Pat Hill Realtor

Housing Market for the Week of August 24, 2009

INFO THAT HITS US WHERE WE LIVE - Last week began with somewhat tepid housing news, as starts were reported down 1.0% for July. But once again, the decline was all due to a drop in the volatile multi-family part of the market. In fact, single-family starts actually increased 1.7%, gaining for the fifth month in a row and now up 37.3% since February! Likewise, building permits for single-family homes were UP 5.8% for July, gaining for the fourth month in a row! The National Association of Home Builders chimed in with their builders' confidence index at a new high of 18. We ended the week with existing home sales UP 7.2% in July to a 5.24 million annual rate. This is the fourth month in a row of gains and the biggest one since the mid-1990's. Sales are now HIGHER than a year ago and that's the first time we've seen that since 2005. Since the January low, overall sales are UP 17%. Experts say housing will recover when there's a bottom in sales, a bottom in building and a bottom in prices. Well, sales and starts have now been UP for several months. Some observers estimate national average home prices are at or even below fair value and should therefore bottom by year end, with many areas likely to see prices inch upward very soon.

Review of Last Week - HEADED BACK UP... The stock indexes registered their fifth weekly win out of the last six weeks, with the S&P 500 reaching its highest level since October. At the same time, commodities were strong, with crude oil hitting a 10-month high. The week did get off to a shaky start, thanks to China's stock market reversing course. The Shanghai Composite had been up 109% from last October to the beginning of August, but went down 10% last week and 20% over the last two weeks. But investors ultimately remembered it's still the US economy that leads the way and our companies are reporting pretty good Q2 earnings. Another sour note came from Initial Jobless Claims, up by 15,000 for the week, although continuing claims pretty much stayed the same. On the positive side, in addition to the extremely encouraging housing numbers, we had good indicators for manufacturing. The Empire State index, gauging manufacturing in the New York region, increased to +12.1 in August and is now the highest it's been since November 2007. Later in the week, the Philadelphia Fed index for manufacturing activity in that region increased to +4.2 for August. This is its first positive reading since 2007 and indicated that manufacturing is now expanding. All this contributed to a 156-point market gain on Friday. For the week, the Dow was UP 2.0%, to 9505.96; the S&P 500 shot UP 2.2%, to 1026.13; while the Nasdaq ended UP 1.8%, to 2020.90. Bond prices held up pretty well for most of the week, but got slammed Friday as stocks rallied and traders worried about upcoming supply. The price of the FNMA 30-year 4.5% bond we follow ended just a tad below the previous week's close of $99.88, dipping to $99.69. Mortgage interest rates, remaining in the very attractive range they've been in all year, hit their lowest levels in months.

This Week’s Forecast NEW HOME SALES AND Q2 GDP... Interesting economic reports pepper the week, with New Home Sales getting our attention, of course, and then preliminary Q2 GDP. We'll also have August Consumer Confidence and July Personal Income and Spending. These are important takes on the health of the consumer, whose spending drives two-thirds of the economy.

Published Monday, August 24, 2009 12:11 PM by Pat Hill