This past week highlighted an extremely busy news calendar as it relates to the economy and to the housing market. Included were several important housing reports, Durable Goods Orders, Gross Domestic Product updates, and finally, the week ended with the highly anticipated speech by Federal Reserve Janet Yells on Friday. Yellen’s comments were meticulously scrutinized after recently strong jobs reports, hawkish Fed Minutes, and comments from other Fed members regarding a September rate hike.
Commentary
Last week New York Fed President Bill Dudley said that the Fed is closer to the point in time when it will be appropriate to raise rates further, and thought it was conceivable that a hike could come as soon as the September meeting. Prior to that, Fed Vice Chair Stanley Fischer said that employment is close to the Fed’s definition of “full employment” and that that Core PCE inflation, which is an important Fed benchmark is close to their target of 2%. He went on to say that the Consumer Price Index is currently above the Fed’s target of 2% … and has been for 9 months. He, too, is strongly favoring a quick rate hike!
New Home Sales
The New Home Sales Report measures the amount of people out shopping for homes and signing purchase contracts. While these are only measuring contracts, not closings, it is never the less a great forward-looking indicator for future closings. Tuesday’s release of August New Home Sales was the best figure in almost 9 years! Sales were up almost 13% from last month, and much stronger than the market expectations. The Median Home Price was nearly unchanged. New Home Sales made up about 10% of the market. Granted, the supply of homes are still low, which does make finding a home more difficult, but it is also very supportive of current home prices. Even skeptics however had to scramble to find some negatives within the report.
Existing Home Sales
Existing Home Sales, which tracks closings on existing homes, were revised upwards for July to the best sales figure in almost a decade. As far as inventory – homes were on the market for an average of 36 days compared to 42 last year, which is a highly positive sign. Strong demand and low supply is always very supportive of these home price levels. Distressed sales, a sign of a weak market, improved even more and dropped to 5% last month showing a healthier overall market.
Mortgage Statistics
The Mortgage Bankers Association released their Mortgage Application data for the week, showing purchase buses up 7.7% year over year basis. The FHFA House Price Index which measures prices on single family homes was up 0.2% in June. On a year over year basis, home prices remained strong at 5.6%. First time homebuyers made up 32% of sales, while cash buyers made up 21% of sales.
Overall, the extremely low mortgage rates, competitive real estate market and improving economy, are predicting a very strong and demanding fall housing season. For those on the fence about buying a house or possibly reassessing their current housing and financial circumstances now is certainly proving to be a great opportunity to do just that. A very special shout out to the Titen family!
Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker and direct lender. Approved Funding is a mortgage company offering competitive interest rates as well specialty niche programs on all types of Residential and Commercial properties. Shmuel has over 20 years of industry experience including licenses and certifications as certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. He can be reached via email at [email protected]
