mortgage rates

Housing Still Lags Behind As Economy Recovers

Market newsThree years after the recession came to an end and as the U.S. economy has been signs of being on a path to recovery, the housing sector still lags behind. This week will be big for housing data as a slew of different data points will be released. Home builder sentiment, existing home sales and new home sales are some of the highlights that will be released later this week.

Housing data has been a bit better over the past few months but analysts are ready to see some marked improvement. Everything for a housing turnaround appears to be in place with mortgage rates at all time lows and and improving jobs market.

There are still obstacles for the housing sector though. While the unemployment rate has dropped to 8.3%, it remains high for people between 20 and 24 at 14%. This age bracket is where many young people would begin to think about buying their first home. Loans are also hard to get as banks are reluctant to lend money out as they continue to deal with a large number of foreclosures. [Read more...]

Housing Sector Sees More Bad News

Pending home sales in the U.S. fell in December after hitting the highest level in a year in November. The National Association of Realtors said pending home sales fell 3.5% in December to 96.6 on their index. November’s index reading was 100.1. Even with the drop, December sill had the second highest reading since April 2010. A reading of a 100 is considered healthy for the housing market.

Pending home sales gives some insights into where the housing market is potentially headed. There is usually about a month or two wait time between a signed contract and a completed deal. Lately though, pending home sales have not always meant a completed deal as many buyers have cancelled their contract at the last minute.

While pending sales saw a decline last month, analysts have welcomed the recent trend as the housing market tries to right itself.

Home prices are the cheapest they’ve been in decades with long-term mortgage rates at historic lows. Home prices in cities have fallen steadily since 2006.

There are many factors as to why Americans aren’t buying houses right now. The main ones are high unemployment and weak job growth. Plus, loans are still hard to come by unless you have a well paying job and great credit. Even those with the ability to get a loan are waiting as they think home prices will move even lower.

New Home Sales Rise 1.3%, Home Prices Down

The Commerce Department announced Monday that sales edged up 1.3% to a seasonally adjusted 307,000 unit annual rate, which was the fastest pace in five months, still below analysts’ expectations. The supply of new homes in the market would last 6.3 months at the current pace of sales. The median sales price of new houses sold in October 2011 was $212,300; the average sales price was $242,300. The seasonally adjusted estimate of new houses for sale at the end of October was $162,000.

The report suggests housing continues to drag on the U.S. economy and is a long way from recovering.

While new homes sales represent a fraction of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to the National Association of Home Builders. Many Americans believe it is just too risky to buy a home right now so soon after the housing bubble burst from four years ago.

While home prices have fallen, unemployment at over 9% has taken its toll on consumers. Many consumers who wish to buy a home simply cannot due to higher down payments and loan qualifications they cannot meet.

Mortgage rates continue to hover at historic lows. Refinancing has been a boon for mortgage companies, but that does nothing to address the glut of houses for sale on the market. Also, with the number of foreclosures and short sales on the market, consumers are more apt to purchase one of those vice a new home.

Sales of previously owned homes rose slightly last month to a seasonally adjusted annual rate of 4.97 million units, the National Association of Realtors said last week. That’s below the 6 million that economists say is consistent with sales in a healthy market and barely ahead of last year’s totals, which were the fewest since 1997.

New Home sales data for November 2011 will be released on Friday December 23, 1011 at 10:00 am ET.

Mortgage Rates In U.S. Lowest In 50 Years

Freddie Mac is reporting that mortgage rates in the U.S. fell to their lowest in more then 50 years. The stumbling global economy and uncertainty here at home in the U.S. markets has sharply decreased demand for bonds that guide home loans.

The average rate for a 30 year fixed loan dropped to an unheard of 4.15%this past week. The average 15 year fixed rate dropped to 3.36%.

The decline follows a slide in yields for U.S. Treasury notes. This is the benchmark for gauging consumer debt. The yield on U.S. Treasury notes dropped to 1.9735%. Concern over the deepening crisis in Europe has caused concern and lower forecasts for global economic growth.
With the wild swings in the U.S. financial markets, and the continuing growl of the economy, these low rates have done very little to boost demand in our housing market. The U.S. housing market continues to stagnate as recession fears loom on the horizon.

Low interest rates can be very helpful for the U.S. consumer, but the terrible unemployment picture coupled with stagnated salaries have many consumers opting to not take chances at this time. Housing demand continues to be depressed with not a lot of hope for the near-term future.

The low rates are doing absolutely nothing to stimulate the housing industry leaving many analysts to wonder exactly when will a turn around emerge. Current homeowners seem to be the only ones taking advantage of the low rates by refinancing existing mortgages. Refinancing has climbed through the roof over the past year. This still does nothing to help the ailing housing market.

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