The National Association of REALTORS reported that existing home sales for July came in at 5.39 million on a seasonally adjusted annual basis. July’s reading exceeded both expectations of 5.21 million existing homes sold and June’s reading of 5.06 million homes sold.
This suggests good news for home buyers who’ve been constrained by limited supplies of homes for sale.
As home prices continue increasing in many areas, more homeowners are likely to list their homes for sale. Existing home sales for July rose by 6.80 percent year-over-year.
The Federal Housing Finance Agency Home Price Index reported a 7.70 percent year overyear increase in prices for homes financed by Fannie Mae or Freddie Mac.
This reading was slightly higher than May’s year-over-year reading of a 7.60 percent increase in home prices.
New Home Sale Inventories Also Growing
New home sales for July dropped by 13.40 percent to a seasonally adjusted annual reading of 394,000; this was lower than expectations of 485,000 new homes sold, but this expectation was based on June’s original reading of 497,000 new homes sold. June’s reading has been adjusted to 455,000 homes sold, which likely would have resulted in a lower expectation.
New home sales were lower in all four U.S. regions:
-16.1 percent in the West
-13.4 percent in the South
-12.9 percent in the Midwest
– 5.7 percent in the Northeast
While this isn’t great news for developers and home builders, supplies of new homes for sale jumped from a 4.30 month supply of new homes in June to a 5.20 month inventory of available new homes in July. This was the highest inventory of available new homes since January 2012.
Monthly New Home Sales Continue Upward Trend
Month to-month sales of new homes tend to be volatile, but July’s year-over-year home sales were 6.80 percent above new home sales in July 2012.
Higher mortgage rates likely stifled sales, but slower sales would increase inventories of available homes. More homes available would help ease constraints on buyers and level then playing field for home buyers who have been competing for few homes in strong seller’s markets.
Rising mortgage rates could continue, especially if the Federal Reserve begins tapering its $85 billion in monthly bond purchases, a program known as quantitative easing. The Fed has announced that it may start reducing the QE program before year-end.
When QE purchases are reduced, securities prices can be expected to fall due to less demand, and mortgage rates can be expected to rise.
Last week brought mixed economic news, but Leading Indicators released Thursday suggest that the U.S. economy is growing at a moderate rate.
Mortgage rates for fixed rate loans were higher, but the average rate for a 5/1 adjustable rate mortgage was unchanged from the prior week. Weekly jobless claims were also higher.
The National Association of REALTORS released its Existing Home Sales report for July and reported existing home sales came in at 5.39 million on an annualized basis.
This reading surpassed expectations of 5.21 existing homes sold as well as June’s reading of 5.06 million existing homes sold on an annualized basis.
FOMC Minutes Released, Mortgage Rates Rise
The minutes for the July 31 FOMC meeting were released, and emphasized the likely “tapering” of the Fed’s quantitative easing program possibly as early as September, though no dates have been set. Many of the FOMC members support reducing the $85 billion in monthly securities purchases made by the Fed; fewer members supported tapering the asset purchases sooner than planned.
Previous announcements by the Fed regarding its plan to reduce QE have created erratic responses in financial markets, but the release of the meeting minutes seemed to cause a sharp rise in mortgage rates.
Freddie Mac reported that the average rate for a 30-year fixed rate mortgage moved from the prior week’s average rate of 4.40 percent to 4.58 percent; average discount points moved up from 0.70 to 0.80 percent. Average rates for a 15 year fixed-rate mortgage also rose from 3.44 percent to 3.60 percent with average discount points moving from 0.60 to 0.70 percent.
Average rates for a 5/1 adjustable rate mortgage were unchanged from the previous week at 3.21 percent with average discount points paid at 0.50 percent.
FHFA reported that home prices for homes with mortgages owned by Fannie Mae and Freddie Mac rose by 7.70 percent year-over-year in June, home prices rose slightly from May’s year-over-year- rate of 7.60 percent.
Leading Economic Indicators (LEI) for July rose by 0.60 to a reading of 96.0; this exceeded expectations for an increase of 0.50 percent. The LEI measures the health of the economy by measuring 10 top economic sectors; eight of 10 factors measured increased; these were led by the spread on interest rates, availability of credit, stock prices and permits issued for building new homes.
New home sales for July were lower than expected at 394,000; Wall Street expected new home sales to come in at 485,000 on a seasonally-adjusted annual basis against the revised number of 455,000 new home sales reported for June. 497,000 homes were initially reported sold in June. Hew home sales gained by 6.80 percent year-over-year in July.
What’s Coming Up
Scheduled economic news for this week includes the Case-Shiller Home Price Index, and Consumer Confidence on Tuesday, Pending Home Sales will be out Wednesday. Thursday brings Weekly Jobless Claims, and Friday brings consumer spending and the University of Michigan’s consumer sentiment report.
You’re brushing your teeth and you turn on the faucet. It’s not draining and starts to back up. Here’s the dilemma; do you spit and let it sit or run to the kitchen? One thing is for sure; having a clogged drain can be a major annoyance.
Clogs not only frustrate a homeowner but they can be hard on your plumbing. The added pressure they create puts stress on your pipes and can shorten their lifespan.
So end the issue by following the guidelines below. You’ll learn how to prevent clogging and clear the ones you already have.
No Food Down The Drain
Even if you have a disposal, it’s not good for your pipes to have sticky, mushy food shoved through them. Peel vegetables and scrape plates into the trashcan.
Also, avoid pouring grease down the drain. Animal fat can congeal into a solid and form a blockage. Instead, store it in a sealable container in the freezer. Once it’s full, trash it!
Only TP In The Toilets
All feminine hygiene products should be thrown away, because most don’t dissolve quickly enough and can cause a backup. And be sure to secure toilet lids from curious children, because you have to admit that it is pretty fun to watch almost anything go “bye-bye.”
Hair Today, Problem Tomorrow
Don’t wash loose hair down the drain. Collect it and throw it away after your shower. If you shed a lot, it might be beneficial to install drain screens to catch loose hair and make it easy to dispose. Be sure to clean these out every few weeks.
Chemicals Should Be Used With Caution
Be wary about using chemical drain cleaners. They can erode cast-iron pipes and usually don’t remove an entire clog, so it can easily recur. You should consider hiring a professional plumber to snake your drains; or better yet, buy your own augur at the hardware store for about $15.
Homeowners can be hard on their drains. From hair to food, clogs are a time-consuming frustration that might cost you big. Treat your plumbing with a little love and it’ll reward you by quickly removing water and waste from your sight!
The minutes of last month’s Federal Open Market Committee (FOMC) meeting show significant support for tapering the Fed’s current amount of monthly securities purchases. These purchases, known as quantitative easing (QE), are an effort to maintain lower long-term interest rates including mortgage rates.
The Fed has been buying $85 billion per month in Treasury securities and mortgage-backed securities (MBS).
Ben Bernanke, chairman of the Federal Reserve and FOMC has hinted at “tapering” the Fed’s securities purchases by year-end in recent statements. The FOMC minutes released Wednesday further suggest that tapering based on strengthening economic trends is likely.
FOMC Members Express Mixed Views
The minutes for the last FOMC meeting, which took place on July 30 and 31, states that many members are “broadly comfortable” with tapering QE securities purchases later this year if the economy continues to improve. At the same time, many FOMC members indicated that it “isn’t yet time” to scale back the purchases.
All along, the FOMC has emphasized that it will closely monitor domestic and global financial and economic developments as part of its decision about when tapering the QE purchases will begin.
The minutes for July’s meeting reflected this sentiment and noted “A few members emphasized the importance of being patient and evaluating additional information on the economy before deciding on any changes to the pace of asset purchases.”
On the other side of the issue, the minutes note that a few members said that “It might soon be time to slow somewhat the pace of purchases as outlined in the QE plan.”
QE Tapering Not The Only Influence On Mortgage Rates
The Fed is likely to monitor its words as well as economic conditions, as previous announcements about tapering QE made by Chairman Bernanke and FOMC have created havoc in world financial markets.
In relation to mortgage rates, it’s likely that tapering QE purchases will cause mortgage rates to rise. Demand for bonds will fall as the Fed reduces its purchases, falling bond prices usually cause mortgage rates to rise.
It’s important to keep in mind that tapering QE securities purchases is only one among many things that can impact financial markets, mortgage rates and the economy.
While the Fed is expected to begin tapering its securities purchases as soon as September, developing economic news throughout the world can potentially impact mortgage rates and could cause the Fed to revise its timeline for tapering the volume of its securities purchases.
The National Association of Home Builders (NAHB) reported Thursday that its Housing Market Index rose three points to a reading of 59 for August.
Confidence among builders is likely growing in connection with stronger housing markets and high demand for homes. These conditions are being driven by short supplies of homes for sale in many markets.
Builder confidence in current market conditions rose by three points to a reading of 62, while builder confidence in market conditions within the next six months rose by one point to a reading of 68. Confidence in buyer foot traffic was unchanged from July’s reading of 45.
Readings above 50 indicate that more builders surveyed view housing market conditions as positive rather than negative; there was some concern that the high builders’ confidence reading could trigger the Fed to announce the tapering of its $85 billion monthly purchase of Treasury securities and mortgage-backed securities.
Housing Starts Driven By Apartment Construction
Housing starts rose in July, but were led by the volatile apartment sector rather than single- family homes.
On Friday, the U.S. Department of Commerce reported 896,000 housing starts on a seasonally adjusted annual basis. This reading fell short of expectations of 915,000 housing starts, but exceeded June’s reading of 846,000 housing starts.
Starts for residential buildings with five or more units rose by 20.90 percent year-over-year while construction of one of one-to-four family residential buildings fell by 2.20 percent. Demand for rental properties and a shortage of available single family homes was seen by economists as contributing to increasing multi-family housing construction.
Analysts said that some home builders may be holding back on single-family home construction due to increasing materials and labor costs, but this doesn’t reflect the record level of builder confidence reported in the NAHB Housing Market Index.
Building homes at less than optimum capacity isn’t good news for the shortage of available single-family homes. Rising mortgage rates are also a concern for home builders, as fewer borrowers may be able to qualify for mortgage loans needed for financing home purchases.
Building permits numbers were also released on Friday, and presented a more positive picture than housing starts. July’s reading for building permits issued rose by 2.70 percent in July to an annual reading of 943,000 permits against expectations of 953,000 permits issued and exceeded June’s reading of 918,000.
Building permits issued provide an indication of future housing starts.
Last week wasn’t kind to stock market investors, but weekly jobless claims fell to an unexpected low of 320,000 new jobless claims filed, the lowest level in nearly six years.
Here is a review of the major events of the week.
Monday: The federal budget for July shows an increase in its deficit to -$98 billion, a deficit increase of $28 billion over June’s figure of -$70 billion. The good news is that the deficit for the first 10 months of the fiscal year is $38 billion less than during the same period of the prior fiscal year.
Thursday: Thursday was a busy day for economic news. The weekly jobless claims report came in lower than expected with 320,000 new jobless claims filed. This was lower than the expected.
While this is a strong sign for the economy that would typically boost stock prices, the markets fell. Analysts cite a good news/bad news scenario in describing what happened. The good news was that jobless claims fell to a new low, but the bad news is that investors feared that this may give the Fed a signal to begin tapering its quantitative easing (QE) program.
The Fed is expected to begin tapering its monthly purchases of $85 billion in treasury securities and mortgage-backed securities as early as next month. The QE purchases are intended to help hold down long term interest rates including mortgage rates.
The fall in stock prices on Thursday and Friday suggested that fear of the Fed ending QE is more compelling than the lowest number of new jobless claims since October 2007.
Freddie Mac reported that the average rate for a 30-year fixed rate mortgage remained unchanged at 4.40 percent with 0.7 percent in discount points. The average rate for a 15-year fixed rate mortgage ticked upward by one basis point from 3.43 to 3.44 percent.
Discount points fell from 0.70 percent the prior week to 0.60 percent last week.
The average rate for a 5/1 adjustable rate mortgage (ARM) rose from 3.19 to 3.23 percent with discount points unchanged at 0.50 percent. The 5/1 ARM provides an alternative to higher fixed rates for borrowers seeking lower mortgage rates and payments.
Friday: Included Housing Starts for July, which came in at 896,000 as compared to expectations of 915, 00 0 and June’s figure of 846,000 housing starts. Building permits issued in July came in at 943,000, and surpassed June’s reading of 918,000 building permits.
Increasing home values, buyer demand and a short supply of available homes were seen as motivating factors for builders to construct more homes.
This week’s schedule of economic news is set to include the Chicago Fed’s National Activity Index on Tuesday. The FOMC minutes will be released on Wednesday along with Existing Home Sales.
Thursday will bring Weekly Jobless Claims, Freddie Mac’s survey of mortgage rates and the FHFA home price index. Friday will finish the week with a New Home Sales report.