The Home Buyer's Korner

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July 1st, 2013

What Home Buyers Need To Know for July 1st, 2013

Guy looking up in colorThe past week was full of economic news and created the largest jump in the 10 Year Treasury rates in over two years.  It all started on Wednesday when the Fed’s announcement that it may start dialing back its 85 billion dollar monthly purchase of Treasury and mortgage backed securities.

What else happened last week that affected the real estate markets:

Tuesday’s Case-Shiller Composite Indices for April showed a strong momentum of recovery in almost all markets it sampled and according to the indices national home prices had increased by 12.10 percent as compared to April 2012. It was also worth noting that April’s reading also exceeded March’s reading of 10.10 percent year-over-year.

FHFA (Federal Housing Finance Authority) released its home prices report for April and noted that the average price for homes with mortgages owned by Fannie Mae or Freddie Mac increased by 7.40 percent and surpassed the March reading of 7.20 percent.

The Department of Commerce released New Home Sales for May and reported 476,000 new homes sold on a seasonally-adjusted annual basis. This exceeded expectations of 453,000 new home sales and surpassed April’s reading of 454,000 new homes sold.

Wednesday brought the Gross Domestic Product (GDP) report for the first quarter of 2013. The GDP grew by 1.80 percent against expectations of 2.40 percent.  If anything, investor looked at the data and shrugged it off.

Freddie Mac’s Primary Mortgage Market Survey (PMMS) may have shown us the last days of rock bottom mortgage rates.  The average mortgage rate for a 30-year fixed rate mortgage moved from last week’s 3.93 percent to 4.46 percent. Average rates for a 15-year fixed rate mortgage rose from 3.04 percent 3.50 percent and the largest weekly jump in mortgage rates in 26 years. 

Although home rates are higher, rates under five percent in a growing economy will support a healthy housing marketing and may even help tame some of the hyper increases in home prices seen around the country of late.  Home buyers still needing the lower rates may want to consider a 5/1 adjustable rate mortgage, which provides an average 5 year fixed rate of 2.74 percent.  The fixed mortgage rate converts to a 1 year adjustable rate after the 60 payment and if you intend to live in your home for five years or less these mortgages could be a viable option.

The National Association of REALTORS® reported that Pending Home Sales in May rose by +6.70 percent to their highest level in six years.

Last week ended on a positive note with the Consumer Sentiment Index for June beating expectations of 83.0 and coming in at 84.1. May’s reading was 82.1 and higher consumer confidence is most likely driving demand for available homes.

This week’s scheduled economic news includes Construction Spending for May, which is up by 0.5 percent.

The ADP private sector jobs report is scheduled for release on Wednesday.

Thursday the financial markets are closed as we celebrate the July 4th holiday.

Friday brings the Department of Labor’s Non-farm Payrolls Report and the National Unemployment Rate. Home buyers who are still floating their rates may want to see where the unemployment rate is, before locking in their mortgage.  If unemployment stays steady at 7.60 percent, it could reduce investor fears that the Fed will start reducing its QE3 monetary program any time soon, which could lead to slightly lower rates or closing cost we have seen this past week.

To learn more about the home buying market and what’s going on in your city visit “The Home Buyer’s Korner” to the right of our blog.