 

>> This Week’s Forecast

CONSUMERS WEIGH IN... This is a fairly quiet week for economic data, but we'll have a good look at the consumer's participation in the recovery with Friday's May Retail Sales. The June Michigan Consumer Sentiment index will follow. Expectations are for continued improvements in these numbers. Initial and Continuing Unemployment claims will also be watched closely given last week's jobs report. Thursday's April Trade Balance will show us the strength of U.S. business in the global economy.

by Pat Hill | 0 Comments

Kansas City Metro Weekly Housing Market Report

>> Market Update 

INFO THAT HITS US WHERE WE LIVE  For the third month in a row, Existing Home Sales beat expectations, UP 7.6% for April and UP 22.8% over a year ago. A lot of the gain was put to the tax credit expiration that required a signed contract by April 30. But buyers have till June 30 to close, so observers feel sales will probably increase for the next couple of months, then take a short break before rising again. Inventories were up from 8.1 to 8.4 months, but this is similar to April gains in prior years, rather than evidence of some huge "shadow inventory" hitting the market. Meanwhile, the median price for an existing home went to $173,000, up 4.0% from a year ago.

April New Home Sales shot UP 14.8%, reaching a 504,000 annual rate, their highest level since May 2008. The supply fell to 5.0 months in March and inventories dropped to 211,000 -- their lowest level since 1968, down 63.1% from their mid-2006 peak. The tax credit expiration also contributed to these great numbers. But the fact remains, new homes are now significantly more affordable, thanks to prices that are the lowest since 2003 and extremely low mortgage interest rates.

Two home price indicators gave mixed signals. The Case-Shiller index for the 20 top metro areas was down 0.5% for March but UP 2.3% for the year. The FHFA price index for homes bought with conforming mortgages was UP 0.3% for the month but down 2.2% for the year.

>> Review of Last Week

THANK YOU, CHINA... Call it a somewhat volatile week in the stock markets, as investors continued to fret over Europe's financial health, the Gulf oil spill and North Korea. Then Thursday China stepped in as a solid buyer of Eurozone bonds, giving Wall Street ample reason to calm down, leaving two major indexes up for the week, with the Dow off just 0.6%.

We continue to get good factory data, with the Richmond Fed manufacturing index at +26 for May indicating continued expansion in the Mid-Atlantic region. The Chicago PMI manufacturing index also showed growth, though slightly slower than the month before. Durable Goods were UP 2.9% for April and UP 18.9% over a year ago. Especially encouraging, orders for capital goods used in production were UP 7.4% for April and UP 30% over a year ago, one of the steepest annual boosts in the last 20 years. 

Real Q1 GDP was revised down slightly to 3.0% annual growth. But Q1 corporate profits grew at a 24% annual rate and are UP 31% over a year ago. Economists expect these profits to boost hiring and business investments. Q1 prices were up only 1% annually, so inflation is still under control. April Personal Income came in UP 0.4% and Personal Consumption was flat, but economists feel it's normal for consumers to take a break every few months. University of Michigan Consumer Sentiment was UP to 73.6.

For the week, the Dow ended down 0.6%, to 10136.63; but the S&P 500 was UP 0.2%, to 1089.41 and the Nasdaq was UP 1.3%, to 2257.04.

Bonds also had an up-and-down week, finally recovering on Friday to end in pretty good shape. The FNMA 30-year 4.5% bond we watch closed down 13 basis points for the week, ending at $102.03. National average mortgage rates continued near record lows, according to Freddie Mac's weekly survey. Their Chief Economist feels this should soften the effect of the expiration of the homebuyer tax credit.

>> This Week’s Forecast

LOOKING FOR JOBS... The economic news of the week is dominated by the May employment report on Friday. Expectations are that a substantial number of jobs will be added, but increases in the workforce population will cut the unemployment rate by just 0.1%. On our way to this big news, we'll be interested to check out April Pending Home Sales, which should continue to show gains. Tuesday's ISM manufacturing read and Thursday's ISM Services and revised Q1 Productivity should also provide more support for our continuing recovery. 

by Pat Hill | 0 Comments

Housing Market for the Week

>> Market Update 

INFO THAT HITS US WHERE WE LIVE  Last Tuesday the National Association of Realtors (NAR) reported the Q1 median price for existing homes was up in 91 out of 152 metro areas compared to a year ago, showing the housing market is starting to stabilize. This was a nice gain over Q4 of last year when prices were up in only about 40% of the cities tracked. Even more encouraging, the percentage price increases in 29 cities were in double-digits.

The NAR also reported that existing home sales of single-family homes and condos were UP 11.4% in Q1 compared to a year ago. Sales increased in 44 states and Washington, D.C., with over 70% reporting double-digit percentage gains.

Long-term forecasts were also revised slightly downward by the NAR, but the numbers are still good. They see existing home sales UP 4.3% this year and UP 5.1% for 2011, with the median resale home price UP 2.5% for 2010 and UP 3.7% in 2011. New single-family home sales are forecast to rise 6.9% in 2010 and a whopping 42.0% next year. Median new home prices will be up 3.3% this year and 4.7% the next.

>> Review of Last Week

ANOTHER EUROPEAN TRIP... Europe's fiscal shenanigans were in the news again and they took the markets on a trip north, then turned them sharply south to end the week. The gains came after Sunday's announcement of a major Euro-zone rescue package. But as the week wore on, concerns over whether individual countries would put the necessary austerity measures in place sent stocks down, though the market indexes ended the week with strong gains.

If you could take your mind off Europe, there were plenty of reasons to feel positive about the U.S. economic situation. Wednesday, the March trade deficit came in as expected, up $1.0 billion to $40.4 billion, thanks to the strength of our recovery pushing imports up faster than exports. Best of all, the report showed our total volume of international trade was up 3.1% for the month and up 24% since it hit bottom a year ago April.

On the jobs front, the four-week moving average inched down for both initial and continuing unemployment claims. Then Friday came the news retail sales were UP 0.4% for April and UP 0.9% including upward revisions to February/March. For the last six months, retail sales are up at a 10.7% annual rate, 10.3% excluding autos, showing the consumer is certainly alive and well. Finally, industrial production was UP 0.8% for April, as manufacturing continues to boom, up at a 9.5% annual rate since its low last June.

For the week, the Dow ended UP 2.3%, to 10620.16; the S&P 500 was UP 2.2%, to 1135.68; and the Nasdaq was UP.6%, to 2346.85.

Worried about Europe, investors flocked to the safety and bargains they found in bonds. Friday's drop in stocks pushed bond prices up nicely. So even though we had good economic data on Friday, the week ended on an up note. The FNMA 30-year 4.5% bond we watch closed UP 9 basis points for the week, ending at $101.59. According to Freddie Mac's weekly survey, national average fixed-rate mortgages dipped to their lowest levels of the year.

>> This Week’s Forecast

HOMES, INFLATION--WHAT'S GOING UP?... Housing Starts and Building Permits reports will tell us where new home construction is headed and the expectation is those numbers will continue to trend upward.  We'll see if inflation is going up too, with the wholesale PPI on Tuesday, followed by consumer CPI inflation on Wednesday. Most experts feel inflation remains under control. The week will be bookended with reads on New York and Philadelphia manufacturing, which should continue to show a strong recovery for the sector.

by Pat Hill | 0 Comments

Weekly Housing Market Report

>> Market Update 

INFO THAT HITS US WHERE WE LIVE  Friday, March Housing Starts came in above expectations, UP 1.6%, at an annual rate of 626,000 units. Throw in revisions to February and starts were UP 8.9%. Single-family starts were down a tad for the month, but for all of Q1, they were UP at a 41% annual rate versus the Q4 average. New Building Permits for March also beat estimates, UP 7.5% to a 685,000 annual rate. Some experts feel we're in the early stage of a substantial rebound in home building. And they point out that the pace of building is still slow enough that inventories can come down even as new construction increases. 

As you know, the home buyer tax credit for qualified purchases requires a signed contract by April 30 and a closing by June 30. However, for members of the military, the Foreign Service and the intelligence community who have been on official extended duty, these dates have been extended one full year -- to April 30, 2011, for a signed contract and June 30, 2011, for the closing. If you have clients in these services, please have them contact us right away to see if they meet the specific provisions to qualify for this valuable benefit.

>> Review of Last Week

FINE TILL FRIDAY... Right through Thursday, investors felt pretty good about the start of corporate earnings season, as the Dow soared past 11,000 for the first time in about two years. Then Friday the SEC announced civil-fraud charges against Goldman Sachs and one of its vice presidents for how they sold subprime securities. The Dow dropped 125 points but did end the week above 11,000. Goldman denies wrongdoing and some pundits say this is just the government putting pressure on Wall Street to kowtow to regulatory reform. We'll see.

As far as corporate earnings go, they pretty much justified investors' positive feelings. Intel, a bellwether for computers if not the whole tech sector, reported earnings that beat expectations and a bullish forecast. JPMorgan Chase and Bank of America bested expectations before the Goldman news spoiled the party for all the financials. Google, GE and UPS also did well with Q1 earnings.

Economic data revealed March CPI was up 0.1%, showing consumer prices are holding. Core CPI, excluding volatile food and energy, is up just 1.1% from a year ago. Consumers must be happy with prices, since Retail Sales shot up 1.6% in March and are up at an 11.7% annual rate for the last six months. Industrial Production is up at a 6.0% annual rate the last six months. Capacity Utilization is up to 73.2% for March from 68.3% last June, the fastest 9-month increase since 1984! Both the Empire State and the Philadelphia Fed indexes are also up, reflecting manufacturing growth in two key regions.

For the week, the Dow ended UP just 0.2%, to 11018.66; the S&P 500 was down just 0.2%, to 1192.13; while the Nasdaq went UP solidly 1.1%, to 2481.26.

Friday's down day in the stock market sent investors to bonds, where prices moved up nicely heading into the weekend. The FNMA 30-year 4.5% bond we watch closed strongly UP 81 basis points for the week, at $100.50. After inching up four weeks in a row, average mortgage rates fell last week, as reported in Freddie Mac's survey, and still remain at historically low levels!

>> This Week’s Forecast

FOCUS ON HOME SALES... The week begins with the Leading Economic Indicators Index on Monday giving us another broad read on the economy. Then Thursday brings weekly jobs data, the PPI numbers for inflation at the wholesale level and Existing Home Sales for March. Friday we wind up with Durable Goods and March New Home Sales. Q1 corporate earnings season will bring more major players reporting the data investors watch most closely.

by Pat Hill | 0 Comments

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.

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Open House in Lionsgate on Tuesday

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

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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

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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

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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.

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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.

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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.

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