The Home Buyer's Korner

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September 29th, 2014

What Home Buyers Need to Know for the Week of Sept 29, 2014

The Buyer's Korner LogoLast week the economic news related to housing included several reports with mixed results.  Existing Home Sales showed lower than expected results and we saw higher than expected sales for New Homes. FHFA (Federal Housing Finance Agency) released its House Price Report for July and it indicated year-over-year home prices were lower than year-over-year prices reported for June.

The National Association of REALTORS® reported August sales of Existing Homes fell to 5.05 million and lower than the expected reading of 5.20 million. July’s revised reading was 5.14 million homes sold on a seasonally adjusted annual basis and the consensus figure was based on the original reading of 5.15 million homes sold. It’s worth noting that the sales pace of existing homes has slowed in recent months and August’s reading pointed to the first time in five months that sales fell below the previous month’s reading. Analysts cited consumer concerns over sluggish labor markets as a deterrent to home sales and also said that tighter mortgage credit standards are making it tough for first-time home buyers to purchase homes. 

New Home Sales on the up side were higher in August according to the Department of Commerce with 504,000 sold and came as a nice surprise as it surpassed expectation of 426,000 sold.  July’s revised reading was 427,000 new homes sold and the original reading was 412,000 sold on a seasonally adjusted annual basis. The increase took New Home Sales to their highest level since May 2008. Month-to-month readings for new home sales are extremely volatile and many analysts prefer to consider a rolling average of several months’ new home sales data, so keep an eye forward market trends.

FHFA which oversees Fannie Mae and Freddie Mac reported that prices of homes connected with Fannie Mae and Freddie Mac mortgages grew by 0.10 percent in July.  This was lower than the 0.30 percent growth in home prices reported in June and further supports a a slight slowdown of home price increase we’ve seen over the past year. FHFA also mentioned that home prices were up by 4.04 percent year over year. This was the eighth consecutive monthly gain for FHFA home prices, but U.S. home prices remain approximately 6.40 percent below their peak in 2007.

FHFA further stated that year-over-year home prices rose in all nine census divisions. While regional home prices ranged from -0.50 to +0.40 percent from June to July, FHFA reported that year-over-year home prices grew in all nine regions and varied between +1.60 percent in the Mid-Atlantic region to 7.20 percent in the Pacific region.

Freddie Mac reported a mixed reading for average mortgage rates last week. The average rate for a 30-year fixed rate mortgage dropped three basis points to 4.20 percent. 15 year mortgage rates averaged 3.36 percent, one basis point lower than the prior week’s reading. The average rate for a 5/1 adjustable rate mortgage was two basis points higher at 3.08. Discount points held steady at 0.50 percent for fixed rate mortgages, but dropped to 0.40 percent for 5/1 adjustable rate mortgages.

The Bureau of Labor Statistics reported that new jobless claims rose to 293,000 from the prior week’s reading of 281,000 claims filed. The latest jobless claims reading were lower than the expected 300,000 claims.

The Consumer Sentiment Index held steady in September with a reading of 84.6. This reading was identical to July’s reading and higher than the expected reading of 84.3.

What’s Ahead for the Week?

We’ll get Personal Income and Spending; Pending Homes Sales; S&P Case Shiller; Consumer Confidence Index; ADP Employment Report; Construction Spending; Average Mortgage Interest RatesInitial Jobless Claims; The Jobs Report.  Be sure to check back as we update this blog post with all the most current news home buyers need to know.