Navy Fellas Realty Group

Real Estate, Residential sales and purchase

Case-Shiller Report Shows Home Prices Rose in January

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Case-Shiller Report Shows Home Prices Rose in JanuaryHome prices were 5.70 percent higher year-over-year in January according to S&P Case-Shiller’s 20-City Home Price Index. Top year-over-year gains were posted by Portland, Oregon at 11.80 percent, San Francisco, California at 10.80 percent and Seattle Washington posted a year-over-year gain of 10.70 percent. Denver, Colorado, which had top gains in recent months, posted year-over-year home price growth of 10.20 percent.

Lowest year over-year gains for January were posted by Chicago, Illinois at 2.10 percent, Washington, D.C at 2.20 percent and New York, New York at 2.80 percent.

Average home prices remained about 12 percent below their summer 2006 peak, but have recovered to 2007 levels.

Rising Home Prices and Short Inventory of Homes Impacts Buyers and Sellers

David M Blitzer, Managing Director and Chair of the S&P Indices Committee expressed concerns over rapidly rising home prices and the shortage of available homes. Mr. Blitzer said “would-be sellers seeking to trade up are having a hard time finding a new larger home.” Analysts also noted that home prices are escalating faster than wages, which were growing at a rate of 2.20 percent annually as of February.

New construction is not keeping up with demand; the current supply of available homes is below the normal six month inventory. Mr. Blitzer said that home building is the segment of the housing sector that creates economic growth.

Rapidly rising home prices and low inventories of available homes are potentially sidelining first-time and moderate income buyers. This trend also sandwiches homeowners who want to buy larger homes between a short supply of available homes and finding qualified buyers for their current homes. Mr. Blitzer said that high amounts of education debt and consumer debt are contributing to younger buyers’ inability to qualify for mortgages. Mortgage lenders have loosened mortgage qualification requirements somewhat, but Mr. Blitzer said that lenders haven’t forgotten what happened 10 years ago; they remain reluctant to further ease lending requirements.

Pending Home Sales Rise in February

In related news, the National Association of Realtors reported that pending home sales rose 3.50 percent in February as compared to an expected reading of 1.80 percent and January’s negative reading of -3.0 percent February’s reading for pending home sales was the highest in seven months.

Analysts and real estate pros use pending home sales readings s as indications of future closings and mortgage loan activity.

NAR Chairman Lawrence Yun cited lower mortgage rates as the driving force behind February’s jump in pending home sales. Mr. Yun said that building more homes is essential for boosting home sales; he cautioned that failure to increase the current supply of available homes could cause home sales to “plateau.”

What’s Ahead For Mortgage Rates This Week – March 28, 2016

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What's Ahead For Mortgage Rates This Week - March 28, 2016Increasing Home Prices Good For Sellers

The National Association of Realtors (NAR) reported lower sales of pre-owned homes in February. Would-be buyers were discouraged by rapidly rising home prices. Short supplies of available homes sidelined potential buyers as higher home prices and cash buyers squeeze out buyers who need mortgages to buy homes. Multiple offers resulting in bidding wars have also deterred buyers in high demand markets. According to NAR’s February report, sales of existing homes fell 7.10 percent to their lowest level since November.

NAR has predicted that rapidly rising home prices would eventually damage housing markets. While analysts weren’t certain whether February’s report indicated a temporary lull due to weather and anomalies related to new closing regulations and seasonal influences, NAR Chief Economist Lawrence Yun said, “The main issue continues to be a supply and affordability problem. Finding the right property at an affordable price is burdening many potential buyers.”

During the housing bubble, buyers jumped into the market as speculators or to buy before home prices increased beyond their reach. NAR surveyed renters last week and found that the percentage of renters who believed that it’s currently a good time to buy a home decreased.

Respondents to Fannie Mae’s February Home Purchase Sentiment Index forecasted a 1.70 percent increase in home prices year-over-year. One year ago, respondents expected home prices to increase by 2.50 percent year-over-year. This may suggest that home prices are cooling. This can be expected as the number of buyers declines as home prices become increasingly unaffordable.

New Home Sales Up in February

New home rose in February according to the Commerce Department. Based on a revised reading of 502,000 new home sales in January, February’s reading was 2.00 percent higher than January’s reading, but was 6.10 percent lower than for February 2015.

Builders have held back on increasing construction due to concerns about ups and downs in the economic recovery. Short supplies of labor and available land have also kept home builders from meeting current demand.

Mortgage Rates Trend Lower

According to Freddie Mac, average mortgage rates fell across the board last week. The rate for a 30-year fixed rate mortgage fell by two basis points to 3.71 percent; the rate for a 15-year fixed rate mortgage fell three basis points to 2.96 percent and the rate for a 5/1 adjustable  rate mortgage fell four basis points to 2.89 percent.

New jobless claims rose to 265,000 from the prior week’s reading of 259,000 new claims. Last week’s reading matched analyst expectations.

What‘s Ahead This Week

This week’s scheduled economic news includes reports on inflation, pending home sales, Case-Shiller’s Home Price Index reports and government and private sector employment data. Weekly reports on mortgage rates and new jobless claims are also scheduled. 

What’s Ahead For Mortgage Rates This Week – March 21, 2016

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What's Ahead For Mortgage Rates This Week - March 21, 2016Housing Starts Up in February

Shortages of available homes are a major factor in rising home prices; shortages also make it more difficult for buyers to find homes they want. Housing starts in February rose, which is good news for the peak spring and summer home buying season. Other housing related news released last week included the Fed’s decision not to raise the target federal funds rate and Housing Starts and Building Permits reports issued by the Commerce Department. Consumer Sentiment was also released along with regularly scheduled releases on mortgage rates and weekly unemployment claims.

Builder Confidence Holds Steady, Real Estate Pros Call for More Construction

According to the NAHB/Wells Fargo Housing Market Index for March, home builder confidence held steady at a reading of 58. Analysts expected an uptick to 59 based on February’s reading of 58. Any reading above 50 indicates that more builders have confidence in housing market conditions than those who do not. The overall HMI reading is based on three components including builder perception of current market conditions, market conditions within the next six months and buyer foot traffic in new home developments.

Builder confidence in current market conditions held steady at a reading of 65. Builder confidence in market conditions within the next six months dropped three points to 65. Builder confidence in buyer foot traffic increased four points to a reading of 43. Confidence in buyer foot traffic has not topped a reading of 50 since 2005.

High demand for homes coupled with a short supply of affordable suburban single family homes compelled NAR Chief Economist Lawrence Yun to comment, “Imbalances in supply and demand and unhealthy levels of price growth in several metro areas have made buying a home an onerous task for far too many first-time buyers and middle class families.” Mr. Yun called for builders to double their focus on building single family homes.

Housing Starts Hit 9-Year High in February

Reports on housing starts and building permits issued indicate good news for the shortage of available homes.

The Commerce Department reported that housing starts rose from January’s reading of 1.120 million starts to an annual level of 1.178 million starts. Analysts expected a reading of 1.153 million starts. Building permits also increased from January’s reading of 1.120 million permits to 1.167million permits issued. Analysts forecasted a reading of 1.210 million in February.

Mortgage Rates Rise, Fed Holds Interest Rate Steady

The Federal Reserve announced its decision not to raise the target federal funds rate on Wednesday. The current rate is 0.250 to 0.50 percent. Policymakers cited concerns over global economic developments as a reason for their decision. This decision quickly showed an impact on Thursday. Freddie Mac reported average rates rose across the board. The rate for a 30-year fixed rate mortgage rose five basis points to 3.73 percent. 15-year mortgage rates averaged 2.99 percent, which was three basis points higher than the prior week’s reading. The average rate for a 5/1 adjustable rate mortgage rose by one basis point to 2.93 percent. Discount points averaged 0.50, 0.40 and.50 respectively.

Weekly jobless claims rose to 268,000 against expectations of 268,000 new claims and the prior week’s reading of 258,000 new jobless claims.

Consumer sentiment dropped to 90.00 in March against an expected reading of 92.10 and February’s reading of 91.70. Consumer outlook is important to housing markets as the decision whether or not to buy a home is typically based on potential buyers’ evaluations of job stability and affordability of available homes.

What’s Ahead This Week?

This week’s scheduled economic releases include reports on new and existing home sales as well as usual weekly releases on mortgage rates and new jobless claims.

Fed Policymakers Make Interesting Decision on Interest Rates

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Fed Policymakers Make Interesting Decision on Interest RatesAccording to a press release by the Federal Reserve, the Federal Open Market Committee (FOMC), the current target federal funds rate will hold steady at  0.25 to 0.50 percent. Committee members cited positive developments in the U.S economy including jobs growth, stronger labor markets and gradually increasing inflation. In addition, stronger housing sector and household spending were also noted as positive signs for the economy. Committee members cited risks associated with global economic and financial developments as a concern.

FOMC members are guided in decision making by the Federal Reserve’s dual mandate of maximum employment and price stability. Inflation remains below the committee’s longer-term goal of 2.00 percent; FOMC members attributed slow inflation growth to lower energy prices. The Fed described its current monetary policy stance as “accommodative” and expects it to remain so until inflation reaches 2.00 percent.

Analysts said that the Fed has scaled back its forecast for rate increases from four increases to two increases in 2016, but any actions will depend on FOMC review of current and expected domestic and global factors. Fed Chair Janet Yellen previously cited turbulent market conditions as “significantly” tightening financial conditions due to lower stock prices.

Fed Chair Janet Yellen‘s Press Conference

Fed Chair Janet Yellen explained policy makers’ decision not to raise the target federal funds rate in a press conference after the FOMC statement. Chair Yellen responded to media representatives’ questions about FOMC’s views on inflation and unemployment, zero or negative interest rates and uncertainty about China’s economy

Ms. Yellen cautioned against over-emphasis of the relationship between unemployment and inflation as employment rates only modestly impacts tracking inflation indicators as they relate to wages and prices. In her remarks about the decision not to raise the target federal funds rate, Chair Yellen cited uncertainty about China’s economy as a factor in the decision not to raise the benchmark federal funds rate.

The U.S. economy is strengthening as Europe and Japanese economies wane. Chair Yellen indicated that although global economic decisions influence U.S. monetary policy, that U.S. decisions are not based solely on global economic and financial developments.

In response to a question about whether the FOMC has considered the effects of zero to negative interest rates used by Japan and other nations, Chair Yellen said that committee members were not actively considering or discussing negative interest rates in view of improving economic conditions. Ms. Yellen said that Japan incorporated negative interest rates but did not realize the desired effect of increasing inflation.

Media analysts said that a rate increase in April’s FOMC meeting seems unlikely, but with world-wide economic conditions changing quickly, such, forecasts can’t be cast in cement.

What’s Ahead For Mortgage Rates This Week – March 14, 2016

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What's Ahead For Mortgage Rates This Week - March 14, 2016Last week’s economic news included Fannie Mae’s Home Purchase Sentiment Index along with weekly reports on mortgage rates and new jobless claims. The City of Detroit also announced a program to help would-be buyers purchase homes that do not qualify for mortgage loans due to severe damage.

Fannie Mae: Home Buyer Sentiment Index Rises

Fannie Mae’s Home Buyer Sentiment Index (HBSI) gained 1.20 percent for an overall reading of 82.70 percent for February. The index reading is calculated using responses to several questions contained in Fannie Mae’s National Housing Survey. HBSI components include consumer responses to questions about whether it’s a good or bad time to sell or buy a home, consumer expectations concerning whether home prices and mortgage rates will rise, whether respondents expected to keep or lose their jobs, and consumer outlook for their income to significantly increase year-over-year.

The HBSI is designed to assess consumer attitudes about housing markets and their decisions about buying a home.

Mortgage Rates Rise, Weekly Jobless Claims Fall

Freddie Mac reported that average mortgage rates rose across the board last week. The average rate for a 30-year fixed rate mortgage rose four basis points to 3.68 percent; the average rate for a 15-year mortgage rose two basis points to 2.96 percent and the average rate for a 5/1 adjustable rate mortgage was eight basis points higher at 2.92 percent. Discount points averaged 0.50 percent for fixed rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.

New jobless claims dropped to a five-month low last week with a reading of 259,000 new claims filed as compared to expectations of 275,000 new claims and the prior week’s reading of 277,000 new claims. New claims readings under 300,000 new claims indicate a healthy labor market; new claims readings have held below the 300,000 benchmark for more than a year. The lowest reading of 256,000 new jobless claims occurred in October 2015.

City of Detroit Addresses Problems with Ravaged Homes

The City of Detroit announced a program designed to facilitate the purchase and rehabilitation of vacant and damaged homes that do not meet appraisal requirements for traditional home loans. While many markets have recovered from the Great Recession, housing markets such as Detroit have languished due to the lack of financing options. The program offers mortgages to cover the home purchase and second mortgages up to $75,000 for repairs and renovation. Program administrators say they plan to issue 1000 loans over the next three years. This type of program may help struggling housing markets recover while providing homeownership opportunities to those who could not otherwise afford to buy a home.

What’s Ahead This Week

This week’s scheduled economic events include the National Association of Home Builders/Wells Fargo Housing Market Index, federal reports on housing starts and building permits issued. The Federal Reserve will release its usual post-meeting statement after its Federal Open Market Committee meeting. Fed Chair Janet Yellen will also hold a press conference.

What’s Ahead For Mortgage Rates This Week – March 7, 2016

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What's Ahead For Mortgage Rates This Week - March 7, 2016Week in Review

Last week’s scheduled economic news included reports on pending home sales, construction spending and several jobs related readings including ADP Payrolls, the government’s Non-Farm Payrolls and the national unemployment rate.

Mortgage Rates, Weekly Unemployment Claims Rise

Mortgage rates rose across the board according to Freddie Mac’s weekly report. The average rate for a 30-year fixed rate mortgage rose two basis points to 3.64 percent; the average rate for a 15-year fixed rate mortgage rose by one basis point to 2.94 percent and the average rate for a 5/1 adjustable rate mortgage rose five basis points to 2.84 percent. Discount points were consistent at 0.50 percent for all three types of home loans.

Weekly jobless claims also rose to 278,000 new claims as compared to expectations of 270,000 new claims and the prior week’s reading of $272,000 new jobless claims. While an increase in new unemployment claims may seem discouraging, new claims for unemployment remain near pre-recession lows.

The four-week rolling average of new jobless claims dropped by 1750 claims to 270,250 and reached its lowest reading in three months. Analysts view the four-week reading as more reliable than week-to-week readings that can be volatile.

Pending Home Sales and Construction Spending

In other news, pending home sales fell by 2.50 percent as compared to December’s reading. Analysts expected an increase in pending sales of 0.50 percent; December’s reading was 0.10 percent higher than for November. Pending home sales represent sales contracts that have not yet closed and are considered an indicator of future closings and mortgage activity.

Home sales have been impacted in recent months by a shortage of available homes; this creates a backlog of would-be buyers who can’t find homes they want to buy and also causes rapidly escalating home prices in desirable areas. Bidding wars and cash sales can sideline buyers who can’t pay cash or are whose offers are outbid.

Analysts say that new home construction is a key component of easing the housing shortage. Construction spending increased by 1.50 percent in January, but month-to-month spending for residential projects was flat in January. Spending for residential projects was 7.60 percent higher year-over-year.

Labor Reports Reflect Stronger Economy

Federal and private sector reports on jobs indicate that job growth continues. The Department of Commerce reported that Non-Farm Payrolls grew by 242,000 jobs in February, which was higher than expectations of 195,000 new jobs and January’s reading of 172,000 new jobs. According to ADP, which tracks private sector payrolls, 214,000 new jobs were created in February as compared to expectations of 185,000 new jobs and January’s reading of 193,000 new jobs.

Improving jobs markets are a positive indicator for housing markets as stable employment is important to home buyers’ ability to qualify for mortgages. The National Unemployment Rate remained stable in February with a reading of 4.90 percent; the expected reading and prior month’s reading were also 4.90 percent.

What‘s Ahead

Next week’s scheduled economic reports include the NFIB Small Business Index and February’s Federal Budget along with regularly scheduled weekly reports on mortgage rates and new unemployment claims.

What’s Ahead For Mortgage Rates This Week – February 29, 2016

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Whats Ahead For Mortgage Rates This Week February 29, 2016Last week’s economic reports included Existing and New Home Sales and Consumer Confidence along with regularly scheduled weekly reports on mortgage rates and new jobless claims.

Sales of Pre-Owned Homes Exceed Expectations

January sales of previously owned homes rose to an annual level of 5.47 million sales against expectations of 5.30 million sales and December’s reading of 5.45 million sales. Existing home sales rose by 0.40 percent month-to-month, which was the second-highest month-to-month reading since existing home sales were first tracked. Sales of existing homes had a strong showing with sales 11 percent higher year-over-year.

Real estate markets continue to face challenges as a severe shortage of available homes reached a four-month supply; real estate pros typically consider a six-month supply of available homes a normal reading. The shortage of homes for sale has caused home prices to escalate quickly in many markets; this creates affordability issues for would-be buyers. National Association of Realtors chief economist Lawrence Yun expressed concerns that rapidly rising home prices may not be good for the economy, but there was some positive news.

Nearly 32 percent of existing homes were bought by first-time buyers in January according to the National Association of Realtors. This is good news as first-time and moderate income buyers accommodate homeowners’ ability to move up to larger homes.

New home sales dipped in January to 494,000 sales as compared to expectations of 520,000 new home sales and the prior annual rate of 544,000 new homes sold. As the shortage of available homes continued, analysts said that the market is unbalanced in favor of sellers as offers from cash buyers make it difficult for offers from less qualified buyers to compete. Analysts said that low supplies of pre-owned homes drive buyers to purchase new homes. The number of homes purchased but not yet built is near a ten-year high.

Mortgage Rates Lower And Jobless Claims Rise

Freddie Mac reported lower mortgage rates last week. The average rate for a 30-year fixed rate mortgage was three basis points lower at 3.62 percent; the average rate for a 15-year fixed rate mortgage fell by two basis points to 2.93 percent and the average rate for a 5/1 adjustable rate mortgage dropped by six basis points to 2.79 percent. Average discount points were 0.60, 0.50 and.50 percent respectively.

Weekly jobless claims rose to 272,000 new claims as compared to expectations of 270,000 new claims and the prior reading of 262,000 new claims. The four-week rolling average of new claims also posted a reading of 272,000 new claims, which was lower by 1250 new claims. In spite of the higher week-to-week reading, new jobless claims remain near historical lows. Low readings for new jobless claims indicate a low rate of layoffs, which analysts said indicates that employers are maintaining staff levels in spite of conditions suggesting a slower economy.

Consumer confidence dropped more than five points in February. The Conference Board reported an index reading of 92.20 percent as compared to an expected reading of 97.20 and the prior month’s reading of 97.80. Consumers indicated growing concerns about business, personal finances and the labor market.

What’s Ahead This Week

This week’s scheduled economic news includes reports on pending home sales, construction spending, ADP Payrolls, federal Non-Farm Payrolls and the national unemployment rate.

December Home Prices Rise According To S&P Case-Shiller Home Price Index

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December Home Prices Rise According To S&P Case-Shiller Home Price IndexHome prices rose slightly in December according to S&P Case-Shiller Home Price Indices released Tuesday. According to the S&P Case-Shiller 20-City Home Price Index, which covers cities representing all nine US Census divisions, home prices rose 5.40 percent year-over-year in December as compared to November’s reading of 5.20 percent.

December’s year-over-year home price increases were led by Portland Oregon at 11.40 percent, San Francisco, California at 10.30 percent and Denver, Colorado with a year-over-year reading of 10.20 percent. 10 cities reported higher home prices while eight cities reported lower home prices and year-over-year home prices were unchanged for two cities.

Year-over-year national home prices equaled winter 2007 home price levels, The S&P Case-Shiller 20-City Home Price Index has recovered by 36.30 percent since March 2012. Phoenix, Arizona posted its 12th consecutive month of home price gains for the longest streak of price gains in 2015.

Home Price Growth Surpasses Core Inflation Rate

David M. Blitzer, chairman of the Index Committee at S&P Dow Jones Indices, said that while home prices continue to rise, they are rising at a slower pace. All but one city (Washington, D.C.) posted home price gains higher than the core inflation rate of 2.20 percent. Home prices rising faster than inflation is positive for home sellers, but would-be-buyers may sit on the sidelines due to concerns about affordability. On the plus side, job markets are strong and mortgage rates remain low, which will likely encourage more first-time and moderate income buyers to enter the market.

S&P Case-Shiller Month-to-Month Readings

After seasonal adjustments, both the Case-Shiller 10 and 20 City home price indices posted a month-to-month gain of 0.80 percent. 19 of 20 cities posted month-to-month gains after seasonal adjustments. Factors contributing to higher home prices include high demand for homes coupled with a short supply of available homes. Home builders are ramping up construction, which should ease demand and help stabilize prices.

In related news, The National Association of Realtors reported that January sales of existing homes rose to 5.47 million sales on an annual basis as compared to expectations of 5.30 million sales and December’s reading of 5.45 million sales. January’s reading was 11 percent higher year-over-year and indicated that homes are selling in spite of rapidly rising prices in many areas.

Analysts said that the shortage of homes is causing an imbalance in market conditions; currently there is a four month supply of available homes as compared to an average six month supply of available homes. There have been only three instances when home supplies were lower in the past 16 years.

What’s Ahead For Mortgage Rates This Week – February 22, 2016

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What's Ahead For Mortgage Rates This Week - February 22, 2016Last week’s economic news included the NAHB Housing Market Index, Commerce Department releases on housing starts and building permits and minutes of the most recent meeting of the Fed’s FOMC meeting.

Home Builder Confidence Falls in February

According to the National Association of Home Builders (NAHB), home builders had less confidence in market conditions for newly built homes. The reading for February was three points lower at 58 than the upwardly adjusted reading for January. Analysts had expected a reading of 59; any reading over 50 indicates that more builders are confident about conditions than those who are not.

Builder confidence was mixed for the three components used to calculate the NAHB Wells Fargo Housing Market Index reading. Confidence in current market conditions was lower by three points to 65, but builder confidence in future market conditions rose one point to 65. The reading for buyer foot traffic in new housing developments hasn’t topped the benchmark of 50 since the peak of the housing bubble; in February, the reading for buyer foot traffic dropped five points to 39.

NAHB Chief Economist David Crowe said that builder confidence is likely to improve in 2016 due to low mortgage rates, stable job markets and pent-up demand for homes. Mr. Crowe also said that shortages of available land and labor were concerns for builders.

Housing Starts,Building Permits Issued Lower

Commerce Department reports on housing starts and building permits issued also showed lower readings for January than for December. Housing starts reached 1.099 million starts in January as compared to an expected reading of 1.165 million starts and December’s reading of 1.145 million starts.  Winter weather likely contributed to fewer housing starts.

Fewer building permits were issued in January than in December. January’s reading was 1.202 million permits issued as compared to December’s reading of 1.143 million building permits issued. Building permits issued for single family homes dropped by 1.60 percent to 731,000 permits issued. While lower month-to-month readings for current conditions may seem discouraging, the pace of single-family home building grew steadily during 2015 and is expected to do likewise in 2016.

FOMC Minutes: Policy Makers Eye Economic Developments

Minutes of January’s Federal Open Market Committee meeting indicate that members will closely monitor developing economic conditions as part of any future decision to raise the target federal funds rate from its current range of 0.250 to 0.500 percent. The Fed raised this rate in December, but did not increase the federal funds rate at its January meeting. Fed Chair Janet Yellen emphasized that decisions to raise the federal funds rate were not on a pre-determined course and that developing economic trends would continue to inform FOMC decisions.

Mortgage Rates and Weekly Jobless Claims

Average rates for fixed rate mortgages were unchanged last week according to Freddie Mac. The average rate for a 30-year fixed rate mortgage was 3.65 percent and the average rate for a 15-year fixed rate mortgage was 2.95 percent with Discount points averaged 0.50 percent for both types of fixed rate mortgages. The average rate for a 5/1 adjustable rate mortgage rose by two basis points to 2.85 percent with average discount points at 0.40 percent.

Analysts have consistently cited stronger labor markets as a factor driving U.S. housing markets. New weekly jobless claims dropped last week and added evidence of expanding job markets. 262,000 new jobless claims were filed last week; the reading was lower than expectations of 275,000 new claims and the prior week’s reading of 269,000 new jobless claims. Stable job markets are important to would-be home buyers; as labor conditions improve more buyers are likely to enter the housing market.

What‘s Ahead

This week’s scheduled economic news includes reports on sales of new and pre-owned homes and the Case-Shiller 10 and 20 City Home Price Indices. Reports on consumer sentiment and inflation will also be released.