Last week’s economic reports included Case-Shiller 10 and 20-City Home Price Index reports for November along with new and pending home sales for December. Freddie Mac reported on average mortgage rates and new jobless claims dipped unexpectedly. The details:
Case-Shiller: Home Price Growth Slower in November
Case-Shiller’s 20-City Home Price Index for November indicated that home prices continue to slow across the nation. Seasonally-adjusted annual home price growth slowed to 4.30 percent from October’s reading of 4.50 percent. Slowing momentum in year-over-year home price growth placed downward pressure on month-to-month readings. Several cities, including Atlanta, Georgia, Boston Massachusetts and Cleveland Ohio reported lower home prices in November as compared to October. Chicago, Illinois surprised analysts with a -1.10 percent drop in home price growth for November. Although mortgage rates have fallen in recent weeks, analysts cited tough mortgage approval standards, lower demand for homes and growing inventories of available homes as factors contributing to sluggish housing markets.
New and Pending Home Sales: Mixed Readings
New home sales jumped to a seasonally-adjusted annual reading of 481,000 sales in December against expectations of 455,000 sales and November’s revised reading of 431,000 new homes sold. The original reading for November was 438,000 new homes sold. New home sales were 8.80 percent higher in December year-over-year. The median price of new homes was $298,100 in December, which was an increase of 8.20 percent year-over-year.
Pending home sales reflected sluggish market conditions in December with pending sales lower by -3.70 percent as compared to November’s reading of +0.60 percent. This lull will likely impact completed sales as pending sales generally forecast completed sales within the next 60 days. The National Association of Realtors® said that home prices rose in some areas as supplies dwindled. Fewer homeowners list homes for sale during the fall and winter months than during spring and summer. Analysts also said that home sales trends rely on the willingness of homeowners to list their homes and move up. Although the economy continues to grow, homeowners can impact supplies of available homes if they wait to move up to larger homes.
Mortgage Rates Rise, New Jobless Claims Fall
Freddie Mac reported that average mortgage rates rose last week. The average rate for a 30-year fixed rate mortgage was three basis points higher at 3.66 percent; the average rate for 15-year mortgages rose by five basis points to 2.98 percent, and the average rate for a 5/1 adjustable rate mortgage was 2.86 percent. Discount points fell to 0.60 percent for 30-year mortgages and 0.50 percent for 15-year mortgages. Discount points were unchanged at0.40 percent for 5/1 adjustable rate mortgages.
New jobless claims fell to 265,000; this was lower than the expected reading of 296,000 new jobless claims and the prior week’s reading of 308,000 new jobless claims. Analysts said that the short work week likely contributed to the drop in weekly jobless claims, which was the largest drop in new jobless claims since November 2012. As labor markets improve, more consumers can afford to buy homes. January’s Consumer Confidence Index rose more than expected in January with a reading of 102.9 against expectations of 96.90 and December’s reading of 93.10.
This week’s scheduled reports include Construction Spending, Personal Income, Core Inflation, and several employment reports including ADP Payrolls, Non-Farm Payrolls and the national unemployment rate. Freddie Mac’s mortgage rates report and new unemployment claims will be released on Thursday as usual.
Here’s a recent article from Colin Robertson of TheTruthAboutMortgage.com
The Mortgage Crisis Created Nearly 7.3 Million Potential Boomerang Buyers
It has now been roughly seven years since the devastating housing crisis rocked our great nation.
Between 2007 and 2014, foreclosure activity ran well above historical norms after exotic lending and sky-high home prices eventually brought down the entire real estate market.
But the foreclosure rate has since fallen to pre-crisis levels as problem loans were dealt with in one way or another. For some, a loan modification has meant a second chance to erase past mistakes.
For many others, the outcome wasn’t as positive. Their homes were lost via short sale or foreclosure and they must start anew. Of course, this may have been deliberate in some cases thanks to a phenomenon known as strategic default.
Regardless, many of those who lost their homes will now be able to get another crack at homeownership over the next several years. These folks are known as “boomerang buyers,” and are primarily Gen Xers or Baby Boomers.
Well, foreclosure waiting periods enforced by Fannie Mae, Freddie Mac, the FHA, and so on generally bar previously foreclosed homeowners from obtaining mortgages for seven years. For short sales, the wait is only two to four years in many cases.
Yes, there are exceptions to the rule that shorten these windows, and even programs that allow for mortgages just one year after such a negative event (or even one day!). There are also those who can buy a home with cash.
But generally it takes a considerable amount of time to bounce back and improve your credit history, regardless of the rules that are in place.
Seeing that it’s now 2015, the potential pool of boomerang buyers is growing in numbers.
A new analysis from RealtyTrac reveals that some 551,000 individuals will be able to buy a property again this year, assuming they still favor homeownership.
The number of boomerang buyers is expected to rise year after year until 2018 when the number peaks at over 1.3 million, then slowly decline through 2022, just as foreclosure rates have done.
This means the housing market might get an unexpected boost in demand at a time when supply is still low. Hello higher home prices?
Where Are All These Boomerang Buyers?
As you might expect, the areas hit hardest by the crisis should have the largest number of potential boomerang buyers.
That explains why Phoenix, Arizona leads the nation with nearly 350,000, followed by Miami with 322,000 and Detroit and Chicago each with over 300,000.
The largest share of potential boomerang buyers (as a percentage of total housing units) can be found in former foreclosure hotbeds such as Las Vegas, Merced, Stockton, Cape Coral-Fort Meyers, and Modesto.
Of course, in order for a potential boomerang buyer to become an actual homeowner the conditions need to be just right, kind of like conditions here on Earth.
RealtyTrac notes that the “trifecta of market conditions” includes an area where a high percentage of homes were lost to foreclosure, where home prices are still within reach to median income earners, and where the population of Gen Xers and Baby Boomers has held steady or increased.
The company found 22 metros (with a population of at least 250,000) meeting these criteria. The top five are Las Vegas, Tampa, Orlando, Cape Coral-Fort Myers, and Charlotte.
Phoenix wasn’t on the list because it’s Gen X/Baby Boomer population fell by 2.64% from 2007 to 2013. Miami isn’t ideal either because its housing payment to income ratio is over 28%.
In any case, the toughest part will be convincing these individuals to buy again seeing that home prices are already back near peak levels.
Your mortgage payment may be among the largest payments you make every month. While certainly an important part of your budget, this payment is also critical to helping you build equity in your home because it attributes to mortgage principal reduction. Managing your mortgage payments can be challenging, but there are some incredible apps available for use with Android or iPhone smartphones that can simplify your mortgage management tasks.
This app is available for both iPhones and Android devices, and is designed to be compatible with all types of mortgages. It can calculate PMI for adjustable rate and variable rate mortgages, and it can help you to determine the true cost of a mortgage. Through the use of this intelligent app, you can track your account information in real-time, or you can manipulate the numbers to help you to make more thoughtful and intelligent decisions about your finances.
Loan Calculator Pro
This app is only currently available on iOS devices, but those with this operating system may want to download it today. It has some of the same capabilities as Mortgage Mentor, but it goes a step above and beyond by providing you with mortgage payment notification reminders. It also has a unique feature that allows you to set a final payoff date for your mortgage, and it will calculate how much money you need to pay per month toward your mortgage to accomplish this goal.
Bill Payment Log
The Bill Payment Log app is a unique program that can entirely replace the outdated manual entry checkbook balancing task. It is suitable for use with iOS, Android and even Windows. You can use it to monitor and track payments for all credit accounts, including mortgages. While it does not have the analytical tools associated with some of the other mortgage apps, those who are looking for an all-in-one app that facilitates bill payment tasks for all accounts, this may be a great option to consider.
Making your mortgage payments on time is important, but you also may need to know if you need to pay extra each month and what the effects of that will be. You may also be concerned about “what if” scenarios for your adjustable rate mortgage. There are numerous apps available on the market today that can help you to facilitate your efforts, and these are among the leading choices available.
Case-Shiller reported that home prices hit their lowest pace in two years. According to the Case-Shiller 20-City Home Price Index for October, home prices fell in 10 cities, rose in eight cities and were unchanged in two cities.
In other news, pending home sales increased and weekly jobless claims rose. The details:
Case-Shiller: Home Price Growth Lowest in Two Years
According to its 20-City Home Price Index, Case-Shiller said that home prices dropped by 0.10 percent to a reading of 4.50 percent year-over-year as compared to September’s reading of 4.80 percent year-over-year. Analysts expected home price growth to drop to 4.70 percent in October.
David Blitzer, chairman of the Index Committee at S&P Dow Jones Indices, said that 2014 could finish on a strong note with price growth accelerating in 2015. Home price growth hasn’t hit double digits since April, but there is encouraging news on the horizon.
More than half of states’ average home prices are set to surpass housing bubble peaks in 2015. Through October, home prices were approximately 15 percent below a 2006 peak. Higher inventories of available homes and lower mortgage rates are seen as stabilizing influences on housing markets, and could also encourage more buyers into the market.
Pending Home Sales Up, Mortgage Rates Mixed
The National Association of Realtors® reported that November pending home sales rose to a reading of 0.80 percent from October’s reading of -1.10 percent. The seasonally-adjusted index reading for November was 104.8.
Lawrence Yun, NAR’s chief economist noted that steady economic growth and hiring contributed to home buyer confidence. Regional readings for pending home sales were +1.40 percent in the Northeast, +1.30 percent in the South and +0.40 percent in the South. Pending home sales declined by -0.40 percent in the Midwest.
Fixed mortgage rates rose last week. Freddie Mac reported that average rates for 30-year and 15-year mortgages rose to 3.87 percent and 3.15 percent respectively; the average rate for a 5/1 adjustable rate mortgage was unchanged at 3.01 percent.
Discount points for all types of mortgages were unchanged at 0.60 percent for fixed rate mortgages and 0.50 percent for 5/1 adjustable rate mortgages.
Jobless Claims Up
Weekly jobless claims rose to 298,000 new claims against expectations of 290,000 new claims and 281,000 new claims filed the previous week. This was the highest reading since Thanksgiving.
Analysts said that seasonal hiring fluctuations and the volatility of week-to-week claims cause weekly reports to be less reliable than the four-week rolling average of jobless claims, which fell by 250 claims to a reading of 290,750.
Continuing claims fell by 53,000 to a reading of 2.35 million in the week ending December 20. This reading was close to a 14 year low.
Overall, analysts viewed stronger labor markets and economic growth as positive signs for 2015.
Next week will resume a full schedule of economic events including construction spending, ADP employment, Non-Farm Payrolls and the national unemployment rate. The Federal Reserve will release the minutes from the most recent meeting of the Federal Open Market Committee (FOMC).
Last week’s economic news included several housing related reports. Housing markets continue to cool as November reports on existing and new home sales fell below expectations. New Jobless claims were lower than expected by 10,000 claims. The details:
Existing and New Home Sales Down, FHFA House Price Index Up
The National Association of Realtors® reported that November sales of existing homes fell to 4.93 million sales against expectations of 5.18 million sales. October’s reading was revised from 5.25 million sales to 5.26 million. This was seen as an anomaly that may have occurred during uncertainty caused by volatile stock markets. Federal Reserve Chair Janet Yellen slow housing markets to tight lending standards in a recent statement.
FHFA reported that October home prices connected with Fannie Mae and Freddie Mac mortgages increased incrementally year-over-year. October house prices increased to 4.50 percent year-over-year as compared to September’s year-over-year house price increase of 4.40 percent.
November sales of new homes fell short of expectations according to the Commerce Department. 438,000 new homes were sold as compared to expectations of 450 new home sales and September’s reading of 445,000 new homes sold. This was the slowest rate of growth in four months.
New home sales declined in three of four regions. Readings for November were -12.00 percent in the Northeast, -6.40 percent in the Southeast, -6.30 percent in the Midwest. Sales of new homes rose by 14.80 percent in the West. Analysts typically caution against reading too much into volatile month-to-month figures, but they are concerned about longer-term sales trends too. Sales of new homes were 1.60 percent lower year-over-year.
The median sale price of new homes was $280,900 in November, which was 1.40 percent higher year-over-year.
Mortgage Rates Up, New Jobless Claims Down
Mortgage rates rose across the board according to Freddie Mac’s weekly survey of average mortgage rates. The average rate for a 30-year fixed rate mortgage increased three basis points to 3.83 percent. The average rate for a 15-year mortgage rose one basis point to 3.10 percent. The average rate for a 5/1 adjustable rate mortgage was six basis points higher at 3.01 percent. Discount points were 0.60 for 30 and 15-year fixed rate mortgages and 0.50 percent for 5/1 adjustable rate mortgages.
280,000 new jobless claims were filed last week, a seven-week low. Analysts expected 290,000 new claims based on the prior week’s reading of 289,000 new claims. The four-week rolling average of new jobless claims also showed improvement with 8500 fewer claims at 290,250 new jobless claims filed. Stronger labor markets are considered good news for housing markets as more consumers can afford to buy homes.
No economic reports were scheduled Thursday or Friday due to the Christmas holiday.
This week brings Case-Shiller Home Price reports, Pending Home Sales and Construction Spending. Freddie Mac mortgage rates and Weekly Jobless Claims will be released on Wednesday due to the New Year’s Day holiday on Thursday.
Last week’s scheduled economic events were few but informative. Housing related reports included the National Association of Home Builders/Wells Fargo Housing Market Index for December, which stayed close to a nine-year high reading of 59 in September. December’s reading was 57 and fell two points shy of the expected reading of 59. November’s reading was 58. Readings above 50 indicate that more builders are positive about market conditions than those who are not.
Housing Starts for November were lower according to the Department of Commerce’s report released Tuesday. The reading for November was 1.028 million starts on a seasonally adjusted annual basis. Analysts expected a reading of 1.035 million housing starts based on October’s level of 1.045 million starts.
Fed Confident, but Watchful of Economic Conditions
The Fed’s Federal Open Market Committee (FOMC) released its statement at the conclusion of its final meeting in 2015. Fed Chair Janet Yellen also gave a press conference that primarily supported information contained in the statement. The Fed did not foresee rising the target federal funds rate until mid to late 2015, and said that no changes were likely to be made at the first two FOMC meetings of the year. The target federal funds rate remains steady at 0.00 to 0.250 percent. FOMC members noted improvement in labor markets, but said that housing continued to recover at a slow rate. The Fed repeated its customary statement that FOMC members would monitor ongoing economic conditions and developments as part of any decision to change monetary policy. Chair Janet Yellen affirmed the committee’s position in her press conference.
Mortgage Rates, Jobless Claims Fall
Mortgage rates fell according to Freddie Mac. The average rate for a 30-year fixed rate mortgage was 3.80 percent as compared to the prior week’s reading of 3.93 percent. The average rate for a 15-year fixed rate mortgage was 3.09 percent, which was 11 basis points below the prior week’s reading. 5/1 adjustable rate mortgages had an average rate of 2.95 percent; this was three basis points lower than the previous week. Discount points remained steady at 0.50 percent with the exception of average points charged for a 15-year mortgage, which increased to 0.60 percent.
Weekly jobless claims fell to 289,000 against expectations of 295,000 new jobless claims; expectations were based on the prior week’s reading of 295,000 new claims. Analysts cautioned that weekly jobless claims readings can be particularly volatile during the holiday and early winter season.
Economic news scheduled for next week includes the National Association of Realtors® report on November sales of existing homes and November sales of new homes, which is issued by the Department of Commerce. Consumer sentiment, consumer spending and core inflation reports will also be issued next week. No economic reports will be issued Thursday or Friday due to the Christmas holiday.