Pat Hill Realtor

Housing Market as of August 10,2009

>> Home Base INFO THAT HITS US WHERE WE LIVE We got another positive housing report last week, this time with Pending Home Sales shooting up a surprising 3.6% after a mere 0.7% was expected by the experts. This makes five consecutive months of gains for Pending Home Sales and that's the first time that's happened since July 2003. Low mortgage interest rates and affordable home prices are what's moving things upward. The affordability is amazing. The median existing home price in June was $181,600. But a family earning the median income – $60,700 – could actually afford a home costing $289,100. With 20% down, they would spend about 25% of their gross income on the mortgage payment! And rates dropped again last week, keeping things very affordable indeed. The Wall Street Journal reported inventories of homes for sale fell again in many U.S. cities last month. In 28 major metro areas, the supply of homes for sale at the end of July was down 2.5% from June, including single-family homes, condominiums and town houses. This compares to an average drop for July of just 1.0% over the last 25 years. Compared to July 2008, inventory in these 28 metros was down a whopping 27%!

>> Review of Last Week RECESSION OVER?... Let's not get ahead of ourselves. No one's claiming the recovery is in full swing, but there are plenty of signs the bottoming process may be coming to an end. Investors certainly supported that view last week, as their solid buying sent stock prices up nicely again. The Dow is now up almost 7% for the year. The broader S&P 500 that professionals prefer to watch is up almost 12% for the year, and just went over the 1,000 threshold. The more volatile Nasdaq has almost a 27% gain for the year and just edged past 2,000. This week's good feelings weren't just the result of good corporate earnings reports, although we had some nice news in that department. Ford reported a 2.3% monthly sales boost, its first since 2007. Tech giant Cisco and consumer giant Procter & Gamble also beat earnings estimates. But get this. Bad boy AIG, who needed a big bailout because of its credit default swap fiasco, came in with its first quarterly profit since Q3 of 2007 and it was almost a buck over expectations. This should make taxpayers feel great, since we now own so much of the company. There was a bit of a downer from year-over-year same-store sales coming in below expectations for 15 of 27 retailers. The big boost in positive energy came from economic data. Pending Home Sales were noted above. Then we had ISM Manufacturing moving up for the seventh straight month, to 48.9 for July. This is awfully close to 50, above which is economic expansion! But the blockbuster of them all was the highly anticipated, week-ending Employment Report, which came in with a way-better-than-expected 247,000 jobs lost in July, the lowest level in nearly a year. And the unemployment rate dropped for the first time in months, to 9.4%. It sure looks like we're starting a recovery, though no one knows how strong it will be. The Dow shot UP 2.2% for the week, to 9370.07; the S&P 500 moved UP 2.3%, to 1010.48; while the Nasdaq finished UP 1.1%, to 2000.25. With stocks ending the week on a strong upturn from the encouraging employment report, bond prices dipped. The price of the FNMA 30-year 4.5% bond we watch ended down from the previous week's close of $100.62, dropping to $98.75. Nonetheless, mortgage interest rates are still holding at low levels.

>> This Week’s Forecast SHOP TILL YOU DROP... More retail data will be a focus for this week, as world no. 1 retailer Wal-Mart reports earnings, along with Macy's, Kohl's, Nordstrom and JCPenney. We'll also get July Retail Sales figures and the CPI take on inflation. In the midst of all this will be another little two-day meeting from our friends at the Fed. The FOMC (for Federal Open Market Committee) rate decision coming out is not expected to change the funds rate one iota. But the statement released by the committee at 2:15 on Wednesday is sure to get picked apart for signs of future moves by the Fed... and the economy.

Published Monday, August 10, 2009 10:02 AM by Pat Hill