The Home Buyer's Korner

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June 3rd, 2013

What Home Buyers Need To Know ~ June 3, 2013

Guy looking up in colorFinancial news last week was light due to the Memorial Day holiday. The biggest news in terms of housing and mortgages was the S&P/Case-Shiller Housing Market Indices (HMI) released on Tuesday.  The March HMI data for national housing markets showed a strong increase in year-over-year home prices from 9.30 percent in February to 10.90 percent in March.

Twelve cities included in the Case-Shiller 20-city index reported double-digit year-over-year percentage gains for March home prices. The data strongly supports a recovering housing market, but analysts point to the need for more jobs, which would enable more consumers to buy homes.  Thursday’s weekly Jobless Claims Report from the Labor Department highlighted ongoing problems with lagging employment as new jobless claims jumped to 354,000. It was worth nothing that the four-week moving average for new jobless claims increased by 6.75 percent to 347,250 new jobless claims.

The Bulls on Wall Street Are Having An Affects Mortgage Interest Rates

Mortgage rates jumped in connection rising stock prices; Freddie Mac reported that the average rate for a 30-year fixed rate mortgage increased to 3.81 percent plus 0.80 percent in discount points.  The average rate for a 15-year fixed rate mortgage increased to 2.98 percent plus 0.70 percent in discount points.  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.  If you’re considering purchasing a starter home or only plan to live or own the property for a few years these fixed/adjustable ARM’s are attractive financing tools to consider.  To find out more about them contact a mortgage professional by visiting The Home Buyer’s Korner to the right of our blog for your city.

The Chicago Purchasing Managers Index (Chicago PMI) measures how manufacturing and related businesses perform on a monthly basis.  May’s reading increased to 58.70 and surpassed expectations of a 49.90 reading as well as April’s reading of 49.00. Readings above 50 are considered positive.

Consumer Sentiment rose in May to a reading of 84.50 and exceeded both the expected reading of 83.80 and April’s reading of 83.70. As Consumer Sentiment rises they are more likely to buy homes.

What Home Buyers Need To Know For This Week

Construction spending consensus for April was estimated at +1.00 percent, but came in at +0.40 percent.  It’s worth noting the March’s construction spending was down -1.70 percent for March.  New home construction continues to face headwinds including increasing labor and material costs and a shortage of available land for residential building.

Thursday’s we have the weekly Jobless Claims report and Freddie Mac’s weekly report of average mortgage rates.

Friday brings us the monthly Jobs Report and consists of the Department of Labor’s Non-farm Payrolls report and the monthly unemployment rate. The reports are significant for gauging both national and regional labor markets, as well as anticipating the Fed’s decision regarding Quantitative Easing (QE3) that is having strong impact on keeping rates low.  If the Fed ceases or reduces its purchase of Treasury securities and mortgage-backed securities (MBS), mortgage rates are likely to rise.