Talking about home builder confidence, the federal deficit, the latest unemployment numbers and what it all means for real estate…
Ah Monday! When the groans are loudest and the coffee needs to be the strongest. Let’s kick off this week by looking at the latest news for real estate:
In the Red
There wasn’t a bunch of news last week other than on Wednesday when the federal government announced a $138 billion budget deficit for May 2013. The U.S. Treasury said this is 11% higher than May 2012 but they expect to come in with about a -$1 trillion deficit for the 2013 fiscal year. Their fiscal year runs from October to September.
The Treasury is estimating that the 2013 budget deficit will come in at approximately $642 billion in the red. This is not good at all but is below the 2012 deficit of -$1.1 trillion. We all know that the economy has been hurting for the past several years. The government has been funneling money into the economy at a neck breaking pace because the federal budget has been running in the red since 2008. Eventually this is going to have to change…
Employment Continues To Get Better
You might have read last week’s post What Does the Latest News About Unemployment Mean for Real Estate which talked about both the employment numbers, the number of unemployed people looking for work and the effect that the rumors about the Fed ending or slowing down QE. Like I said, all of this will impact interest rates, which then has an effect on mortgage rates. Needless to say, the recent increases in mortgage rates is going to affect the real estate market. Both nationally and right here in the Anderson SC area.
So when we look at last week’s Weekly Jobless Claims report it was with a sigh of relief. Jobless claims fell from the prior week’s 346,000 jobless claims to 334,000 jobless claims. As more people find a reliable and good paying job, we should expect to see more people looking to buy a home.
Retail Sales Improved
Another bit of good news from last week was that Retail sales for May 2013 also improved.
Mortgage Rates Climbed Again
The one thing that happened last week that causes me some concern is that mortgage rates increased again. I switched things up last week and posted the Mortgage Rate Update on Friday instead of Saturday. Sorry for any confusion. Both Freddie and the MBA said that rates increased.
While mortgage rates are still super low, it is something that both buyers and sellers need to keep an eye on.
Home Builders Index
The NAHB just released the latest National Association of Home Builders/Wells Fargo Housing Market Index. The good news is that builder confidence is at the highest point since way back in 2006! NAHB Chairman Rick Judson said:
This is the first time the HMI has been above 50 since April 2006, and surpassing this important benchmark reflects the fact that builders are seeing better market conditions as demand for new homes increases
Good sign for the economy and for the housing market. Overall we are seeing positive news for the economy and the housing market. The key thing in my opinion is mortgage rates. Let’s hope that mortgage rates don’t keep climbing like they have been.
Upcoming Stuff We Need to Watch
A really big event that may have a major impact on mortgage rates and the real estate market is the upcoming FOMC statement and Fed Chair Ben Bernanke’s press conference. After just hinting about slowing or stopping QE, mortgage rates started to increase. So everyone will be waiting to see if the Fed is going to reduce or stop its current quantitative easing (QE) program.
Tomorrow we will be checking out the May 2013 Consumer Price Index. The Consumer Price Index tells us about the prices that consumers are paying for goods and services. Obviously, if people are having to pay more for just stuff it means that they are going to have less money at the end of the month. So if someone is saving up for their down payment and closing costs, any increase in the Consumer Price Index could mean fewer home buyers.
I am looking forward to Thursday’s Existing Home Sales Report. While it is talking about the big picture of the US housing market, I always compare it our local market conditions.