Market Reports
A mortgage update from Jay Skwierawski for the week of August 23
"IF YOU BUILD IT...THEY WILL COME." And while that line from the movie Field of Dreams may have referred to a baseball field, there are some small signs that it could perhaps refer to the housing market once again before too long.
The housing market continues to show signs of stabilization, and although home prices are not about to spike higher, the decline certainly seems to have subsided. Existing Home Sales came in better than expectations, reaching their highest level in two years, as you can see in the chart above.
And while the inventory of unsold homes remains lofty, it was reported at its best level in a year. In addition, while Housing Starts and Building Permits both came in slightly below expectations, they did rise in July - another sign of stabilization in the housing market. New Home Sales data will come out this Wednesday, so indeed we will soon find out if home buyers are coming out to buy those new built homes. With home loan rates still at exceptionally low levels - it presents a great opportunity to buy. Do let me know if you or one of your friends, family, neighbors or coworkers would benefit from learning more about buying a home in today's market.
Interest rate rose last week. Weaker than expected economic news was offset by a rebounding stock market that left stock levels at their highest levels of the year. Along with this, the markets had an increasing price of oil to worry about and an announcement that there would be another $110 Billion of treasury bonds auctioned off next week. This never ending supply of treasury bonds helps to fund all of the economic stimulus programs, but it has caused the markets to worry about the inflation implications that it brings. This week brings more news on housing, income and spending.
First, lets take a look at the economic news that was reported last week:
Monday - The Empire State Index, which measures the economy in the New York tri-state area came in much better than anticipated. It moved into positive territory, and exceeded market estimates.
Tuesday - The Producer Price Index (PPI), which measures inflation at the wholesale level, showed inflation DECREASING by .9 percent, which was much more than the decrease of 0.3 percent that was expected and the +1.8 percent that was reported in June. The core PPI, excluding food costs, came in at -0.1 percent, less than the +0.1 percent expected and the +0.5 percent reported in June. On the housing front, the new home starts and permits for new homes both came in weaker than than expected, but better than the month before. This isn't necessarily bad news, as the markets would like to see a decrease in the number of new homes on the market.
Thursday - First time unemployment claims came in higher than expected, which was a surprise for the markets. Recent trends had been bringing first time claims down. The Index of Leading Economic Indicators showed a surprising drop. The LEI is a predictor of future economic trends. As many in the markets have been predicting that the end of the recession is near, this report says otherwise. The Philadelphia Fed Index, which reports economic activity in the Pennsylvania area, showed a large increase in July versus June and versus what was expected. The markets sold off on this report, ignoring the negative economic reports reported earlier in the day and week.
Friday - Existing home sales were reported at 5.24 Million units, a huge increase over June's 4.88 Million units, and larger than the 5.0 Million units that were expected. This report added to the market sell-off that had started on Thursday, and caused rates to end the week higher than where they started.
The week ahead starts out slow for economic reports, but ends the week with a bang and a busy Friday. Please see above for what to expect.
I will be keeping an eye on the markets for you, and will keep you posted on any major moves up or down in mortgage rates. In the mean time, have a great week.
Thank you!
Jay Skwierawski
President
First Sterling Mortgage Services, LLC
737 North Michigan Avenue, #1900
Chicago, IL 60611
312.268.7601
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