December Weather Affects Pending Home Sales

The National Association of Realtors’ Pending Home Sales Index is a forward-looking indicator that tracks contract signings, not closings. The index, which is released monthly, is a predictor of future existing-home sales. In December, the index fell 8.7 percent from November’s downwardly revised total. Lawrence Yun, NAR’s chief economist, said unusually disruptive weather across large stretches of the country forced people indoors and prevented some buyers from looking at homes and making offers. According to Yun, rising home prices and lack of for-sale inventory are also to blame for the poor sales performance in December. Still, existing-home sales are expected to be at about the same level this year as last year, despite the fact that inventory is limited in much of the country. Prices, though still rising, are expected to moderate this year, gaining about 5.4 percent in 2014. More here.

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Mortgage Rates Fall For 3rd Straight Week

According to the Mortgage Bankers Association’s Weekly Applications Survey, the average contract interest rate for 30-year fixed-rate mortgages dropped again last week, falling to the lowest level since November. Rates decreased for loans with conforming and jumbo balances, as well as mortgages backed by the FHA. Despite the declines, demand for mortgage loan applications was virtually unchanged from the previous week. The Market Composite Index, which measures total mortgage loan application volume, decreased just 0.2 percent. The Refinance Index fell 2 percent from the week before, while the seasonally adjusted Purchase Index gained 2 percent. The results include an adjustment for the Martin Luther King, Jr. holiday. The MBA’s survey, which has been conducted weekly since 1990, covers more than 75 percent of all U.S. retail residential mortgage applications. More here.

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Upward Price Trend Continues Into Winter

Though prices usually weaken at the end of the year, the most recent S&P/Case-Shiller Home Price Indices show year-over-year increases of nearly 14 percent in both the 10-city and 20-city Composites through the end of November 2013. The gains continue the upward trend of year-over-year improvement that began in June 2012. David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices, said home prices continue to rise despite last May’s jump in mortgage rates. According to Blitzer, mortgage applications for purchase were up in recent weeks which validates home builders’ optimism as seen in the most recent survey from the National Association of Home Builders. Combined with low inflation, homeowners are enjoying real appreciation and rising equity values, Blitzer said. Though home price increases are expected to moderate this year, Blitzer feels housing will make further contributions to the economy in 2014. More here.

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New Home Sales Rise 16.4% In 2013

An estimated 428,000 new homes were sold in 2013, according to figures released by the U.S. Census Bureau and the Department of Housing and Urban Development. Last year, sales reached their highest level since 2008 and beat year-before figures by 16.4 percent. But despite the year-over-year improvements, December saw a 7 percent drop in sales from November’s revised rate of 445,000, marking the second consecutive month-over-month decline following a sales surge in October. Regionally, the Northeast and Midwest experienced double-digit decreases, indicating cold winter weather may have contributed to what is already a slow sales month, historically. The median sales price of new homes sold in December was $270,200; the average price was $311,400. Also, there were an estimated 171,000 new homes for sale at the end of December. That represents a 5-month supply at the current sales rate. More here.

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Housing Recovery To Boost Economic Growth

Economic growth is expected to gain momentum in the new year, according to Fannie Mae’s Economic & Strategic Research Group. A rebound in consumer sentiment, an improving labor market, and the continued housing recovery are all expected to drive economic activity and boost consumer and business spending throughout the year. Doug Duncan, Fannie Mae’s chief economist, said the housing recovery’s contribution to GDP should double last year’s, due in large part to increased homebuilding activity and continued improvement in the market overall. According to Duncan, consumer attitudes about housing are strengthening, despite last year’s mortgage rate and home price increases. That, and the fact that many housing indicators posted strong gains at the end of 2013, bodes well for a continued but measured housing recovery this year. Less uncertainty surrounding the federal government’s fiscal and monetary policy is also expected to lead to improved private-sector activity and economic gains. Overall, Duncan feels the economy is on a sustainable path for continued growth in 2014. More here.

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Home Sales Post Strongest Year Since 2006

In 2006 – the final year of the housing bubble – 6.48 million homes were sold. Last year, sales of previously owned homes reached 5.09 million. It was the strongest year of sales since the bubble burst and a 9.1 percent improvement on 2012’s totals, according to new data released by the National Association of Realtors. Lawrence Yun, NAR’s chief economist, said housing has experienced a healthy recovery over the past two years. Existing-home sales have risen nearly 20 percent since 2011, with job growth, record low mortgage interest rates, and a large pent-up demand driving the market, Yun said. Though housing lost some momentum in the fall, sales were up 1.0 percent in December and ended the year near normal, despite limited inventory and disappointing job growth. Total housing inventory at the end of December was down 9.3 percent to 1.86 million homes available for sale, which represents a 4.6-month supply at the current sales pace. Also in the report, the median existing-home price for all housing types was up 9.9 percent from December 2012 at $198,000. More here.

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Mortgage Rates Fall To Lowest Level Since November

According to the Mortgage Bankers Association’s Weekly Applications Survey, the average contract interest rate for 30-year fixed-rate mortgages fell last week, reaching its lowest level since November 2013. It was the second consecutive week of decreases after ending 2013 on an upward swing. The drop led to a 10 percent increase in the Refinance Index and a 4.7 percent gain in overall mortgage loan application volume. The refinance share of total mortgage activity was at its highest level in a month, improving to 64 percent from 62 percent the month before. The seasonally adjusted Purchase Index, on the other hand, decreased 4 percent from one week early and was 15 percent lower than the same week one year ago. The MBA’s survey covers 75 percent of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. More here.

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Housing Headed In The Right Direction

Freddie Mac’s U.S. Economic and Housing Market Outlook for January finds four of the key housing indicators moving in the right direction to begin the year. The unemployment rate, though still high at 6.7 percent, is vastly improved and should continue its gradual path to a more consistent and historically normal level. Mortgage delinquencies have also shown great improvement, having been nearly cut in half since their peak. Finally, both affordability levels and home sales continue to trend in the right direction, with the average mortgage payment remaining very affordable in most markets – suggesting there’s still room for more recovery in home prices. Frank Nothaft, Freddie Mac’s chief economist, said the housing recovery continues on a steady pace. According to Nothaft, home prices should rise about 5 percent this year, while home sales – along with other key indicators – will continue to trend in the right direction. More here.

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Housing Starts Finish 2013 At Six-Year High

New residential construction ended 2013 at the highest level in six years, according to estimates from the U.S. Census Bureau and the Department of Housing and Urban Development. An estimated 923,400 housing units were started last year, which is 18.3 percent above year-before levels and the best total since 2007. That year, housing starts came in at 1.4 million. Still, despite a strong finish year-over-year, monthly figures fell in December. Privately-owned housing starts dropped 9.8 percent, after surging to the highest pace of the year the month before. But, though starts fell nearly 10 percent, December’s estimate was still the third best month of 2013. Also in the report, building permits were down 3 percent from the previous month. Permits – which are a barometer of future building activity – ended the year 17.5 percent above 2012’s estimate. There were an estimated 974,700 housing units authorized in 2013. More here.

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Builder Confidence Levels Off In January

After an unexpected spike in December, builder confidence in the market for newly-built, single-family homes fell a point to 56 in January, according to the National Association of Home Builders Housing Market Index. The index – derived from a monthly survey conducted for the past 25 years – scores builders’ perception of the current market on a scale where any number above 50 indicates more builders view conditions as good than poor. Rick Judson, NAHB’s chairman, said January’s results show that confidence is holding at a solid level. According to Judson, the fact that many markets are showing improvement bodes well for future sales of new homes. Still, all three index components suffered declines in January. The index gauging current sales fell one point to 62, while future sales dropped two and buyer traffic slipped three points. Regionally, the three-month moving averages found the Northeast and West both up four points. The South was unchanged at 56 and the Midwest fell a point to 58. NAHB chief economist David Crowe believes rising home prices, historically low mortgage rates, and significant pent-up demand will continue driving the recovery in the year ahead. More here.

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