Recapping last week’s big news for real estate including the latest on home builder and consumer confidence, home prices, unemployment and much more…
Happy St Patrick’s Day! Glad to be back up and running after the change over to the new search last week. Sorry about the down time. Plenty of news for the real estate market and the economy last week so let’s dive right in!
Home Builder Confidence Low
Today, the National Association of Home Builders/Wells Fargo Housing Market Index was released. The index was at 47 and any reading below 50 indicates that more builders see conditions as poor than good. NAHB Chairman Kevin Kelly said builders continued to be affected by poor weather and difficulties in finding lots and labor.
I do not see wintry weather slowing down serious home buyers. It would however create problems for builders. And it creates interesting scenarios for buyers and sellers.
For sellers, fewer new homes may mean less competition.
For buyers, fewer new homes may mean fewer choices.
FNC Says Home Prices Increase
The latest FNC Residential Price Index™ (RPI) shows U.S. home prices have gotten off to a positive start in 2014, rising a modest 0.4% in January. The index, constructed to gauge the price movement among normal home sales exclusive of distressed properties, indicates home prices of the underlying housing market continue to strengthen as market fundamentals and credit conditions continue to improve.
The index is up 9.0% from a year ago and continues to point to the fastest year-over-year growth to date since the recovery began. Home prices are expected to rise modestly in February as improving signs are emerging in the for-sale market: The for-sale market has strengthened in February and the average seller asking price discount dropped from 5.4% in January to 4.7% in February.
Sounds great. Remember they are talking about the entire US and not just home prices in your local market. While reports such as this one are important indicators for the economy and the housing market, they are NOT the local info that buyers and sellers need.
Unemployment / Employment
It is pretty obvious (or it should be) that strong employment numbers are needed for a healthy housing market. If someone is unemployed, buying a house is probably the last thing on their mind. Or if the unemployed person owns a home, they are probably thinking about how they are going to make the payments.
So it was great news that January’s job openings increased from the December level. Weekly jobless claims fell from 324,000 to 315,000. The Bureau of Labor Statistics expected 330,000 new jobless claims so this was good news.
Weekly reports are more volatile than monthly statistics; analysts typically track employment trends by reviewing rolling averages of several weeks’ new jobless claims data.
As usual, I posted the weekly Mortgage Rate Update on Friday. To recap, mortgage rates rose slightly due to the better than expected Jobs Report. Funny how good news for the economy can lead to an increase in mortgage rates rather quickly. However, the ongoing unrest in Europe may keep mortgage rates from rising as much or as quickly.
Retail Sales Rise
More good news came from the Commerce Department last week when they reported that retail sales increased for the first time in three months. February retail sales were better than expectations of a 0.20% gain and came in at 0.30%.
Of course, today’s news was even better…
Industrial Production Increases
Earlier today, the Fed reported:
Industrial production increased 0.6 percent in February after having declined 0.2 percent in January. In February, manufacturing output rose 0.8 percent and nearly reversed its decline of 0.9 percent in January, which resulted, in part, from extreme weather. The gain in factory production in February was the largest since last August.
Good to see that it isn’t just retail sales that are improving. Manufacturing is a vital part of our economy and must be strong if we are going to have a healthy economy and real estate market.
There was some bad news regarding consumer confidence last week. The University of Michigan Consumer Sentiment index was slightly lower than expectations. This is the lowest reading in 4 months. Check out the chart below:
However, notice the upward trend since the bottom back in 2009. I admit we still have a long way to go but it appears that consumers are feeling more confident than they did just a few years ago. If we could just get this to translate into more home sales and jobs, it would be awesome.
Stuff to watch this week includes:
- Housing Starts and Building Permits for February
- Existing Home Sale
- Fed’s FOMC statement and Fed Chair Janet Yellen’s press conference
- Weekly Jobless Claims report
- Mortgage Rate reports from MBA and Freddie Mac