From Fidelity National Title:
The Week In Review
MONDAY, July 18th
The NAHB housing market index increased two points to a level of 15 in July as homebuilders upped their expectations for single family home sales. Two of the three components of the survey were scored higher, present single family sales and sales projections six months from now, with the larger increase in future sales ratings. Foot traffic through model homes was judged as unchanged from the previous month. While the gain in homebuilder sentiment is welcomed, the index remains near its record low at the beginning of 2009. The housing market remains weak with the prospects of recovery hinged on jobs and stronger economic conditions.
TUESDAY, July 19th
Housing starts increased 14.6% in June to an annual rate of 629k, stronger than expectations for an annual rate of 575k. This was the highest level of new construction starts since January. Meanwhile, May’s gain was downwardly revised to show no change at an annual rate of 549k. Housing starts are now 16.7% above their year ago level in June 2010. Both single-family and multifamily starts showed nice gains last month. Single family housing starts were up 9.4% last month to an annual pace of 453k while multifamily housing starts shot 30.4% higher to a rate of 176k. Gains were broad based across all four regions of the country, as well. Housing permit issuance which is used as a proxy for future building activity climbed 2.5% in June to an annual rate of 629k, boding well for moderate gains in new construction starts in coming months. With the June gain, housing starts are trending slightly higher; however, they remain below the Q1average meaning they will detract from Q2 economic growth. Whether or not the June gain in housing starts is marking a turnaround for homebuilding remains to be seen. Given stronger economic conditions and revived demand from stronger job growth, combined with exceptionally low inventory levels, we could see housing starts pick up in the months to come. Downside risks remain however, if the recovery falters further, foreclosures continue to rise and home prices continue to fall.
WEDNESDAY, July 20th
The MBA mortgage applications index jumped 15.5% to 556.0% for the week ending July 15. The purchase index was just 0.1% lower on the week and is 8.8% higher than its year ago level. The refinance index surged 23.1% last week in response to much lower rates recently; the contract rate for the 30-year fixed was down 1bps last week to 4.54% after dropping 14 bps in the prior week. Other than homeowners taking advantage of a dip in rates, mortgage application activity in total remains range bound at a low level.
Existing home sales slipped 0.8% in June to an annual pace of 4.77 million, compared to expectations for a modest gain to a rate of 4.95 million. This was the third straight monthly decline in home re-sales bringing the pace to the slowest it’s been since last fall. Home re-sales are now 8.8% below their year ago level in June 2010. It looks like tough lending standards are at the heart of this slump because much of the decline last month was related to a spike in contract cancellations. The composition of sales was roughly in line with recent months with first-time home buyers accounting for 31% of all transactions; all-cash sales were 29% of the total while distressed sales accounted for 30% of all purchases. Regionally, sales were mixed with declines in the Northeast and West and modest gains in the Midwest and South. The inventory of homes available for sale increased 3.3% in June to 3.765 million which represents a 9.5 month-supply on the market at the current sales pace. Prices were higher year-over-year due to fewer distressed sales this year compared to 2010. The median price for an existing home was up 0.8% from June 2010, to $184,300; average prices gained 2.7% to $236,200. Like the broader economy, the housing recovery has hit a soft patch. But economists expect the recent reversal in oil price spikes and increases in job creation in coming months to help boost demand resulting in modestly stronger home sales in the second half of this year.
THURSDAY, July 21st
Jobless claims rose 10k to 418k for the week ending July 16. Initial claims have now been above the 400k level for 15 straight weeks indicating that improvement in labor market conditions has stalled. Economists expect the labor market to begin growing again toward the end of summer, once seasonal distortions like auto plant shutdowns for retooling are over.
FRIDAY, July 22nd
No news.
I find myself focused on jobless claims and yet again, there is an increase. And, from what I see, this number is not going to go down anytime soon. People need and want jobs, but this is just not happening. I believe the economy would be in a lot better shape if we could get companies hiring. While it is good to see new home builders seeing a boost in sales, the numbers across the board are relatively weak. It makes me a little sick to my stomach that things have not improved much in the last few years, but I can always try to remain optomistic.
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