Looking at the big news from last week plus the news from today’s NAR Pending Sales report and more…
Let’s kick the week of with my normal post recapping last week’s big news for real estate and what we have to keep an eye on this week. But first let’s talk about today’s big news:
Pending Home Sales
It is quite appropriate to start of with today’s report from NAR about Pending Home Sales since it is a forward looking indicator. NAR’s Pending Home Sales Index is based on contract signings and not on closed transaction. There is a world of difference between Under Contract and Closed.
Anyway, NAR reported that their Pending Home Sales Index fell 1.2% from the same time last year. I think we could be safe in saying the government shutdown, increasing mortgage rates & decreasing consumer confidence are to blame. This is the first time in 29 months that pending home sales weren’t above year-ago levels.
On a positive note, NAR is saying that US existing home sales for 2013 will be 10% higher than 2012. Also, the US median existing-home price is expected to rise 11 to 11.5% for all of 2013.
More on Foreclosures
Last week I wrote about LPS reporting that the number of loans in foreclosure is at the lowest level since 2009. Then I read the latest RealtyTrac foreclosure report and see that they are reporting:
- September 2013 US home sales are up 14% from the September 2012 level
- September 2013 US median home prices are up 6% from the September 2012 level
- Distressed sales accounted for 25% of US home sales in September 2013
Combine the high number of foreclosed homes with how many homes are being sold for cash to investors and you see that real estate is very different than just a few years ago.
Existing Home Sales
It has been a week since NAR reported that US Existing Home sales for September. I covered this in last week’s Looking Forward Looking Back but in case you missed it:
- US existing-home sales fell 1.9% in September from the August level
- September 2013 existing home sales were 10.7% above the September 2012 level
- Existing home sales have remained above year-ago levels for the past 27 months
- The US median existing-home price for September 2013 was up 11.7% from September 2012
- This is the 10th consecutive month of double-digit year-over-year increases in median price
- All cash sales comprised 33% of transactions in September 2013
- Inventory is 1.8% above a year ago
Remember that this is for the entire US and you MUST always look locally for the most relevant info.
I covered the latest figures for unemployment in Friday’s post. To recap, the unemployment rate was 7.2% which is down from 7.3% in August. This is the lowest level for the unemployment rate since November 2008.
Weekly Jobless claims were higher than expected at 350,000 new claims; analysts had expected 337,000 new claims. The latest reading was below the prior reading of 362,000 new jobless claims.
Since I wrote Friday’s post, I have read several people saying that the weak unemployment numbers were caused by uncertainty over the government shutdown. The silver lining is that most of them also said the economy is growing. It might be slow but it is growing.
So do you see the glass as half empty, half full or the wrong size?
We got more good news from the Commerce Department that points to a strengthening economy. They said that construction spending rose by 0.60% in August. The Federal Reserve also said that residential construction is growing at a “moderate pace”.
Plenty of people miss my weekly Mortgage Rate Update since I usually post it late Friday or early Saturday. So to recap, the average mortgage rates reported by both Freddie and the MBA fell last week. Let’s hope this will create more activity especially since we are headed into the Fall and Winter months.
On Friday, we did get some bad news via the University of Michigan’s Consumer Sentiment Index. October’s reading of 73.2 was down from September’s revised reading of 77.5. Consumers interviewed for the October CSI indicated that the federal government was the major factor in lower confidence in the economy.
Maybe I am not the only one frustrated with Washington?
Sadly, some federal agencies are still delaying their reports because of the government shutdown. But the main thing we need to watch this week is the Case-Shiller Housing Market Index. While it is a national report, it is the biggest of the big boys.
There is also a FOMC meeting tomorrow and Wednesday but most are not expecting any big changes from the Fed. Of course the Fed has surprised us recently so keep your ears open. Any changes to QE would be a huge surprise considering recent events and the weak economy.