Real Estate Market Update
By Fred Arnold
I was concerned about the state of the housing market over the past 3 months as it has been quieter this spring with light home sales. The spring fever buying season has not quite caught fire and I anticipated poor numbers on the housing front this week (Housing market index, Housing starts and Existing home sales) as is reflective in a Reuters article I was interviewed in two weeks ago.
See link below:
So here are the numbers: (oh there is some positive that I will share below also!)
This week the Housing Market Index, which is a measurement of the mindset of home builders, once again continues to show that builders are not optimistic about new construction because home building remains at very low levels. Some of the blame is being placed on stiff competition from foreclosures and short sales.
Housing Starts, which had risen 12.9% in March, dropped 10.6%. Uncertainty about the economy and consumer concern about higher cost of living expenses due to gas prices, continues to keep buyers on the sidelines.
Existing Home Sales unexpectedly declined this month by .8%. This recent drop is not nearly as alarming as the fact that Existing Home Sales are actually 12.9% lower than the same time last year. However there is good news in that the median price for homes sold last month actually increased by 2.4%. (I bolded the previous line just to make sure that you did see that there is some good news)
Now more good news, I came into the office on Monday and had eight clients that needed pre-approval letters on offers they made or were going to make this week. Only two offers were accepted which means there is still competition for good homes when good homes finally come on the market. Loan Modifications and uncertainty in the economy is keeping a lot of homes off the market! There are interest buyers out there if you have a good home at the right price.
More good news: Refinance applications surged 13.2% due to the incredibly low mortgage rates available. We are actually getting close to the record interest rate lows which may become a boost to the purchase market. This will help homeowners out as it will free up cash and lower consumers payments thus allowing more cash for them to spend on the economy each month!
First Time Jobless Claims dropped from 438,000 to 404,000 from the prior week. Any decline in jobless claims is welcome. Although we remain above the purely psychological number of 400,000 in weekly claims, the fact that we have a decline in the claims is good news!
Reports due out next week are:
- Tuesday May 24th - New Home Sales
- Wednesday May 25th - MBA Applications & Durable Goods Orders
- Thursday May 26th - First Time Jobless Claims and GDP
- Friday May 27th - Pending Home Sales
Check out more articles in our SCV “Your Home Inside And Out” section.