Rental Homes in Demand

Housing data was plentiful today with both good news and not so good news. Home prices continue to move higher as evidenced by the 12.2% year-over-year gain in the Case/Shiller 20-city Composite Home Price Index. It was the biggest annual gain since March of 2006. From April to May, prices rose 2.4% for the 20-city index.
Over in the foreclosure front, Corelogic reports that completed foreclosures dropped by nearly 20% from June of 2012 (68,000) to June of 2013 (55,000). The 55,000 in June was slightly higher than the 53,000 recorded in May. Since the beginning of this year, foreclosure inventories have declined by 14%. A completed foreclosure occurs when a property is auctioned and results in the purchase of the home at auction by either a third party, such as an investor, or by the lender.
The homeownership rate in the U.S. has now fallen back to levels not seen in two decades and is well below its record high of 69.2% hit back in 2004, currently at 65.1%. During the recent housing crisis, more than 7 million Americans were ripped from their homes after the bubble burst and busted. The rate is expected to fall to 64% due to foreclosures as people enter the rental markets.
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Mortgage News

The Federal Housing Finance Agency (FHFA) reported today that housing prices rose 7.3% in the 12 months ended in May as buyers vied for a smaller amount of listings as inventories have declined. In addition, there was a 0.7% rise from April to May. The FHFA Housing Price Index measures transactions for single-family properties that are financed through Fannie Mae and Freddie Mac.

The closely watched S&P 500 Stock Index hit yet another closing record high (1,675) yesterday and can be attributed in part to the easy money policies from the Federal Reserve (the Fed). The Fed has been purchasing $85 billion a month in Treasury Securities and Mortgage Backed Securities in an effort to stimulate the economy and to ensure job growth.

There were no economic reports released today and the rest of the week's calendar is on the light side with readings on New Home Sales due out tomorrow and Weekly Initial Jobless Claims on Thursday.
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Home Sales Fall

The National Association of Realtors reported today that Existing Home Sales fell 1.2% in June from May to 5.08 million units on an annualized basis. Inventories rose to 5.2 months supply from 5 months in June while the national median price was $214,000, up 12.5% from June of 2012.

In its second half forecast for 2013, Fannie Mae reports that the housing recovery is expected to continue with improvement in both consumer confidence and the labor markets. In addition, despite the recent rise in mortgage rates, home sales have held up and home prices will continue to post gains.
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Rising Mortgage Rates and NOW Gas too!

Freddie Mac reported today that the 30-year fixed conventional home loan rate rose to 4.51%, but to obtain that rate a potential borrow would have to pay 0.8 in points and fees. This is up from 4.29% last week and up from 3.65% a year ago. Home loan rates have been rising since the May 1 lows, due to ongoing talk that the Fed will pull back on its stimulus programs geared towards holding rates low.

Don't look now, but gas prices at the pump could be spiking in the next several days due to rising oil prices. The current national average is at $3.51, up 3 cents since Tuesday. Gas prices were higher a month ago at $3.63...unrest in the middle east and the summer driving season will push prices up in the coming weeks. In addition, inventories in the U.S. dropped for a second week.
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Rates Rise

The Mortgage Bankers Association reported this morning that its Market Composite Index, a measure of loan application volume, fell by 4% in the latest week as home loan rates hit their highest levels in two years. The refi index fell 4% while the purchase index declined by 3%. Home loan rates have been rising since mid-May on comments from the Fed Chairman Ben Bernanke saying that it expects to wind down the pace of its Bond buying program later this year if the economy continues to improve.
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