Recapping the big real estate news for the week of 6-24-2013 and discussing what we better keep an eye on this week…
So who had a most excellent weekend? Instead of being a grouch because it is Monday, let’s try to be positive and think about the fun we had over the weekend! My big fun this weekend was yesterday evening we got the driveway finished. 2 loads of crush and run plus a friend with a skid steer and no more muddy grassy pitiful excuse for a driveway!
The Markets Went Nuts
Well just like I have been warning you about, the comments from Fed chairman Ben Bernanke last week after the FOMC meeting caused a commotion in the financial world. Pretty much, investors are NOT happy about the FED tapering off their current policy of quantitative easing (QE). The Fed hinted that they MIGHT start cutting back on their monthly $85 billion purchase of Treasury securities and Mortgage Backed Securities later this year.
Remember that QE is part of the reason for the super duper low mortgage rates that are available today!
Bernanke said that any changes to the current QE policy will depend on how the economy is doing. QE has kept long-term interest rates low and this is why any changes to the FED buying MBS will probably mean that mortgage rates are going to go up up up.
Good News for Real Estate
Home Builders More Confident
I preach all the time about how the housing market and the economy pretty much go hand in hand. Last week’s we got several positive indicators for real estate. You may have read last week’s post about the National Association of Home Builders/WF Housing Market Index for June 2013. It came in at 52 and any reading over 50 indicates that more builders surveyed believe that housing market conditions are positive.
Last week the Department of Commerce released their Housing Starts Report for May 2013. While the numbers were lower than expected they were up from the previous month. Again we are seeing the basic law of Supply and Demand affecting the real estate market. Right now, there is a shortage of homes in some price ranges/areas in the US. If there were more homes available then the recent increases in home prices should slow down.
Fed Expects Moderate Improvement Continuing For Economy
As always, we have to take any news from the Fed seriously. You saw how Wall Street went nuts after the FED and Bernanke talked. I would say they over reacted since the Fed said that it expects moderate improvement in the economy. The Fed also said that housing is now leading the economic recovery despite being the primary cause of the economic downturn. I would say the banks and NOT housing were the primary cause of the economic meltdown.
In case you missed last week’s Mortgage Rate Update, let me recap. Freddie Mac reported decreasing mortgage rates and the MBA reported some rates increasing and some rates decreasing. But this is the average mortgage rates we are talking about. Plus we saw mortgage rates start to climb after the Fed mentioned reducing its QE program. I think we will see mortgage rates increase this week and suggest you call your mortgage professional ASAP.
Existing Home Sales Up
NAR released their Existing Home Sales report for May 2013. Existing home sales across the entire US increased. If you look at the May 2013 Market Report for Upstate South Carolina you will see that home sales are up 6.2% compared to the same time in 2012.
There is going to be several BIG housing related reports this week such as the FHFA Home Prices, the Case-Shiller Home Prices Report, the NAR’s pending home sales report and finally the New Home Sales report. I will write about these and compare them to really happening in Upstate South Carolina.
Plus we will need to pay attention to this week’s Gross Domestic Product Report, the weekly jobless claims, the consumer spending report, the Chicago Purchasing Managers Index and the Consumer Sentiment Index. So why do we need to pay attention to these reports?
Because these are just a few of the reports that the Fed will use to determine what they are going to do about QE. Which again will make a HUGE difference in mortgage rates.