Keeping you updated on the market! For the week of December 2, 2013 ________________________________________ MARKET RECAP Home Prices Continue to Chug Along A month or so back we thought a slowdown in the rate of home-price appreciation was upon us. After all, data from the NAR and the Census Bureau pointed to stagnating national median home prices. But the latest issue of the S&P/Case-Shiller Home Price Index suggests otherwise. The index showed prices in its 20-city index increased 0.9% month over month in September. For the second-consecutive month, prices increases swept all 20 cities. This latest increase lifted the year-over-year gain to an impressive 13.3%. Well be interested to see what Case-Shiller reports for October. Data weve seen from Zillow and CoreLogic suggest some slowing in the rate of price appreciation. Our own anecdotal experience also suggests some slowdown in more local markets. Wed like to see if empirical evidence bears this out. Unfortunately, empirical evidence still bears out weak sales growth. The Pending Home Sales Index slipped 0.6% to a 102.1 reading in October. The index is at the lowest level in nearly 12 months. Contract signings were likely impacted by the government slowdown, which made verifying income difficult for anyone needing a purchase mortgage. At the same time, rising prices and low inventory continue to impede sales. Given the strong price increases over the past year, were surprised we havent seen more homes come to market. Rising prices always increase supply. With housing, though, the increase has been less than we expected. Nevertheless, we are seeing at least a marginal increase in inventory, which is up 3.2% for the year. To be sure, i nventory remains very low, but if it continues to increase, you can be assured that the rate of home-price appreciation will slow. Rising supply always leads to a slowdown in the rate of price growth, if not an outright price reduction (which we dont expect). New construction is another factor in raising overall supply. The Census Bureau hasnt published housing starts in a couple months due to the government slowdown, but it did release data on permits. On that front, permits for residential construction increased to 1.034 million units on an annualized basis in October, a considerable increase over the 918,000 units in August. Unfortunately, all the gains are attributable to the multi-family segment. Single-family permits posted at 620,000 units on an annualized basis in October, which is actually a decreased compared with the 627,000 units in August. The encouraging news is that weve seen a recent uptick in purchase-mortgage activity. Now, wed just like to see this recent uptick morph into a long-term trend. Economic Indicator Release Date and Time Consensus Estimate Analysis Mortgage Applications Wed., Dec. 4, 7:00 am, ET None Important. Volatile purchase activity is giving mixed signals on the sales trend. New Home Sales (October) Wed., Dec. 4, 10:00 am, ET 428,000 (Annualized) Important. Sales appear to have hit a plateau, but permit activity points to a 2014 upswing in multi-unit sales. Gross Domestic Product (3rd Quarter 2013) Thurs., Dec. 5, 8:30 am, ET 3.1% (Annualized Growth) Important. GDP growth exceeding exceptions will give the Fed another reason to taper. Employment Situation (November) Fri., Dec. 6, 8:30 am, ET Unemployment Rate: 7.3% Payrolls: 180,000 (Increase) Very Important. If payroll growth exceeds estimates, the odds increase that interest rates will rise. All Quiet on the Mortgage Front The mortgage market has been subdued, and we dont expect that to change until Dec. 6 when the all-important November employment report is released. The report for October was exceptionally strong, and motivated a few Federal Reserve governors to ponder “tapering” the Feds bond purchases in December. If the employment numbers come in strong again (payroll growth above 200,000), the odds measurably increase that the Fed will undertake tapering as soon as December. The amount and pace of tapering – if any – is anyones guess. But should the Fed begin to taper, mortgage rates will surely rise. How much they will rise, again, is anyones guess, because the Fed will attempt to moderate any rate increase. Whether it can actually do that is another story. We have to confess that were still somewhat circumspect on the strength of the October employment numbers (which were likely hastily compiled). We would not be surprised to see them revised lower; nor would we be surprised to see payroll growth come in below the consensus estimate of 180,000. Economic growth appears to be gathering momentum, but still not enough to maintain payroll growth near 200,000 per month. With that said, higher lending rates loom in the future – if not this month, then very likely within the next quarter. So at this point, waiting to buy a home with a purchase mortgage or waiting to refinance a current mortgage makes no economic sense. BBVA Compass is a trade name of Compass Bank, a member of the BBVA Group. Compass Bank, Member FDIC If you wish to unsubscribe, click on the following link and send the email with unsubscribe as the subject: Click Here EQUAL HOUSING LENDER This Newsletter is for informational purposes only. The information contained herein may not be applicable to every situation or jurisdiction and we urge you to consult your professional advisor prior to acting on information contained herein. The content, accuracy and opinions expressed herein are not verified or endorsed by the sponsor hereof.
Posted on: Mon, 02 Dec 2013 14:41:01 +0000
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