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What’s Ahead For Mortgage Rates This Week – June 17, 2013
Last week’s news was relatively quiet with no data significant to the mortgage lending released until Wednesday, when the federal government announced a $138 billion budget deficit for May.
According to the U.S. Treasury this figure is 11 percent higher than for May of 2012, but the federal budget is expected to come in with less than a -$1 trillion deficit for the 2013 fiscal year, which runs from October to September.
The Treasury estimates that the 2013 budget deficit will come in at approximately -$642 billion, well below fiscal 2012’s deficit of -$1.1 trillion. The federal budget has been running deficits over -$1 trillion since 2008.
Employment Market Continues To Strengthen
On Thursday, the Weekly Jobless Claims report brought good news; jobless claims fell from the prior week’s 346,000 jobless claims to 334,000 jobless claims. This was also less than expectations of 350,000 jobless claims. As more workers gain steady employment, this will enable more would-be home buyers to become active buyers.
May Retail sales also showed slight improvement as they moved from 0.60 percent from April’s 0.10 percent.
According to Freddie Mac’s Primary Mortgage Market Survey (PMMS), the average mortgage rate for a 30year fixed rate mortgage rose from last week’s 3.91 percent to 3.98 percent with discount points unchanged at 0.70 percent. The average rate for a 15-year fixed rate mortgage rose from last week’s 3.03 percent to 3.10 percent with discount points holding at 0.70 percent.
What‘s Coming Up This Week
Next week’s economic news schedule has a number of reports due including Wednesday’s FOMC statement and Fed Chair Ben Bernanke’s press conference. This meeting and press conference are significant as any move by the Fed to reduce or cease its current quantitative easing (QE) program could cause mortgage rates to rise further.
Monday’s news includes the Home Builders Index for June. Tuesday brings the Consumer Price Index (CPI) for May and the Core CPI, also for May. The indices measure prices paid by consumers for goods and services; the Core CPI eliminates the volatile food and energy sectors included in the CPI. Rising or falling consumer costs influence how much discretionary income consumers have for saving toward buying a home.
No news is scheduled for Wednesday other than the FOMC statement and press conference.
Thursday brings the Existing Home Sales Report, Weekly Jobs Report, Freddie Mac PMMS and Leading Indicators. These reports are expected to provide news about U.S. housing markets, mortgage rates and economic influences impacting consumers.
There is no economic news scheduled for Friday.
Case-Shiller Reports Energetic Annual Home Price Gains Nationally
The most recent S&P/Case-Shiller Index showed all three composites posting double-digit increases over the last four quarters. The national composite, which is the broadest based index, showed an increase of 10.2% annually. The 20-City composite posted even stronger annual growth at 10.9%.
Click Here To Download The Full Report
The Case-Shiller Index measures changes in home prices by tracking same-home sales using 10-City, 20-City and national housing markets; and the change in sales price from sale-to-sale. Detached, single-family residences are used in the Case-Shiller Index methodology and data is for closed purchase transactions only.
12 Of 20 Metro Markets Notch Double-Digit Annual Growth
Between March 2012 and March 2013, home values rose in all 20 Case-Shiller Index markets. Phoenix, Arizona (+22.5%) once again was leading the national price recovery, quite possibly due to its precipitous fall during the onset of the housing crisis.
Another notable gainer was San Francisco (+22.2%), followed by Las Vegas, Nevada (+20.6%) On the weaker end were Boston (+6.7%), Cleveland (+4.8%) and New York (+2.6%), but it is important to note that even these smaller numbers still represent significant gains across the board.
There were a total of 12 year-over-year double digit gainers in home value which included those mentioned above as well as Atlanta, Detroit, Los Angeles, Miami, Minneapolis, Portland, San Diego, Seattle and Tampa.
All 20 Metro Markets Show Positive Growth For 3 Consecutive Months
In another very strong supporting point for the housing recovery, all 20 metro markets measured showed positive home price growth for at least 3 consecutive months. This consistency in growth contributes to an overall indication of strength in the housing sector rebound.
The only potential back-pedaling in the report came from noting that higher than normal multi-family housing numbers, large numbers of homes still in the foreclosure process, and significant investor activity may demonstrate that the housing recovery is not yet complete.
This latest S&P/Case-Shiller Home Price Indices report seems to indicate that the housing market continues to show positive growth.
Now may very likely be the best time to move forward with your next Simpsonville real estate transaction. A positive next step is to call your local, trusted mortgage professional for advice today.
Existing Home Sales Numbers Highest Since 2009
The National Association of REALTORS reported that sales of existing homes in April reached 4.97 million on a seasonally-adjusted annual basis.
Although this reading fell short of Wall Street’s expectations of 5.00 million existing homes sold, it surpassed the March 2013 upwardly revised reading of 4.94 million existing home sales. This represents a 0.60 percent increase from March to April, and a 9.70 increase year-over-year.
Low Mortgage Rates Contribute To High Sales Levels
Low mortgage rates and pent-up demand for homes are driving sales of existing homes, which reached their highest level since November 2009.
Lawrence Yun, chief economist for the National Association of REALTORS, indicated that housing market momentum is overcoming obstacles: “The robust housing market recovery is occurring in spite of tight access to credit and limited inventory. Without these frictions, existing home sales would be well above the five million unit pace.”
Inventories of homes for sale are gradually increasing; at the end of April, the total inventory of existing homes had increased by 11.9 percent to 2.16 million existing homes for sale. This represents a 5.20 month supply of available homes in April as compared to a 4.7 month supply of homes in March 2013. Listed inventory is 13.60 percent below April 2012, when there was a 6.60 month supply of homes available.
Average Home Sales Prices Up 14 Months In A Row
The national average price for all housing types was $192,800, and increase of 11.0 percent over April 2012. This represents the fourteenth consecutive month of rising average home prices; the last time this occurred was between April 2005 and May 2006.
Homes sold through foreclosure or short sales fell by three percent to 18 percent of existing homes sold in April. Of these sales, 11.0 percent were foreclosure sales and 7.0 percent were short sales. Foreclosure sales averaged 16.0 percent below market value and short sales averaged 14.0 percent below market value.
The Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac, provided more positive news for U.S. housing markets as of March 2013. Average home prices for homes mortgaged by Fannie Mae and Freddie Mac increased by 7.20 percent year-over-year, and were up by 1.20 percent from February 2013. FHFA also reported that home prices had risen by 6.70 percent in the first quarter of 2013 as compared to the same period in 2012.
New Home Sales Show Rising Trend As Well
In related news, the Department of Commerce reports that New Home Sales are up by 2.30 percent from March to 454,000 units on a seasonally-adjusted annual basis. This handily exceeds Wall Street’s consensus of 430,000 new homes sold in April, and is also higher than March’s reading of 444,000 new homes sold.
Buyers are turning to new homes due to pent-up demand in housing markets caused by low inventories of existing homes and low mortgage rates. It’s also likely that with home prices rising, would-be buyers are acting on indications that record low rates and home prices are expected to increase.
Rising home prices suggest that as demand increases, mortgage rates may not be far behind. Buyers in the Greenville market today can still gain the advantage of historically low mortgage rates.
Home Builder Future Sales Confidence Rises To New Highs
Home builders are gaining confidence in current and future market conditions for new homes, but continue to see below-average foot traffic in new homes.
The reading for May’s National Association of Home Builders (NAHB) /Wells Fargo Housing Market Index (HMI) increased by three points to a reading of 44 as compared to April’s revised reading of 41. The HMI measures builder confidence in current sales conditions for newly built homes, buyer foot traffic in new homes and builder expectations for future sales conditions.
Builder Confidence In Future New Home Sales Highest Since February 2007
The HMI reading for current sales conditions for newly built homes rose from 44 to 48. The reading for buyer foot traffic in new homes rose from 30 to 33, and builder confidence in future sales of new homes rose from 52 to 53, which is the highest reading posted for builder expectations since February 2007.
A reading of more than 50 indicates that more builders consider housing markets good than bad.
NAHB Chairman Rick Judson noted that home builders are facing challenges including rising costs for building materials, lots and labor as supply chains recover from the recession. He also said that builders took note of “urgency” among home buyers wanting to take advantage of low mortgage rates, but who are facing a dwindling supply of available homes.
Regional Housing Market Index Unchanged Except In West
HMI readings for three of the four geographical regions used in the HMI survey of builders remained unchanged with the Northeast at 37, Midwest at 45 and South at 42.
The reading for the West declined by five points to 49, and likely reflects the shortage of building space and available new homes for sale. The regional HMI figures are calculated as a three-month rolling average.
In some areas of the West, home sellers are again receiving multiple offers for homes, a clear indication of diminishing inventories of homes for sale.
As an example, the Sacramento Bee recently reported the dilemma of builders faced with fewer available construction-ready lots alongside an increasing demand for homes. As inventories of both new and pre-owned homes shrink, demand for homes is growing as buyers take advantage of low mortgage rates.
With builders feeling confident about the future and poised to ramp up their home building efforts, it is a great time to consider buying or selling a home in Mauldin.
Contact your trusted real estate professional to discuss your options right away to take advantage of this exciting opportunity.
May 2013 RealtyTrac Foreclosure Report Shows Strength For The US Housing Market
RealtyTrac recently reported that national foreclosure filings are down while foreclosure filings are seeing marked increases in some states.
There are two systems for foreclosing residential real estate in the United States; judicial and non-judicial foreclosure. The states individually decide which foreclosure process will be followed in their state.
Click Here To Download An Overview Of The Foreclosure Process
Judicial foreclosure requires action by the courts because the mortgage is not written including a “power of sale clause”. Judicial foreclosure proceedings generally take longer than non-judicial processes due to this court involvement.
A log-jam of delayed judicial foreclosures are beginning to move through backlogged courts with the result of higher numbers of foreclosures started, foreclosure auctions scheduled, and properties either sold to third parties at foreclosure auctions or repossessed by mortgage lenders.
In states allowing non-judicial foreclosure, the matter may be handled outside of the judicial system as the mortgage is written with the power of sale clause which allows the lender to take control of the mortgaged property to satisfy the outstanding lien.
Here are highlights of April’s foreclosure report:
Nationally, 144,790 foreclosure filings were made in April, a decrease of 5 percent compared to March and representing an annual decrease of 23 percent year-over-year.
Overall, April’s residential foreclosure activity was at its lowest since February 2007. About one of every 905 U.S. housing units had a foreclosure filing during April.
Due to the aforementioned backlog of judicial foreclosures, scheduled foreclosure auctions hit a 30-month high in April rising by 22 percent between March and April.
Some states had markedly higher rates of foreclosure sales scheduled in April 2013 as compared to April 2012. Examples include Maryland (+199 percent), New Jersey (+91 percent), Ohio (+73 percent), Oklahoma (+57 percent), and Florida (+55 percent)
Foreclosure auctions scheduled in non-judicial states were 7 percent lower in April as compared to March, and were an encouraging 43 percent lower in April 2013 as compared to April 2012; this was the lowest reading for non-judicial foreclosure sales scheduled since December of 2005.
Non-judicial foreclosure sales were impacted in some states as the result of legislation affecting foreclosure procedures. Affected states included Arkansas, California, Nevada, Oregon and Washington.
70,133 U.S. homes went into foreclosure in April 2013, which is 40 percent lower than for March 2013 and 28 percent lower than during April 2012.
With home values increasing and large numbers of delayed foreclosures clearing the books, this data offers further evidence that the U.S. real estate market is steadily improving. As more foreclosures are removed from the housing inventory, home prices should continue to stabilize and increase in the Mauldin area.