Archive for December, 2010
The economy grew at a faster-than-expected pace in the third quarter, according to the U.S. Census Bureau. Real GDP increased 2.6 percent, after rising 1.7 percent in the second quarter. Brightening economic data, including improvements to new-and-existing home sales and consumer spending, have boosted expectations for the fourth quarter and 2011, with many economists raising their growth estimates from previous forecasts. Eight banks and research firms surveyed by The Wall Street Journal have upped their fourth-quarter growth estimates to an average of 3.5 percent from 2.6 percent in early December. More here.
According to a recent real-estate market forecast from Veros Real Estate Solutions, 40 percent of major metropolitan areas will see appreciation in home prices over the next year. Veros looked at the median price tier in cities of 500,000 or more and expects a 2.5-to-3.5 percent increase in values between December 2010 and December 2011 in select markets. Eric Fox, Veros’ vice president of statistical and economic modeling, said, though things aren’t happening quickly, they are getting better and, even in depreciating areas, the forecast remains much better than those from a year ago. More here and here.
Due to improvements in the job market, increased demand for goods and services, and gains in consumer spending and confidence, Fannie Mae’s December 2010 Economic Outlook sees a brighter economic future in the new year. Fannie Mae forecasts an 18.5 percent increase in housing starts, a 20 percent rise in new home sales, and a four percent rise in existing home sales. Their Economics & Mortgage Market Analysis Group also expects GDP growth of 3.4 percent, a drop in unemployment, and a stronger labor market in 2011. Doug Duncan, Fannie Mae’s chief economist, said they expect people to take advantage of affordability conditions as their employment and income outlook brightens. More here and here.
Sales of new single-family houses rose 5.5 percent in November, according to the U.S. Census Bureau and the Department of Housing and Urban Development. Despite the gains, sales are still 21.2 percent below year-ago levels. The number of new homes on the market, at the current sales pace, represents an 8.2 month supply, down from 8.8 months in October. The median sales price for a new house rose 8.0 percent to $213,000. More here and here.
Existing home sales, which include single-family, townhomes, condominiums, and co-ops, rose 5.6 percent in November to a rate of 4.68 million from 4.43 million in October. According to data from The National Association of Realtors, sales are 27.9 percent below November 2009, which was the initial deadline for the first-time homebuyer tax credit. Lawrence Yun, NAR’s chief economist, said the gains in home sales are encouraging and he expects the market to reach healthy, sustainable levels in 2011. The national median existing-home price was up 0.4 percent from November 2009. More here and here.
According to The Mortgage Bankers Association’s Weekly Applications Survey, total mortgage loan application volume fell last week, as the average contract interest rate for 30-year fixed-rate mortgages rose from 4.84 percent to 4.85 percent. The Purchase Index was down 2.5 percent from a week earlier while the Refinance Index fell 24.6 percent. Michael Fratantoni, MBA’s vice president of research and economics, said refinance activity continues to fall with rates near six-month highs while purchase applications, though down for a second week, remain little changed over the past month. The Purchase Index’s four-week average is down just 1.2 percent. More here and here.
With mortgage rates rising after spending much of the year near historic lows, analysts and industry experts are weighing the effect recent rate increases may have on the housing market. Economist Thomas Lawler told The Wall Street Journal that somewhat higher rates in a growing economy are better for the market than low rates in a poor economy, suggesting overall economic improvement will lessen the impact. And though rates have risen in the last few weeks, they remain historically low and below year-ago levels. Ed McKelvey, of Goldman Sachs, doesn’t expect recent increases to have a significant effect on sales and a survey of 3,000 real estate agents conducted by Campbell/Inside Mortgage Finance shows that activity among first-time homebuyers rose from 34.4 percent to 37.2 percent in October, as buyers looked to secure low mortgage rates. More here.
According to the most recent national housing report from Re/Max, the housing market is attempting to stabilize following the impact of the homebuyer tax credit and recent foreclosure moratoriums. The report found prices down just 1.7 percent from last year and home inventory following a trend of single-digit declines. Sales, according to the report, are headed in the right direction, with much smaller losses in November than the month before. Margaret Kelly, CEO of Re/Max, said, despite predictions of falling values, prices remain stable with several markets reporting significant increases over the last year. More here and here.
Liz Ann Sonders, of Charles Schwab, argues that the housing market will rebound faster than most expect due to high affordability conditions and low mortgage rates.
Housing starts were up more than expected in November due to a 6.9 percent jump in single-family home construction. According to data from the U.S. Census Bureau and the Department of Housing and Urban Development, total housing starts rose 3.9 percent from October but are 5.8 percent below November 2009 levels. Building permits fell 4.0 percent from a month earlier, though single-family authorizations were up 3.0 percent over October’s revised figure. More here and here.