Recapping last week’s big news for real estate, housing and the economy. Plus what we need to keep our eyes on for the week of 8-19-2013…
A rainy Monday is not quite as bad when you have a closing scheduled. It has been a rough ride but God willing and the creek don’t rise I will have a client with a big smile on their face in just a few hours. And a big check in their pocket. Enough about that.
Here is this week’s round up of the big news for real estate, housing and the economy from last week:
Federal Budget Woes:
Last Monday we got the federal budget for July 2013. Sadly, it has an increase in its deficit to -$98 billion, a deficit increase of $28 billion over June’s figure of -$70 billion. But since every gray cloud has a silver lining I must mention that the deficit for the first 10 months of the fiscal year is $38 billion less than during the same period of the prior fiscal year.
Jobs and Wall Street:
Always a super important indicator for the economy is the weekly jobless claims report. It came in lower than expected with 320,000 new jobless claims filed. This is the lowest level in nearly six years.
While this is a strong sign for the economy that would typically boost stock prices, the markets fell. Analysts cite a good news/bad news scenario in describing what happened. The good news was that jobless claims fell to a new low, but the bad news is that investors feared that this may give the Fed a signal to begin tapering its quantitative easing (QE) program.
The Fed is expected to begin tapering its monthly purchases of $85 billion in treasury securities and mortgage-backed securities as early as next month. The QE purchases are intended to help hold down long term interest rates including mortgage rates.
The fall in stock prices on Thursday and Friday suggested that fear of the Fed ending QE is more compelling than the lowest number of new jobless claims since October 2007.
Like I do every week, I posted the Mortgage Rate Update on Friday. I will summarize it by saying that the average mortgage rates did not make any huge changes last week. I think rates may just bounce around until we get word about the Fed starting to taper QE. Then you can expect all Hell to break loose and rates to start climbing quickly.
On Friday we got big news for the economy and housing when HUD and the Census Bureau released the latest new Residential Construction numbers for July 2013. Housing Starts for July 2013 came in below expectations but building permits issued in July came above the June level. Some are saying that the recent increases in home prices combined with higher demand is why we are seeing more construction.
We have several BIG items coming up this week that are going to impact real estate and the economy. The biggest will probably be the FOMC minutes since it might give us a clue about the Fed’s plans about when they will start to taper QE.
Otherwise, we need to watch the Existing Homes Sales report, the mortgage rate reports from both Freddie Mac and the MBA, the FHFA’s latest Home Price index and last but not least, the latest numbers for New Home Sales.