What Home Buyers Need To Know for July 8th, 2013
On Monday the Department of Commerce reported overall construction spending increased by 0.50 percent for May to a seasonally adjusted annual rate of $874.9 billion. Residential construction grew by 1.20 percent and May 2013 construction spending was 5.40 percent higher than the same time one year earlier. Spending in new home construction points to builder confidence and will play a key role in easing low inventories of available homes many parts of the country is experiencing.
Tuesday CoreLogic issued its May report on national home prices and showed an increase by 12.20 percent over May 2012, as well as a monthly growth rate 2.60 percent in this past month of May. Worth nothing in the report is that distressed homes are also included and further points to a rebounding housing market. Excluding distressed homes, sales rose by 2.30 percent in May for a year-over-year increase of 11.60 percent.
States hardest hit in the economic downturn are showing exceptional recovery in home prices. Nevada for example reports a home prices rose by 26 percent year-over-year. Some local economist point to concerns of local bubbles due to these rising prices, however overall double-digit increases in home prices most likely is good news for the local economies as prices still remain approximately 20 percent below their peak in 2006.
What’s up with the Employment Data and its Effect on Housing?
Jobs are a key factor for most home buyers and their ability to qualify for a mortgage and last week more good news on that front. ADP reported on Wednesday that 188,000 private-sector jobs were added in June and the highest increase in four months. The number surpassed expectations of 160,000 new jobs.
Freddie Mac’s mortgage rates survey had some good news for home buyers. The average rates for a 30-year fixed rate mortgage fell from 4.46 percent to 4.29 percent with discount points also falling from 0.80 to 0.70 percent. The average rates for a 15-year mortgage fell from 3.50 percent to 3.39 percent, with discount points moving from 0.80 percent to 0.70 percent.
Friday’s Non-Farm Payroll and the National Unemployment Rate released by The Labor Department Payrolls and the national Unemployment Rate for June. Non-farm matched May’s level of 195,000 jobs added and surpassed expectations of 155,000 jobs added. The unemployment rate remains at 7.60 percent and just over expected rate of 7.50 percent.
As we move to any prospects of the Federal Reserve’s withdrawal to Quantitative Easing (QE3) many home buyers have been concerned as to where rates are going in the immediate future.
With the Federal Reserves stated benchmark unemployment rate of 6.50 percent as a criterion for raising the federal funds rate this news should continue to keep rates relatively low and at current levels.
This week’s economic news includes today’s report on consumer credit and not yet reported as I’m writing this post. Tuesday brings Job Openings report for May and Wednesday brings the minutes from the recent FOMC meeting, which should clarify exactly what the committee discussed concerning quantitative easing and their plans for modifying it. Thursday, Freddie Mac will releases its weekly mortgage rates and the federal government will release weekly jobless claims. Friday ends the week with the release of the Producer Price Index (PPI), Core PPI for June and Consumer Sentiment for July.
If you’re interested in learning more about home ownership in your city be sure to visit our “Home Buyer’s Korner” to the right our blog and engage our local network members.