The Home Buyer's Korner

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October 6th, 2014

What Home Buyers Need to Know for the Week of October 6th, 2014

The Home Buyer's Korner LogoLast week we received several economic reports effecting housing. The good news came from the job markets as it appears to be stronger, with new jobless claims down and the national unemployment rate lower. However, it didn’t seem to cross over into housing, as the market continues to struggle.

S&P Case-Shiller Housing Market Index showed slower growth in 19 of 20 cities showcased in the report, while July home prices gained 6.70 percent year-over-year compared to June’s year-over-year reading of 8.10 percent. 

The National Association of REALTORS® released its data for August and showed that Pending Home Sales dropped by 1.10 percent to a reading of 104.7 as compared to July’s reading of 105.8. In a further review of the numbers, Pending Home Sales fell by 2.20 percent year-over-year. Housing Analysts point to investor participation as the contributing drop in pending sales, but with less of them in the market it could help first time home buyers in locating and acquiring homes with great equity building opportunity.

Regional results showed fewer Pending Home Sales in all regions accept the West, where Pending Home Sales actually rose by 2.60 percent in August

Housing Analysts said that as distressed home sales diminish, mortgage rates and home prices rise, investors are not buying as many homes.  However, this fact could bode well for first time home buyers, given the fact that it’s all about the margins.  Although the margins might not be there for property investors, it affords great opportunity for first time home buyers, as competition is diminished in this sector.

Construction spending for August also fell by 0.8 percent on a seasonally adjusted basis, but the good news was spending on residential construction dropped only 0.10 percent.

According to Freddie Mac’s PMMS report, average mortgage rates were mixed. The average mortgage rate for a 30-year fixed rate dropped by one basis point to 4.19 percent, with discount points lower at 0.40 percent. The average mortgage rate for a 15-year fixed rate mortgage held steady at 3.36 percent with discount points unchanged at 0.50 percent. The average mortgage rate for a 5/1 adjustable mortgage fell by two basis points to 3.06 percent and discount points held steady at 0.40 percent.

The Jobs Market is showing signs of improvement according to data on weekly jobless claims and reports released by the Department of Commerce. Weekly jobless claims grew by 287,000 as compared to expectations of 298,000 new claims. The Department of Commerce also released its Non-farm Payrolls Report for August with more good news. 248,000 jobs were added against expectations of 220,000.  And, the national unemployment fell below the six percent benchmark in August with a reading of 5.90 percent.

September’s Consumer Confidence Index, however suggests that economic conditions continue to concern most American. The reading for September was 86.0 against an expected reading of 92.3 and August’s reading of 93.4.

What’s Ahead for the Week?

It’s going to be slow this week, as no housing news is scheduled other than Freddie Mac’s weekly report on mortgage rates. We will however get economic news which includes the new Labor Market Conditions Index, Job Openings, and the release of minutes from the last FOMC Meeting