What Home Buyers Need to Know
May 20th, 2013
Monday: Retail sales for April increased to -0.1 percent from the March reading of -0.5 percent. Wall Street’s forecast was for -0.6 percent. Retail sales are important to economic recovery as sales of goods and services represent approximately 70 percent of the U.S. economy.
Tuesday: The National Federation of Independent Business (NFIB) released its Small Business Optimism Index for April. April’s index rose by 2.6 points to 92.1. A reading of 90.7 indicates economic recovery and based on a survey of 1873 NFIB member businesses.
Wednesday: The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for May matched investor expectations with a reading of 44. It’s worthy to note that the March reading was 41 and suggests that builders are slowly gaining confidence in national housing markets.
Thursday: The U.S. Commerce Department reported that Housing Starts fell by 16.5 percent in April to a seasonally-adjusted annual level of 853,000 and from 1.02 million in March. This reading fell short of investors’ consensus of 965,000 housing starts. A closer look indicates the decrease was created by the apartment construction sector and something property investors will want to watch closely going forward
Friday: Consumer sentiment for May surpassed investor expectations of +0.3 percent and came in at +0.6 percent. Consumer sentiment is an important indicator of future economic growth and as sentiment improves history tells us consumers buy homes. If this sounds like you, be sure to join the konversation as our local Google + Communities to the right of our blog and find the right team of real estate professionals for you.
Mortgage rates rose last week according to Freddie Mac. The average rate for a 30-year fixed rate mortgage rose from 3.42 percent to 3.51 percent with borrowers paying 0.70 in discount points and all other typical buyer closing costs. The 15-year fixed rate rose from 2.61 percent last week to 2.69 percent this week with borrowers paying 0.70 in discount points and all of their closing costs a well. The week’s news is consistent with a strengthening economy and home buyers need to be assured we are still at historically low rates, while home affordability remains strong.
Looking ahead, this week’s economic news includes the Existing Home Sales. April’s report is expected to show 5.00 million homes sold on a seasonally-adjusted annual basis against the March tally of 4.93 million. Also set for release on Wednesday are the Federal Open Market Committee (FOMC) Minutes for the meeting held April 30 and May 1. The FOMC meetings typically include discussions of the Federal Reserve’s current policy on quantitative easing (QE), which consists of the Fed buying $85 billion per month in Mortgage Back Securities. QE is a tool created by the Fed’s to keep rates lows during our economic recovery and something to watch closely as we move into the summer months. When the QE program ends, mortgage rates will likely increase. Thursday brings us the weekly Jobless Claims Report, New Home Sales for April and the Home Price Index. It’s worth noting that the consensus for New Home Sales for April is 430,000 as compared to the March reading of 417,000.
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