Pending Home Sales Archives – Fred Gruber - First Rate Financial Group

02

Jun

Financial Reports

Case-Shiller: Home Price Growth Expands to All Metro Areas

Case-Shiller: Home Price Growth Expands to All Metro Areas March home prices were again dominated by the Northwest with Portland, Oregon posting a year-over-year gain of 12.30 percent followed by Seattle, Washington’s year-over-year gain of 10.80 percent.

Denver, Colorado rounded out the top three cities with a year-over-year gain of 10.00 percent. San Francisco, California, which consistently posted double-digit gains in recent months slipped to a year-over-year gain of 8.50 percent. This may indicate that prices in high cost metro areas are nearing their peak.

S&P Dow Jones Chair David M Blitzer attributed outsized price gains to the shortest supply of available homes since the mid-1980s. Homes for sale account for only two percent of U.S. households. To put rapidly increasing home prices in context, the S&P Case-Shiller 20-City Home Price Index was 11.50 percent below its peak in March, 2006.

Case-Shiller’s 20-City Home Price Index posted a 5.40 percent gain year over year, which was equal to its year-over-year price gain in March 2015. Month-to month home prices gained 0.90 percent; analysts had estimated year-year growth of 5.10 percent and a month-to-month gain of 0.70 percent. All cities in the 20-City Housing Market Index posted gains in month-to-month and year-over-year readings.

Pending Home Sales Exceed Expectations

Pending home sales in April supported trends noted in Case-Shiller’s 20-City Home Price Index. Regional results for pending home sales in April rose by 1.20 percent in the Northeast while pending sales were unchanged in the Midwest. The South posted pending sales gain of 6.80 percent and the West recovered with an 11.40 percent rise in pending sales for April.

Based on April’s pending home sales readings, real estate pros expect a jump in closed sales in May. Home buyer demand remains resilient according to Lawrence Yun, chief economist for the National Association of Realtors. Mr. Yun also said that the key to continued expansion of home sales is providing buyers sufficient supplies of affordable homes. Builders may provide relief by increasing construction, but have cited shortages of labor and developed land as constraints on new construction. Active demand for high-end homes has also focused construction on higher priced homes.

Mortgage applications are also increasing, which indicates that more homes are being purchased by owner-occupant buyers than investors. Relatively low mortgage rates and waning investor interest could provide buyers relying on financing a leg-up in competing for available homes.

30

Mar

By support

Financial Reports

Case-Shiller Report Shows Home Prices Rose in January

Case-Shiller Report Shows Home Prices Rose in January Home prices were 5.70 percent higher year-over-year in January according to S&P Case-Shiller’s 20-City Home Price Index. Top year-over-year gains were posted by Portland, Oregon at 11.80 percent, San Francisco, California at 10.80 percent and Seattle Washington posted a year-over-year gain of 10.70 percent. Denver, Colorado, which had top gains in recent months, posted year-over-year home price growth of 10.20 percent.

Lowest year over-year gains for January were posted by Chicago, Illinois at 2.10 percent, Washington, D.C at 2.20 percent and New York, New York at 2.80 percent.

Average home prices remained about 12 percent below their summer 2006 peak, but have recovered to 2007 levels.

Rising Home Prices and Short Inventory of Homes Impacts Buyers and Sellers

David M Blitzer, Managing Director and Chair of the S&P Indices Committee expressed concerns over rapidly rising home prices and the shortage of available homes. Mr. Blitzer said “would-be sellers seeking to trade up are having a hard time finding a new larger home.” Analysts also noted that home prices are escalating faster than wages, which were growing at a rate of 2.20 percent annually as of February.

New construction is not keeping up with demand; the current supply of available homes is below the normal six month inventory. Mr. Blitzer said that home building is the segment of the housing sector that creates economic growth.

Rapidly rising home prices and low inventories of available homes are potentially sidelining first-time and moderate income buyers. This trend also sandwiches homeowners who want to buy larger homes between a short supply of available homes and finding qualified buyers for their current homes. Mr. Blitzer said that high amounts of education debt and consumer debt are contributing to younger buyers’ inability to qualify for mortgages. Mortgage lenders have loosened mortgage qualification requirements somewhat, but Mr. Blitzer said that lenders haven’t forgotten what happened 10 years ago; they remain reluctant to further ease lending requirements.

Pending Home Sales Rise in February

In related news, the National Association of Realtors reported that pending home sales rose 3.50 percent in February as compared to an expected reading of 1.80 percent and January’s negative reading of -3.0 percent February’s reading for pending home sales was the highest in seven months.

Analysts and real estate pros use pending home sales readings s as indications of future closings and mortgage loan activity.

NAR Chairman Lawrence Yun cited lower mortgage rates as the driving force behind February’s jump in pending home sales. Mr. Yun said that building more homes is essential for boosting home sales; he cautioned that failure to increase the current supply of available homes could cause home sales to “plateau.”

07

Mar

By support

Financial Reports

What’s Ahead For Mortgage Rates This Week – March 7, 2016

Week in Review

Last week’s scheduled economic news included reports on pending home sales, construction spending and several jobs related readings including ADP Payrolls, the government’s Non-Farm Payrolls and the national unemployment rate.

Mortgage Rates, Weekly Unemployment Claims Rise

Mortgage rates rose across the board according to Freddie Mac’s weekly report. The average rate for a 30-year fixed rate mortgage rose two basis points to 3.64 percent; the average rate for a 15-year fixed rate mortgage rose by one basis point to 2.94 percent and the average rate for a 5/1 adjustable rate mortgage rose five basis points to 2.84 percent. Discount points were consistent at 0.50 percent for all three types of home loans.

Weekly jobless claims also rose to 278,000 new claims as compared to expectations of 270,000 new claims and the prior week’s reading of $272,000 new jobless claims. While an increase in new unemployment claims may seem discouraging, new claims for unemployment remain near pre-recession lows.

The four-week rolling average of new jobless claims dropped by 1750 claims to 270,250 and reached its lowest reading in three months. Analysts view the four-week reading as more reliable than week-to-week readings that can be volatile.

Pending Home Sales and Construction Spending

In other news, pending home sales fell by 2.50 percent as compared to December’s reading. Analysts expected an increase in pending sales of 0.50 percent; December’s reading was 0.10 percent higher than for November. Pending home sales represent sales contracts that have not yet closed and are considered an indicator of future closings and mortgage activity.

Home sales have been impacted in recent months by a shortage of available homes; this creates a backlog of would-be buyers who can’t find homes they want to buy and also causes rapidly escalating home prices in desirable areas. Bidding wars and cash sales can sideline buyers who can’t pay cash or are whose offers are outbid.

Analysts say that new home construction is a key component of easing the housing shortage. Construction spending increased by 1.50 percent in January, but month-to-month spending for residential projects was flat in January. Spending for residential projects was 7.60 percent higher year-over-year.

Labor Reports Reflect Stronger Economy

Federal and private sector reports on jobs indicate that job growth continues. The Department of Commerce reported that Non-Farm Payrolls grew by 242,000 jobs in February, which was higher than expectations of 195,000 new jobs and January’s reading of 172,000 new jobs. According to ADP, which tracks private sector payrolls, 214,000 new jobs were created in February as compared to expectations of 185,000 new jobs and January’s reading of 193,000 new jobs.

Improving jobs markets are a positive indicator for housing markets as stable employment is important to home buyers’ ability to qualify for mortgages. The National Unemployment Rate remained stable in February with a reading of 4.90 percent; the expected reading and prior month’s reading were also 4.90 percent.

What‘s Ahead

Next week’s scheduled economic reports include the NFIB Small Business Index and February’s Federal Budget along with regularly scheduled weekly reports on mortgage rates and new unemployment claims.