US currency not in recession even if Mortgage Rates Increase causing home sales to fall by 20%, Home Price Gains Ease but Expected to Finish Year in Double Digits

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The rate of home price gains slowed slightly between April and May, but there was less than a 1% change in each of the three S&P CoreLogic Case-Shiller indices and the FHFA House Price Index.

The nine census divisions included in Case-National Shiller’s Home Price Index increased 19.7% from May 2021 to May 2022. However, the 20-City Composite dipped to 20.5 percent from 21.2 percent in the prior month. The 10-City Index increased 19.0 percent compared to 19.6 percent from April 2021 to April 2022.

Craig J. Lazzara, Managing Director at S&P DJI said, “The market’s strength continues to be broadly based, as all 20 cities recorded double-digit price increases for the 12 months ended in May. May’s gains ranked in the top quintile of historical experience for 19 cities, and in the top decile for 17 of them. However, at the city level we also see evidence of deceleration. Price gains for May exceeded those for April in only four cities. As recently as February of this year, all 20 cities were accelerating.”

Pending Home Sales Fell 20% in June As Mortgage Rates Soared

The National Association of Realtors reported that in June, fewer contracts were signed to buy existing homes than at the same time the prior year. With the exception for the first two months of the coronavirus pandemic lockdowns, when sales momentarily declined and then dramatically increased, that is the slowest pace since September 2011.

Pending home sales decreased every month by a larger-than-anticipated 8.6 percent. A 1 percent decline was forecast by economists polled by Dow Jones. A substantial increase in mortgage interest rates coincided with the severe declines.

The South and West experienced the worst of the sales decline, which was widespread. Pending sales in the Northeast decreased 17.6 percent from June 2021 and 6.7 percent from May. In the Midwest, sales were down 13.4 percent annually and 3.8 percent monthly. Sales in the South fell 19.2 percent from the prior year and 8.9 percent monthly. The worst results were seen in the West, where sales fell by 30.9 percent from June 2021 and 15.9 percent each month.

The U.S. Is Currently Not In A Recession, According to Fed Chair Jerome Powell

Federal Reserve Chairman Jerome Powell stated on Wednesday that he does not think the U.S. economy is in a recession. “I do not think the U.S. is currently in a recession and the reason is there are too many areas of the economy that are performing too well,” Powell said at a press conference following the Fed’s decision to raise rates by 0.75 percentage point for a second consecutive time. “This is a very strong labor market … it doesn’t make sense that the economy would be in a recession with this kind of thing happening.”

The Fed has recently increased interest rates to combat the most significant inflationary pressures in approximately 40 years. Following the announcement of the rise, markets surged, with the tech-heavy Nasdaq Composite rising 4 percent and the Dow Jones Industrial Average gaining more than 450 points.

Investors worry that the Fed’s rate hike campaign could push the economy into a recession. Still, Powell also stated that the central bank would closely monitor economic data to determine future movements. He said there would come a time when the Fed needs to limit the rate of hikes, even though another significant boost may be required.

Next week’s potential market-moving reports are:

  • Monday, August 1st – Construction Spending
  • Tuesday, August 2nd – Job Openings, Quits
  • Wednesday, August 3rd – Rental Vacancy Rate, Homeowner Vacancy Rate
  • Thursday, August 4th – Initial Jobless Claims, Continuing Jobless Claims, Trade Deficit
  • Friday, August 5th – Unemployment Rate, Average Hourly Earnings

As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends. I welcome the opportunity to serve you in any way I possibly can. Please feel free to reach me at (800) 216-1047.

Resource Link: https://www.cnbc.com/2022/07/27/pending-home-sales-fell-20percent-in-june-versus-a-year-earlier-as-mortgage-rates-soared.html

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Busting Mortgage Myths: Between Market Spins and The Real Estate Pulse

Hold onto your wallets, Californians! Today’s bulletin will traverse the media’s spin cycle, where sometimes economic seasons make things look chillier than they are. But fear not; California Platinum Loans is here to warm your understanding with some heated insights. Grab your morning brew, and let’s dive in.A Media Mirage on Housing Appreciation?

A Media Mirage on Housing Appreciation?

The financial arena echoed with a slight tremor yesterday, with mortgage bonds experiencing turbulence. If we were to take a leaf out of an aviation book, we’d say, “Expect some turbulence, but keep your seatbelts fastened for a smooth landing.” Why, you ask? Despite the negative rumble about housing, the actual value of homes continues to appreciate.

So, here’s a spin tale: Black Knight recently released a report. And while Daniel decided to pick the non-seasonally adjusted number (up by a mere .23%), it translates to roughly 3% inflation if we delve deeper. Putting it in layman’s terms, for those who put down a mere 10%, that’s a handsome 30% return on their investment. And here’s the kicker – they interpreted this as an indicator of an impending decline in home values. Aren’t statistics fun? One can show a storm on the horizon, while another reveals sunny days ahead.

The Fed’s Song & Dance: What’s Next on The Playlist?

Have they ever tried reading tea leaves? Interpreting the Fed’s next move feels a lot like that. As the grand September 20th meeting looms, there’s anticipation in the air. Will they hike? Will they pause? If only we had a crystal ball!

But here’s a silver lining. Loretta Mester from Cleveland’s Fed and Philly’s Patrick Harker have sprinkled some insights. It’s like a sneak peek into the upcoming blockbuster, where inflation and rates are leading. The overarching message? The Fed no longer relies on past data but gauges the road ahead.

Of Oil Prices and a Slippery Slope

Ah, oil! The lifeblood of our cars and, sometimes, the bane of our wallets. Recent data shows a 10% hike, pushing oil to $87 a barrel. This hike comes as Russia and Saudi Arabia play a little complicated with their production cuts. And what does this mean for our dear friend, gasoline? The prices remain stable, hovering around $3.80 per gallon. But, with the strategic petroleum reserves dwindling, any hike in oil prices could trigger a surge at the pump.

To wrap up today’s bulletin with a neat bow, while mortgage bonds took a slight hit, the true essence of the market showcases promise and resilience. The housing market remains robust, the Fed is looking ahead, and oil prices… well, keep an eye on your gas tanks.

Stay optimistic, financially savvy Californians! Plenty of opportunities are on the horizon between the ebb and flow of the market. Until next time, keep your real estate compass pointed towards prosperity, and remember, California Platinum Loans has your back in every twist and turn!

 

California Platinum Loans

  https://californiaplatinumloans.com

We are seeing a Decline in Home purchases due to economic uncertainty: National Association of REALTORS and Commerce Department agrees

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Existing-Home Sales Slid 5.4% in June

According to the National Association of REALTORS®, existing-home sales decreased for the sixth consecutive month in June. In addition, sales fell month over month in three of the four major U.S. areas, while one region saw no change.

Single-family homes, townhomes, condominiums, and co-ops make up the majority of completed existing-home sales, which fell by 5.4 percent from May to a seasonally adjusted annual pace of 5.12 million in June.

The good news is that inventory is finally growing. Although available homes for sale are still deficient, we are seeing a trend of growth which hopefully will begin to offer relief to the relentless increase in home prices. At the end of June, there were 1,260,000 registered housing units, up 2.4 percent from the previous year and 9.6 percent from May. (1.23 million). At the current sales rate, unsold inventory has a 3.0-month supply, up from 2.6 months in May and 2.5 months in June 2021.

As prices rose across the board, the median existing-home price for all property types in June was $416,000, a 13.4% rise from June 2021 ($366,900). This increase represents the longest-ever string of year-over-year growth.

U.S. Housing Starts Drop To Nine-Month Low In June

The number of new homes being built in the U. S. fell to a nine-month low in June, and permits for new construction projects also fell. This is the most recent sign of a slowing housing market, as rising mortgage rates make homes less affordable.

While activity in the single-family category fell to a two-year low, multi-family construction activity increased as rising rents enhanced the attraction of apartment complexes, cushioning the total decline. As a result, the second quarter’s U.S. gross domestic product is anticipated to be impacted by the changes in the housing market.

The Commerce Department said on Tuesday that housing starts dropped by 2 percent last month to a seasonally adjusted annual rate of 1.559 million units, the lowest level since September 2021. The rate for May’s data was increased from the previously reported 1.549 million units to 1.591 million units.

The number of homes whose construction has been approved but has not yet begun rose by 1.1% to 285,000 units. The backlog for single-family homes decreased by 1.3 percent to 147,000.

For the fourth consecutive month, the number of homes under construction but not yet finished reached a record high of 1.68 million units, highlighting the challenges contractors face in completing jobs on time when labor and materials are in short supply.

Higher Mortgage Rates, Economic Uncertainty Behind Declining Home Purchase Applications

According to the Mortgage Bankers Association’s (MBA) builder application survey, new home purchase applications decreased 12 percent year over year in June due to rising mortgage rates and general economic anxiety. Application volume decreased by 10% from one month to the next.

Fewer properties were available for home buyers from March through May due to a decline in new residential construction and permitting activity. Moreover, MBA reports that a seasonally adjusted annual rate for new single-family home sales in June was estimated to be around 620,000, representing a 15% decrease, or more than 100,000 units, from May.

Next week’s potential market-moving reports are:

  • Monday, July 25th – No Report
  • Tuesday, July 26th – S&P Case-Shiller National Home Price Index, New Home Sales
  • Wednesday, July 27th – Pending Home Sales Index, Fed Funds Target Rate
  • Thursday, July 28th – Initial Jobless Claims, Continuing Jobless Claims
  • Friday, July 29th – PCE Inflation Index, Real Disposable Income, Employment Cost Index

As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends. I welcome the opportunity to serve you in any way I possibly can. Please feel free to reach me at (800) 216-1047.

California Platinum Loans

  https://californiaplatinumloans.com