From Fidelity National Title:
The Week in Review
MONDAY, February 20th
All Markets Closed
TUESDAY, February 21st
Existing home sales rose 4.3% in January to an annual rate of 4.57 million. This follows a downwardly revised decline of 0.5% in December to an annual pace of 4.38 million. For all of 2011 sales totaled 4.28 million. Existing home sales are now 0.7% above their year ago level. Contract failures were reported by 33% of NAR members last month indicating sales could have been much higher. The inventory of homes available for sale fell 0.4% last month to 2.31 million which represents a 6.1 month-supply at the current sales pace. Anecdotal evidence suggests that there is a large shadow inventory of homes available for sale, especially bank owned properties. That will continue to weigh on prices going forward. Indeed, home prices declined again in January with the median price for an existing home down 2.0% over the past year to $154,700 as average prices dropped 2.2% to $201,200. The positives supporting the housing market recovery remain tentative. For now, record high housing affordability conditions are lifting demand, though pricing remains a weak spot. Contract failures, mainly related to appraisals coming in below the negotiated price continue to weigh on overall sales. Economists expect home resales to slowly rise from a very deep bottom in coming months with a price and sales recovery beginning possibly later in the year.
WEDNESDAY, February 22nd
The MBA mortgage applications index fell 4.5% to 766.1% for the week ending February 17. The purchase index fell 2.9% on the week and was down 12.1% from its year ago level. The refinance index slipped 4.8% last week but was up 98.5% over last year. Contract mortgage rates edged higher for the second straight week with the 30-year fixed up 1 bps to 4.09%. Overall application activity remains in the upper half of a narrow range it has been in the last two years based mainly on rising refinance applications. Purchase application activity remains weak reflecting moribund home sales.
THURSDAY, February 23rd
Jobless claims were unchanged at 351k for the week ending February 18. Jobless claims have been trending lower since September and are now at their lowest point since March 2008. The trend in the data suggests that the labor market is steadily, if slowly improving though unemployment remains relatively high.
FRIDAY, February 24th
New home sales fell 0.9% in January to an annual rate of 321k following an upwardly revised annual rate of 324k in December. New home sales are counted when the sales contract is signed so these data reflect current sales activity. New home sales are 3.5% above their year ago level and are actually trending mildly higher. Regionally, sales were mixed with solid gains in the Northeast and South, and sizable declines in the West and Midwest. The inventory of new homes available for sale fell 1.9% last month to a record low level of 151k which represents a 5.6 month-supply at the current sale pace. Home prices in January were lower than in January of last year with the median price for a new home down 9.6% to $217,100 as average prices dropped 5.1% to $261,600. New home prices are hovering around their lowest levels since 2004. New home sales, like other housing market indicators, are fairly stable at a weak level. We have seen signs of life in homebuilder sentiment and new construction recently along with stronger job creation and economic growth which provides some hope for new home sales to gain traction and move up slightly this year from historically low levels.
Decent news, but nothing great at this point. It is nice to see the jobless claims holding somewhat steady under the 400K level, but there is much work to be done before we start trending higher. As I have said before, I feel like we are bouncing along a bottom and while we may still drop a bit, I don't belive that we will drop too much further. I also don't belive that we will be jumping much higher that quickly either. Right now, we have a great opportunity to buy with interest rates at or near all time lows. Rental rates are only going to rise - are you going to be stuck in a rental when interest rates rise? That is the question.