Recapping the big news for real estate for the week ending 9-9-2013 and what we need to watch this week. Plus sharing links to some great housing information…
I skipped last week’s Looking Forward Looking back post because of the Labor Day holiday. Did you notice the difference? Well, despite last week being a short week, there was still plenty of real estate, housing and economic news. So let’s dive in!
We got good news last week about construction spending. It rose 0.60% in July and was above expectations. I know we are still way below where we need to be, but any improvement is a good thing!
Especially since it might mean that residential construction is picking up. Which will be good for the economy as well as the real estate market. Plus it could help the inventory problems that home buyers are facing in some areas of the U.S.
Breaking News: Beige is Still Bland
We got the latest Beige Book last week and I can sum it up with 2 words: modest and moderate. Why?
Because the Federal Reserve said there was modest expansion in manufacturing and moderate residential real estate sales. The Fed is saying that the higher mortgage rates may be the reason for lower home buyer enthusiasm. Some would say the ongoing inventory shortage of available homes is part of the reason for the decrease in residential real estate sales.
Unemployment and the Economy
As the economy goes, so goes the housing market. So we have to pay attention to last week’s reports on unemployment. ADP released its report on private sector jobs added for August and it was lower than expectations.
We also got bad news about jobs from the Bureau of Labor Statistics. Their Non-Farm Payrolls Report for August was also below expectations. If there was a silver lining to their report, it is that unemployment in August was 7.30%, which is lower than the 7.40% level of July.
As usual, I posted the weekly update on average mortgage rates from Freddie Mac and the MBA on Friday. Again, we saw mixed signals as some rates increased and some decreased. The key thing to remember is we know that rates are still super low BUT once the Fed starts to taper QE, you can expect mortgage rates to rise.
Of course, no one knows for sure when the Federal Reserve will start to taper quantitative easing. Maybe higher mortgage rates and crappy unemployment numbers will persuade the Fed to delay the taper?
Again, we have to worry about mortgage rates going up when the Fed starts to taper its $85 billion monthly purchase of mortgage-backed securities and Treasury bonds. This will make the demand for bonds decrease, which normally means bond prices fall which will make mortgage rates increase.
Not many big stories this week other than seeing how mortgage rates will react to the turmoil regarding Syria and last week’s economic news. Later this week we get the University of Michigan’s Consumer Sentiment Index which measure how consumers are feeling about the economy. As I always say, most people don’t buy houses when they are feeling uneasy about the economy.
Here are some interesting real estate stories from around the web:
Just Letting You Know: Housing Affordability Plummets
Do the Freaking Numbers BEFORE You Buy: Poor Math Skills Make a Mortgage Default More Likely
Will the Economy Save Housing? Or Will Housing Save the Economy?
Those that forget history are doomed to repeat it: A Dodd-Frank capitulation on mortgage down payments
CoreLogic Says Home Prices Up 12.4% YOY