Discussing the latest new home sales numbers, consumer sentiment, foreclosure starts, mortgage rates and more…
From HUD/Census Bureau:
Sales of new single-family houses in November 2016 were at a seasonally adjusted annual rate of 592,000. This is 5.2 percent above the revised October rate of 563,000 and is 16.5 percent above the November 2015 estimate of 508,000.
The median sales price of new houses sold in November 2016 was $305,400; the average sales price was $359,900. The seasonally adjusted estimate of new houses for sale at the end of November was 250,000. This represents a supply of 5.1 months at the current sales rate.
Positive news but sadly, 60% of the new homes sold were in the $200,000 to $399,000 price range. While this may be considered a starter home in some areas, it is not the case in the Anderson SC area.
The good news for home buyers is that there are quite a few developments of affordably priced new homes in our area.
While the surge in confidence following Trump’s surprise election ended by mid December, it nonetheless led to the highest level of the Sentiment Index since January 2004. Compared with the rapid gains made in late November and early December, the Sentiment Index was barely higher than at mid month and barely higher than the January 2015 peak — in both cases, just two-tenths of a point — but that small difference was enough to establish a twelve year peak.
An all-time record number of consumers (18%) spontaneously mentioned the expected favorable impact of Trump’s policies on the economy. This was twice as high as the prior peak (9%) recorded in 1981 when Reagan took office. To be sure, nearly as many consumers referred unfavorably to anticipated changes in economic policies, but those references were less than half as frequent as the peak level recorded just three years ago (16% vs. 37%).
Consumers anticipated that a stronger economy would create more jobs, although expected wage gains were quite meager. Smaller income gains were offset by record low inflation expectations. Needless to say, the overall gain in confidence was based on anticipated policy changes, with specific details as yet unknown. Such favorable expectations could help jump-start growth before the actual enactment of policy changes, and form higher performance standards that will be used to judge the Trump presidency.
Will this translate into robust economic growth? As they point out, this increase is based on anticipated changes and NOT on reality.
Consumer confidence is often based on perception and not reality. Time will tell what the future holds…
- Number of Loans in Active Foreclosure Drops Below 500K for 1st Time in Nearly 10 Years
- Pre-Payment Activity Remains Strong
- Total U.S. Delinquency rate (loans 30 or more days past due, but not in foreclosure) Up 2.55% MoM But Down 9.43% YoY
- Total U.S. Foreclosure Starts Up 6.90% MoM But Down 9.31% YoY
Great news. I hope the increases from the previous month were just blips and do not turn into trends.
Credit Suisse and Deutsche Bank Hit With Combined Penalty of Over $12B for Toxic Mortgage Securities
Credit Suisse and Deutsche Bank have been hit with a combined penalty of more than $12 billion over the sale of U.S. toxic debt, further hampering two of Europe’s leading investment banks as they struggle with weak earnings.
The penalties stem from an initiative launched by U.S. President Barack Obama to pursue banks for selling sub-prime debt without warning of the risks, a practice that led to the worst economic crisis since the Great Depression.
Another week another settlement.
The only way to change the behavior of the big banks and financial firms is to send executives to prison.
Freddie Mac Reports Mortgage Rates At Two Year High
- 30-year fixed-rate mortgages averaged 4.30% with an average 0.5 point
- This is up from last week when it averaged 4.16%
- A year ago at this time, 30-year fixed-rate mortgages averaged 3.96%
- 15-year fixed-rate mortgages averaged 3.52% with an average 0.5 point
- This is up from last week when it averaged 3.37%
- A year ago at this time, 15-year fixed-rate mortgages averaged 3.22%
The Conference Board Leading Economic Index® (LEI) for the U.S. was unchanged in November, remaining at 124.6 (2010 = 100), following a 0.1 percent increase in October, and a 0.3 percent increase in September.
Ataman Ozyildirim, Director of Business Cycles and Growth Research at The Conference Board said:
The U.S. Leading Economic Index continued on an upward trend through 2016, although at a moderate pace of growth. The underlying trends in the LEI suggest that the economy will continue expanding into the first half of 2017, but it’s unlikely to considerably accelerate. Although the industrial and construction indicators held the U.S. LEI back in November, the weakness was offset by improvements in the interest rate spread, initial unemployment insurance claims, and stock prices.
While not exactly a block buster, it was at least somewhat positive. It is the comment from Ozyildirim that we should continue to see the economy expanding in the 1st half of 2017 that I find most encouraging.
This is talking about U.S. home prices and not home prices in every market. For more information about home prices and market conditions in the Anderson SC area!
Will home prices keep increasing?
Well check out this chart showing the projections for house prices by the year 2020:
Barclays Plc’s management team, facing a U.S. demand that it pay up over mortgage misconduct from the financial crisis, dared prosecutors to sue. The Justice Department obliged.
After failing to agree with prosecutors on a price to put the U.S. investigation behind it, the bank was slapped with a civil suit in Brooklyn on Thursday. The U.S. accused the firm of selling $31 billion of defective mortgage-linked securities into the market under false pretenses from December 2005 through 2007.
The complaint against Barclays — quoting consultants who privately called the underlying loans “craptacular” — broadly echoes allegations against other banks in mortgage-securities settlements that have netted the government $46 billion and counting in penalties and reparations. The surprise this time is that a global bank is rejecting the Justice Department’s demand for a staggering financial penalty and is forcing prosecutors to prevail in court. In a statement on Thursday, Barclays said the government’s claims “are disconnected from the facts.”
Gutsy move by Barclays. I hope they pay dearly IF they are found guilty of helping to crash the economy and the housing market.
The extended period of historically elevated rates of extreme mortgage distress and defaults in the U.S. housing market, better known as “the foreclosure crisis,” has faded from view as the economy continues its slow recovery. A deeper look at mortgage performance data from the Mortgage Bankers Association suggests the crisis has ended in some states, while it is not quite over yet for the nation as a whole. Based on current trends, we expect it should end in early 2017.
Interesting, especially regarding the decrease in cash sales:
NAHB analysis of the most recent Census estimates concerning sources of financing for new home sales reveals that the share of mortgages financed through conventional products in the third quarter of 2016 rose to 74.1%–the highest level seen since 2008. In contrast, cash sales accounted for the smallest portion they have since the second quarter of 2010. The portions financed with FHA and VA loans also declined while the number of new homes sold fell 6%.
Well that is it for today! I hope you have a very Merry Christmas!