By: FRED ARNOLD
Q: How do you know when the stock market is volatile & unstable? A: The morning bell is rung by Britney Spears!
Go Figure! The housing market index to almost everyone’s surprise turned lower for the second straight month. The issue seems to be more about builders having difficulty locating available lots to build and a lack of credit for new home construction than buyer demand. The positive side to the report is that although present conditions seem challenging for builders, sales traffic seems to be quite robust and shows no signs of slowing down.Housing starts made a partial comeback in February; however, what many consider important for the future is that housing permits made a significant gain. Housing starts in February rebounded 0.8 percent, after they had dropped 7.3 percent in January. The report also reinforces that the market is in a much better place than a year ago as housing starts are up a whopping 27.7 percent from the same time last year. Housing permits continue on an upward trend increasing by 4.6 percent.
The final piece to the housing reports for the week came on Thursday with the existing home sales report. An unexpected rise in existing home sales inventory occurred in February with a reported increase from 4.3 months up to 4.7. A few more people are excited to see their home as home values are rising and they can make a change to meet their family’s needs! Additionally exiting homes sales also improved rising .8 percent with January being revised upward to 0.8 percent as well.
Low supply of available homes for sale had been holding down sales but that appears to be changing as higher prices are bringing more homes into the market. Although the media has not been talking a whole lot about rising house prices, it appears that homeowners are beginning to do their own research and are finding that their homes are worth more than they initially thought. The west coast appears to have the greatest shortage of available inventory of existing homes for sale.
Outside of housing reports for the week, the Federal Open Market Committee dominated midweek headlines. The FOMC announced to no one’s surprise that they are leaving interest rates unchanged. To go along with the no change rate policy the FOMC reiterated their desire to keep interest rates low for mortgages by keeping their bond and mortgage backed securities purchase program in place.
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A few more housing reports on tap for next week:
•Tuesday March 26th – Durable Goods Orders and New Home Sales
•Wednesday March 27th – MBA Applications and Pending home Sales
•Thursday March 28th – First Time Jobless Claims and GDP
•Friday March 29th – Good Friday…U.S. Banks and Equity Markets are Closed
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