What Home Buyers Need to Know the Week of December 23, 2013
December’s NAHB/Wells Fargo Housing Market Index, a leading indicator of home builder confidence rose by four points to a reading of 58 and surpassed the consensus of 56, as well as November’s reading of 56. November’s Housing Starts were released Wednesday and also exceeded expectations. The prior month’s reading of 1.09 million housing starts reported for November showed strong gains against expectations of 963,000 and October’s reading of 889,000 housing starts. Building permits issued in November came in at 1.01 million and fell short of October’s reading of 1.04 million while exceeding November expectations of 990,000 permits issued.
The week’s big news was at the end of the Federal Reserve’s FOMC meeting. The committee announced that it would begin tapering the Fed’s $85 billion purchases of securities. The tapering begins modestly with the Fed reducing its rate of purchases to $75 billion monthly and a split of $40 billion in Treasury securities and $35 billion in mortgage-backed securities. In Chairman Ben Bernanke’s final press conference as Fed chair he noted that the FOMC was confident the economy would continue to improve at a moderate rate and that the Fed would continue monitoring economic and financial developments to guide future adjustments in its future purchasing of securities.
Mortgage rates rose after news of the Fed’s tapering of its quantitative easing program and Freddie Mac’s Primary Mortgage Market Survey confirmed expectations of higher mortgage rates. Average mortgage rates ticked upward by five basis points to 4.47 percent for a 30-year fixed rate mortgage with discount point unchanged at 0.70 percent. The average rate for a 15-year fixed rate mortgage rose by eight basis points to 3.51 percent and discounts points dropped from 0.70 to 0.60 percent. The average rate for a 5/1 adjustable rate mortgage rose from 2.94 percent last to 2.96 percent with discount points unchanged at 0.40 percent.
Weekly Jobless Claims came in at 379,000, higher than projections of 338,000 and the prior reading of 369,000 claims. Although the reading was the highest since March, analysts attributed the higher reading to changes in work schedules during the holidays.
Sales of existing homes slipped to their lowest levels in close to a year. The National Association of Realtors reported that existing home sales fell from 5.12 million in October to 4.90 million in November. Projections were set at 5.00 million sales for November, but a shortage of available homes and rising mortgage rates were seen as reasons for fewer sales.
If you’re interested in learning more about home ownership in your city be sure to visit “The Home Buyer’s Korner” to the right of our blog. Here you’ll find great information from local real estate agents, mortgage lenders and general contractors to assist you in your path to home ownership.
What’s Ahead for the Week.
This week’s scheduled economic news effecting real estate is light due to the Christmas holiday, but today releases include Consumer Spending and the University of Michigan’s Consumer Sentiment Index.
Merry Christmas to Everyone!