Home prices continue to gain as the FHFA House Price Index for July rose a more than expected 1.0 percent after increasing 0.6 percent in June. Analysts expected only a .7 percent increase. If you wanted to chart the progression of the Home Price Index you would see that for 18 straight months the index has been rising.
The largest gain in the index was seen in the West with a rise of 2.2%. The fact that the numbers remain positive is great news, however if you have been tracking the index in these reports you will see that the pace of value increases has slowed considerably from just a few months ago. Home prices are 8.8 higher than the same time last year.
Mortgage rates in the last week fell sharply after the Fed announced that they are not yet ready to begin the tapering of economic stimulus. Pretty much everyone on Wall Street, the real estate industry and mortgage profession expected the Fed to begin slowing their stimulus plan and the announcement by the Fed not to taper was a surprise to all.
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On the news from the Fed mortgage rates have been falling sharply in the last week. As is always the case, when rates drop mortgage and housing activity jumps. The Mortgage Bankers Association reported that applications for purchase loans jumped 7% in the prior week while refinances increased 5%.
The craziness that has existed in regard to the run up in home prices has slowed somewhat. Now that prices seems to be stabilizing, it appears that this is giving a boost to the sales of new homes. In August sales jumped 7.9% which was on target with most analyst’s expectations.
Additionally, new homes have been coming into the market and that likely contributed to another dip in the median home price which declined 0.7 percent. This is the 4th monthly decline in a row which definitely shows a reversing trend in prices. It is not likely that we will see a sustained drop in prices but more of a leveling out after the recent frenzy of purchasing.
The final numbers for housing in this report is that the number of new home for sale rose by 6000 to 175,000 units. Supply in relation to the pace of sales actually slipped to 5.0 month from 5.2 months. In June the supply was only 4.3 months and at the same time last year, supply was 4.6 months. Housing overall has improved from a year ago however demand is clearly not as strong as it was just a few months ago. Seasonal factors are considered to be playing a role in the declining numbers.
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Finally consumer spirits have been sagging in the most recent consumer confidence report. Could the fact that mid-term elections are just a month away and our elected officials have been filling the airwaves and our televisions with never ending negativity? (Just a thought)
For those of you in and near Santa Clarita this weekend, we have the honor of hosting the Traveling Vietnam Wall Memorial at the Westfield Town Center-behind Sears through Sunday, it’s worth a visit!
Next week’s market moving reports:
- Tuesday October 1st-ISM Manufacturing Index & Construction Spending
- Wednesday October 2nd-MBA Purchase Applications and ADP Employment Report
- Thursday October 3rd-First Time Jobless Claims
- Friday October 4th-National Unemployment
As your mortgage professional, I am happy to assist you with any information you may need regarding mortgage or real estate information. I welcome the opportunity to serve you in any way I possibly can. Please feel free to reach me at 661-505-4300.
Source: Santa Clarita News