Home Prices Record Record Month To Month GainsThe S&P Case-Shiller Home Price Indices for April indicate that the housing recovery gained ground.

In April 2013 average home prices tracked in the Case-Shiller 10 and 20-city Composites increased by 11.60 and 12.10 percent year-over-year. On a month-to-month basis, the Composites increased by 2.60 and 2.50 percent respectively.

According to David M. Blitzer, Chairman of the S&P Dow Jones Indices’ Index Committee, the 10-and 20- City Composites experienced their largest month- to- month gains since their inception: “Thirteen cities posted month- to-month gains of two percent or more, with San Francisco leading with a month-to-month gain of 4.90 percent.”

The 10-and-20 City Indices reported the highest year-over-year gains in home prices since 2006.  Cities where home prices gained more than 20 percent year-over-year included Atlanta, Las Vegas, Phoenix and San Francisco. Phoenix posted its 12th consecutive month of double-digit increases in home prices while San Francisco home prices increased year-over-year by an average of 23.90 percent. Home prices increased year-over-year in 19 the 20 cities included in the 10-and 20 City Composites, with home prices in Detroit remaining flat.

Mortgage Loan Requirements Showing Signs Of Loosening

Mr. Blitzer also noted that according to the most recent Fed Senior Loan Officer Opinion Survey, some lenders are beginning to relax credit requirements for mortgage loans. This good news, along with the availability of adjustable-rate mortgage loans is expected to help with maintaining affordability and providing access to homes for more buyers.

According to the S&P Case-Shiller 10-and-20 City Composites, home prices fell approximately 26 to 27percent from their highest in June 2006 to their lowest in March 2012. As of April 2013, average home prices had recovered by 13.10 percent for the 10-City Composite and 13.60 percent for the 20-City Composite.

More Reports Show Ongoing Housing Recovery

The Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac, reported that home prices increased an average of 7.40 percent year-over-year as of April 2013, and rose by 0.70 percent between March and April 2013. While this data fell short of an expected month-to-month increase of 1.10 percent, Average FHFA home prices were 11.70 percent below their peak in April 2007.

FHFA bases its report on sales of homes financed with mortgages owned or securitized by Fannie Mae and Freddie Mac.

The U.S. Commerce Department reported that sales of new homes reached a five-year high in May, the highest level since July 2008. May sales increased 2.10 percent between April and May 2013 to a seasonally-adjusted annual rate of 476,000 homes. This represents a year-over-year increase of 29 percent from May 2012.

While rising mortgage rates and home prices may slow demand for homes, economists don’t believe that either factor will halt the housing recovery. A good next step is asking your trusted mortgage professional about current home values and loan options in and around Richmond.

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What's Ahead For Mortgage Rates This Week - June 24, 2013

Mortgage rates continued their upward trend last week.  Comments by Fed chairman Ben Bernanke after Wednesday’s FOMC meeting caused havoc in financial markets as investors anticipated the potential effects of any rollback of the Fed’s policy of quantitative easing (QE). Chairman Bernanke said that the Fed may begin reducing its $85 billion monthly purchase of Treasury securities and Mortgage Backed Securities (MBS) toward the end of this year.

Will Mortgage Rates Fall This Week?

Rates have risen significantly over the previous 3 days, following a similar pattern over the previous month.  It is doubtful that rates will drop back to the levels we saw this spring but may ease a little.  Historically speaking mortgage rates are still at rock bottom low levels.

There is a good amount of economic data being released this week that will impact financial markets:

Economic Calendar:

Week Of Mon, Jun 23 2013 – Fri, Jun 27 2013
Time

Event

Period Unit Forecast
Tue, Jun 25
08:30 Durable Goods May

%

3.0

09:00 FHFA Home Price mm

Apr

%

09:00 Case Shiller Home Prices

Apr

%

1.2

10:00 New home sales-units mm May ml 0.463
10:00 Consumer confidence Jun

75.5

13:00 2-Yr Note Auction

bl

35.0

Wed, Jun 26
07:00 MBA Mortgage market index

w/e

07:00 MBA 30-yr mortgage rate

w/e

%

08:30 GDP Final

Q1

%

2.4

08:30 GDP deflator Final

Q1

%

1.1

13:00 5yr Treasury Auction

bl

35.0

Thu, Jun 27
08:30 Midwest manufacturing May

08:30 Personal income mm May

%

0.2

08:30 Consumption, adjusted mm May

%

0.3

10:00 Pending sales change mm May

%

0.9

13:00 7-Yr Note Auction

bl

29.0

Fri, Jun 28
09:45 Chicago PMI Jun

56.0

09:55 U.Mich sentiment Jun

82.7

It’s Not Too Late To Lock A Low Rate

Rates have risen from all time lows.   Home affordability is high and studies have estimated millions of home owners would still benefit by refinancing at current rates.  Now is a good time to talk with your loan officer.

 

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Home Builder Confidence Jumps By Widest Margin Since 2002U.S. housing markets are gaining as demand for homes exceeds available supplies in many areas. The National Association of Home Builders/ Wells Fargo Housing Market Index (HMI) for June increased by eight points over May’s reading to achieve a positive reading of 52. This last happened in August-September of 2002, when HMI monthly readings also jumped by eight points.

Any reading over 50 indicates that more builders consider housing market conditions positive than negative. June’s reading was the first time the HMI reading surpassed a reading of 50 since April 2006.

Limited Inventory Drives Sales Of New Homes

Rick Judson, NAHB Chairman, cited short supplies of existing homes as a factor driving sales of new homes. As demand for homes grows and inventories of available existing homes fall, buyers are increasingly buying new homes.

Sales of existing homes continue to be impacted by factors such as homes worth less than the mortgages held against them and sellers taking a “wait and see” attitude toward listing their homes for sale.

All three of the components of June’s national HMI gained:

  • The reading for current sales conditions rose from 48 to 56.
  • Expectations for future sales gained nine points to 61.
  • June’s reading for buyer foot traffic in new homes gained seven points for a reading of 40.

Regional Home Builder Confidence Grows In 3 Of 4 Regions

The 3-month rolling average readings for regional home builder confidence showed increases in three of four regions:

  • Northeast: Builder confidence increased by one point to 37.
  • Midwest: Builder confidence rose by one point to 47.
  • South: Builder confidence rose by four points to 46.
  • West: Builder confidence dropped by one point to 48.

High demand and a shortage lots available for building new homes contributed to the West’s slight decrease in builder confidence. Overall, increasing home builder confidence is a sign of economic recovery, but as the economy gains momentum and home prices continue rising, mortgage rates can be expected to rise as well.

Housing Starts Up 28% Annually In May

The U.S. Department of Commerce reported Wednesday that national housing starts rose by 6.80 percent from April’s revised reading. May’s reading of 914,000 housing starts was reported on a seasonally adjusted annual basis. May’s reading was 28.80 percent higher than for May 2012.

Single-family housing starts (one to four units) fell short of investor expectations of 953,000 but exceeded April’s revised reading of 856,000.

Multi-family housing starts surpassed single-family housing starts, but any additions to low inventories of single-family homes could ease the difference between high demand and low inventories of available homes. Meeting demand for homes would temper rising home prices, which could help potential buyers qualify for mortgage loans.

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RealtyTrac Foreclosure Report Shows 28 Percent Decline From May 2012

Foreclosure actions increased by 2.0 percent in May from April’s 75 month low point for foreclosure activity according to RealtyTrac’s U.S. Foreclosure Market Report released June 11. However, the good news is that May 2013 foreclosure filings were still 28 percent below May 2012 filings.

RealtyTrac reports that approximately one in 885 homes were in some stage of foreclosure in May. This does not mean that 1 in 885 homes was lost to foreclosure, but it does indicate that documents related to some phase of foreclosure (Notice of Default, Notice of Trustee Sale, and Bank Reposession) were filed.

Actual lender repossessions (REO) increased by 11 percent in May, but were down by 29 percent as compared to May 2012. 33 states reported increases in REOs with North Carolina, Oregon and Wisconsin having the highest numbers of REO properties added.

Judicial Foreclosure States Lagging In Clearing Foreclosure Inventory

Foreclosure starts were up by 4 percent in May, but were 33 percent lower than for May of 2012. States using judicial foreclosure proceedings were 5 of the top 6 states for foreclosure filings. The state of Nevada, which uses non-judicial foreclosure proceedings, was second after Florida and ahead of Ohio, South Carolina and Illinois.

In general, judicial foreclosure proceedings take longer to complete than non-judicial foreclosures. This results in homes being unavailable for sale for longer periods of time. Lenders are required to complete the foreclosure process and in some cases, they must await expiration of a redemption period before a foreclosed home can be repaired and sold.

In states using non-judicial foreclosure proceedings, the time between the initial foreclosure filing and the foreclosure sale can be as little as three to four months. Quickly turning over foreclosed homes is helpful for improving regional housing markets and making more homes available for purchase. Economists have recently cited low inventories of homes as holding back housing markets in some areas.

Bank Owned Properties Provide Buying Opportunities

Lender-owned properties provide potential opportunities for first-time buyers and others seeking affordable homes. Mortgage lenders tend to offer attractive sale terms on REO properties, as their objective is to move these homes out of their inventories as quickly as possible.

Some foreclosure properties are also lacking current maintenance and are often sold as-is. DIY enthusiasts can buy and renovate foreclosed homes for owner occupancy or investment. 

It’s a good idea to discuss your interest in the opportunities available for financing a Henrico lender-owned home with your trusted mortgage professional.

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What's Ahead This Week - June 17, 2013Last 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.

Whats Coming Up This Week

 

Week Of Mon, Jun 17 2013 – Fri, Jun 21 2013

Time

Event

Period

Unit

Forecast

Prior

Mon, Jun 17
10:00 NAHB housing market indx

Jun

45

44

Tue, Jun 18
08:30 Housing starts number mm

May

ml

0.924

0.853

08:30 Building permits: number

May

ml

0.980

1.005

08:30 CPI mm, sa

May

%

0.1

-0.4

08:30 Core CPI mm, sa

May

%

0.2

0.1

08:30 Core CPI yy, nsa

May

%

1.7

1.7

Wed, Jun 19
07:00 Mortgage market index

w/e

670.7

07:00 MBA 30-yr mortgage rate

w/e

%

4.15

14:00 FOMC Announcement

n/a

%

0.25

14:00 FOMC Forecasts

n/a

14:30 Bernanke Press Conference

n/a

Thu, Jun 20
08:30 Initial Jobless Claims

w/e

k

340

334

08:58 Markit PMI

Jun

52.8

52.3

10:00 Existing home sales

May

ml

5.01

4.97

10:00 Philly Fed Business Index

Jun

-0.2

-5.2

13:00 30-Yr TIPS auction

bl

7.0

 

Although home loan rates are not as low as they were a few months ago, they are still extremely attractive and now is a good time to buy a home.

 

 

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What's Ahead For Mortgage Rates This Week -- June 10, 2013Last week’s economic reports provided a mixed bag of results. On Monday, the Department of Commerce reported that construction spending increased by 0.40 percent in April and fell shy of the expected reading of 1.0 percent, but exceeded the March reading of -0.80 percent.

Home Prices Increase Fastest Since 2006

On Tuesday, CoreLogic released its Home Prices reported that the national average home price had increased by 12.10 percent year-over-year in April. The comparable year-over-year reading for April 2012 was 11.00 percent. This represents the fastest pace of home price increases since 2006.

The national average home price expanded by 3.20 percent as compared to March,  but average prices grew faster in the West, which is experiencing a pronounced lack of available homes and developed land for building.

New Jobs Created Showing Improvement Over April Revisions 

ADP released its private-sector Payrolls Report for May on Wednesday; 135,000 new private sector jobs were added as compared to investor expectations of 170,000 jobs added in May. The May reading surpassed April’s downwardly-revised reading of private-sector jobs added.

Friday’s Jobs Report, issued by the Bureau of Labor Statistics, consists of the Non-Farm Payrolls Report and the National Unemployment Rate. Non-Farm Payrolls added 175,000 public and private sector jobs and surpassed both the consensus reading of 164,000 new jobs and the prior week’s reading of 149,000 jobs added. The National Unemployment Rate ticked up from 7.50 to 7.60 percent. The Department of Labor attributes this increase to more people joining or returning to the labor market.

Investors Watching Fed Mortgage Backed Security Buying Activity Closely

The Federal Reserve Beige Book Report was also released Wednesday. It contained no surprises and noted modest to moderate economic growth in 11 of 12 Federal Reserve Districts. The Dallas Federal Reserve District reported strong growth, but investors will be watching next week’s Federal Open Market Committee (FOMC) meeting closely for proposed changes to the Fed’s current policy of buying bonds and mortgage backed securities (MBS) with the goal of keeping long term interest rates lower.

Thursday’s Primary Mortgage Market Survey brought disquieting news of rising mortgage rates. Freddie Mac reported that the average rate for a 30-year fixed rate mortgage had risen from the prior week’s rate of 3.81 percent to 3.91 percent. Discount points fell slightly from 0.80 percent to 0.70 percent with buyers paying all of their closing costs. The average rate for a 15-year fixed rate mortgage rose from last week’s average rate of 2.98 percent to 3.03 percent with discount rates remaining the same at 0.70 percent for buyers paying all of their closing costs.

Whats Ahead this Week

Week Of Mon, Jun 9 2013 – Fri, Jun 13 2013

Time

Event

Period

Unit

Forecast

Prior

Tue, Jun 11
10:00 Wholesale sales mm

Apr

%

0.0

-1.3

10:00 Wholesale inventories mm

Apr

%

0.2

0.4

13:00 3-Yr Note Auction

bl

32.0

Wed, Jun 12
07:00 MBA Mortgage market index

w/e

638.7

07:00 MBA 30-yr mortgage rate

w/e

%

4.07

13:00 10yr Treasury Auction

bl

21.0

14:00 Federal budget, $

May

bl

-110.0

112.9

Thu, Jun 13
08:30 Import prices mm

May

%

0.0

-0.5

08:30 Export prices mm

May

%

0.0

-0.7

08:30 Retail sales mm

May

%

0.3

0.1

08:30 Initial Jobless Claims

w/e

k

345

346

10:00 Business inventories mm

Apr

%

0.3

0.0

13:00 30-Yr Treasury auction

bl

13.0

Fri, Jun 14
08:30 Current account (Trade Gap)

Q1

bl

-109.0

-110.4

08:30 Producer prices, core yy

May

%

1.7

1.7

08:30 Producer prices, core mm

May

%

0.1

0.1

09:15 Industrial output mm

May

%

0.2

-0.5

09:15 Capacity utilization mm

May

%

77.9

77.8

09:55 U.Mich sentiment

Jun

84.5

84.5

The potential for volatility remains.

 

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What’s Ahead For Mortgage Rates This Week – June 3, 2013Volatility in the financial markets continued last week.  Tuesday turned out to be one of the worst days for mortgage rates in history.  Consumer confidence was strong, year-over-year home prices rose sharply and the stock market continued to rise.  Mortgage rates ended the week about 1.5 discount points higher.

Rising mortgage rates suggest that home buyers may benefit from considering hybrid adjustable rate mortgages; the average rate for a 5/1 hybrid ARM was 2.66 percent with 0.50 percent in discount points.

Week Of Mon, Jun 3 2013 – Fri, Jun 7 2013

Time

Event

Period

Unit

Forecast

Prior

Mon, Jun 3
08:58 Markit Manufacturing PMI

May

51.9

10:00 Construction spending

Apr

%

1.0

-1.7

10:00 ISM Manufacturing

May

50.5

50.7

Tue, Jun 4
08:30 International Trade

Apr

bl

-41.0

-38.8

Wed, Jun 5
07:00 MBA Mortgage market index

w/e

721.4

08:15 ADP National Employment

May

k

160

119

08:30 Productivity Revised

Q1

%

0.7

0.7

08:30 Labor costs Revised

Q1

%

0.5

0.5

10:00 ISM N-Mfg PMI

May

53.3

53.1

10:00 ISM N-Mfg Bus Act

May

55.0

55.0

10:00 Factory orders mm

Apr

%

1.5

-4.9

Thu, Jun 6
08:30 Initial Jobless Claims

w/e

k

345

354

Fri, Jun 7
08:30 Non-Farm Payrolls

May

k

160

165

08:30 Unemployment rate mm

May

%

7.5

7.5

08:30 Average workweek hrs

May

hr

34.5

34.4

08:30 Average earnings mm

May

%

0.2

0.2

15:00 Consumer credit

Apr

bl

12.50

7.97

Keep prospective, Mortgage rates continue to be at historically low levels and the additional monthly payment resulting from rising rates over the last two weeks on a $250,000 mortgage has changed by less than one tank of gas.

MBS Commentary.

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Case-Shiller Reports Energetic Annual Home Price Gains NationallyThe 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 Henrico real estate transaction.  A positive next step is to call your local, trusted mortgage professional for advice today. 

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Existing Home Sales Numbers Highest Since 2009The 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 Midlothian  market today can still gain the advantage of historically low mortgage rates.

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Home Builder Confidence Surges In May 2013Home 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 Richmond.  

Contact your trusted real estate professional to discuss your options right away to take advantage of this exciting opportunity.

 

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