Home mortgage interest rates were unchanged this week at the lowest levels in over one year. Freddie Mac reported that the national average for a 30 year fixed rate was 4.13%, the same as last week. One year ago the rate was 3.31% and on January 1, 2014 it was 4.52%. The 15 year rate was 3.26%, about the same as last week’s 3.23%. It is down from 3.39% one year ago and 3.55% on January 1. The 5 year ARM was at 2.99%, down from 3.16% one year ago and 3.05 on January 1. The one year ARM was 2.39%, also down from 2.65% one year ago and 2.59% January 1. Jumbo rates are very similar with the 30 year rate around 4.25%The Commerce Department reported that new home sales in the U.S. dropped 8.1%, to a seasonally adjusted annual rate of 406,000 units, in June after 2 month of solid gains. Western states saw the lowest decline of just 2%. Economists did expect to see a decline after a large jump in May, but not 8.1%. Low inventory levels were to blame. Another aspect of the report focused on new housing far from cities as land for development is often “poorly located” and buyers often choose an existing home in a better location, according to the report.
Weekly jobless claims plunged last week to 284,000, an 8 year low. According to the Labor department this is a fresh sign that the recent labor market is recovering. This big drop beat expectations. It marked the fewest claims since February 2006.
The National Association of Realtors reported that sales of previous owned homes hit their highest level since October. There were 5.05 million homes sold in the U.S. in June, on a seasonally adjusted, annual basis. It was the most since October, but 2.3% lower than last June. One difference was the number of foreclosed homes sold. If you take out the foreclosed home sales, sales were up.
Inventory levels are at their highest levels in over a year. The supply of homes has climbed 10% in the last year. There is currently a 5.5 month supply of homes on the market, just shy of a 6 month healthy target, according to NAR.
The Labor Department reported that the consumer price index rose just 0.3% in June, less than the seasonally adjusted increase of 0.4% in May. In the 12 months ending in June, prices were up 2.1% for the one year period. Gas prices jumped 3.3% in June as global tensions drove up prices. That increase accounted for 2/3 of the overall increase last month.
Zillow Inc. appears to be purchasing Trulia. These are the nation’s two largest real estate websites.
The Dow dropped 123.23 points on Friday to close the week at 16,960.57. It was down -0.816% from last weeks close of 17,100.18. The Nasdaq closed at 4449.56, up 0.39% from last weeks close of 4432.15. The S&P 500 closed at 1978.34, up 0.006% from last weeks close. The markets surged earlier in the week with the DOW closing at 17,113.54 Tuesday on higher than expected second quarter corporate profits. Investors got bad news on Friday about the American shopper when Amizon.com and Visa Inc. said that the second half of the year was not looking as robust as originally expected. Visa stock dropped 3.6% on Friday.
Applications for U.S. home mortgages rose last week as both purchase and refinancing applications picked up, an industry group said on Wednesday. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, rose 2.4 percent in the week ended July 18. The MBA’s seasonally adjusted index of refinancing applications climbed 4.1 percent, while the gauge of loan requests for home purchases, a leading indicator of home sales, rose 0.3 percent.
As inventory has begun to increase we are seeing more choices for buyers. This is a relief when showing property, and a relief for buyers. We are seeing more price reductions, which is difficult for sellers. The market is definitely changing to a more normal market. Many of you are complaining that prices are falling. I don’t believe that prices are actually falling. I think that some sellers just got lucky in the last few months and sold homes for more that they should have as buyers got caught up in the heat of the market. Home prices are still far higher than one year ago, yet less than the very highest sales two or three months ago. We are even seeing appraisals come in higher than the current sales prices. New homes and totally remodeled homes are still in short supply and we are still seeing those homes selling for record prices. If your home or your listing is not selling it is definitely time to reduce the price. I do believe that prices will rise again next spring, but at a much more moderate pace.
Have a great weekend!
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