The housing recovery continues to remain strong as indicated with a few different reports this week. The Case-Shiller Home Value Index showed that home prices in June rose 0.9% from the prior month. This report is slightly weaker than the previous report which showed an increase of 1.4% from May to June. It is crazy that already analysts are questioning the housing recovery because of this slightly weaker report. It is simply amazing how with just a single month of data people can change their opinion on the strength of the market. Home prices overall are 12.1% higher than the same time last year.
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The Pending Home Sales Index seems to be slowing down although this is less a representation of the strength of the market and more a reaction to higher mortgage rates. Some people believe that rising rates and rising home prices are placing the squeeze on demand. However most of the people rendering this opinion are not in the real estate or mortgage market on a daily basis.
Real estate and mortgage experts in the field seem to believe that the recent slowing is just a momentary lull due to home buyers accepting the fact that the cost of homeownership has gone up. There is still plenty of demand.
Home prices are rising which means real estate is once again becoming more than just a place to live, it is returning to the point that it can be considered a financial investment. When real estate is viewed as an appreciating asset, regardless of home prices, demand remains strong. Every time prices or mortgage rates rise, there is always a brief slow down as the buyers in the market delay their decision to purchase for the moment, but rarely is it long term.
The Mortgage Bankers Association of America reported that mortgage applications for the prior week increased for purchase transactions but continued to slide on refinances. Purchase applications increased 2.0% whereas refinance apps declined 5%.
The GDP report released on Thursday morning shows that the economy is continuing to grow and become healthy. GDP for the second quarter was raised to annual rate of 2.5% versus the initial estimate of 1.7%. The 4th quarter of last year GDP was estimated at only 1.1%. Sales of domestic products are also up significantly at 1.9% where expectations were only for an increase of 1.3%. The bottom line is that the economy is really starting to improve, and the rate of improvement is also becoming more substantial. (This goes back to why I say housing is just fine. As long as the economy is improving, housing demand will remain strong)
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The fear of the United States becoming embroiled in the civil war taking place in Syria has many investors concerned. The stock market tanked over 170 points on news that the U.S. may get involved.
Market moving reports for next week are:
- Monday September 2nd - Markets are Closed
- Tuesday September 3rd - ISM Manufacturing Index and Construction Spending
- Wednesday September 4th - MBA Applications
- Thursday September 5th - First Time Jobless Claims and ADP Employment Report
- Friday September 6th - National Unemployment
As your mortgage professional, I am happy to assist you with any information you may need regarding mortgage or real estate information. I welcome the opportunity to serve you in any way I possibly can. Please feel free to reach me at 661-505-4300 .