Last Week in the News (December 29, 2008)

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications for the week ending December 19 soared 48% from the previous week. Purchase volume increased 11%, while refinancing applications jumped 63%. Total applications and refinance activity were at their highest levels since July 2003.

On Tuesday, December 23, the Commerce Department reported that the gross domestic product, the broadest measure of economic health, declined at an annual rate of 0.5% in the July-September quarter. It was also reported that corporate profits fell 1.2% in the third quarter.

The Reuters/University of Michigan consumer sentiment index rebounded this month from the lowest level in 28 years. The index rose in December to 60.1 from 55.3 in November. Economists had forecast a reading of 58.8. The increase was attributed to easing inflationary pressures and a decline in gasoline prices. According to AAA, the price of a gallon of regular unleaded gasoline at the pump was $1.65 on December 23, compared with a record high $4.11 on July 17.

The median sales price of an existing home fell 13.2% in November to $181,300, from $208,000 a year ago. It was the biggest year-over-year drop since recordkeeping began in 1968, said the National Association of Realtors. The median price for a new home sold in November declined 11.5% from a year earlier to $220,400.

New home sales dropped 2.9% in November to an annual sales rate of 407,000 units, according to a report by the Commerce Department. The rate was the lowest since January 1991.

The National Association of Realtors reported existing home sales fell 8.6% in November to an annualized rate of 4.49 million units. Economists had expected an annualized rate of 4.93 million.

Meanwhile, the Commerce Department reported that orders for durable goods dropped by 1%, less than the 3% decrease economists had expected.

Upcoming on the economic calendar is a report on consumer confidence on December 30.

Last Week in the News (December 22, 2008)

On Monday, December 15, it was announced that the National Association of Home Builders/Wells Fargo housing market index remained at a record low of 9 in December. That is the same reading for the previous month of November. An index reading higher than 50 indicates positive sentiment about the housing market.
The Federal Reserve reported that industrial activity fell by 0.6% in November. Economists had expected a decline of 0.8%.

The Labor Department reported Tuesday that consumer prices fell 1.7% in November — the largest decrease since record keeping began in 1947. The report reflected a steep fall in energy costs, which dropped 17% in November, following an 8.6% decline in October.

On Tuesday, the Fed cut its key interest rate to a range of zero to 0.25%. This brings the interest rate that banks charge each other to the lowest level on record.

The Commerce Department said construction of new homes fell in November by 18.9%, the biggest drop in 25 years. The decline pushed construction down to a seasonally adjusted annual rate of 625,000 homes, the slowest pace on records dating to 1959.

The Conference Board reported Thursday that its index of leading economic indicators fell for the second straight month, dropping 0.4% in November. That was slightly better than the 0.5% decline economists had expected. The index is designed to forecast economic activity in the next three to six months.

Upcoming on the economic calendar are reports on existing home sales and new home sales on December 23, and durable goods orders on December 24.

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Last Week in the News (December 15, 2008)

The Reuters/University of Michigan consumer sentiment index unexpectedly rose in December to 59.1. The index had hit a 28-year low of 55.3 in November. Economists attributed the gain to the fall in gasoline prices.

The National Association of Realtors reported Tuesday that the pending home sales index dropped 0.7% to 88.9 in October from a reading of 89.5 in September. The October reading was 1% lower than a year earlier. Economists were expecting a drop of 3.2%. Pending home sales declined by 4.3% in September.

On Wednesday, the Commerce Department reported that wholesalers reduced their inventories by 1.1% in October. It was the biggest cutback since November 2001. Economists had expected a decline of only 0.2%. Sales at the wholesale level plunged by 4.1% in October, the largest decline on record.

The Labor Department reported Thursday that applications for jobless benefits in the week ending December 6 increased to a seasonally adjusted 573,000 from 515,000 in the previous week. The increase was more than the 525,000 claims economists had expected.

The Commerce Department reported that retail sales dropped 1.8% in November. The decline was the fifth straight monthly drop. Also, it was reported that total business inventory decreased 0.6% in October, three times the amount economists had expected. It was the biggest drop in inventories since August 2003.

The Labor Department reported the producer price index, which tracks wholesale prices, fell 2.2% in November. That followed a record 2.8% drop in October. Economists had expected a 2% decline.

Upcoming on the economic calendar are reports on consumer price index and housing starts December 16, and the index of leading economic indicators on December 18.

Last Week in the News (December 8, 2008)

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications for the week ending November 28 soared 112.1% from the previous week. Purchase volume increased 38%, while refinancing applications jumped 203.3%.

The Labor Department said that productivity rose at an annual rate of 1.3% in the third quarter. That’s down from the 3.6% growth rate in the second quarter, but higher than the 0.9% rise economists expected.

The Commerce Department reported Monday that construction spending dropped by 1.2% in October, a bigger drop than the 0.9% decline analysts had expected.

The National Bureau of Economic Research officially announced the U.S. economy slipped into recession in December 2007. The economic expansion from November 2001 to December 2007 lasted 73 months. The previous expansion of the 1990s lasted 120 months. The average expansion since the end of World War II has lasted 57 months.

The Institute for Supply Management reported the monthly index of manufacturing activity fell to 36.2 from October’s 38.9. The November reading was the lowest since May 1982. The institute also announced its services sector index fell to 37.3 in November from 44.4 in October. Economists had expected a reading of 42. Figures below 50 indicate contraction.

The Commerce Department reported Thursday that factory orders dropped 5.1% in October, the largest decrease since an 8.5% fall in July 2000. Economists had expected a 4% drop.

Upcoming on the economic calendar are reports on pending home sales on December 9, and producer price index and retail sales on December 12.

Mortgage Rates Drop on Fed Action!

Due to economic rescue actions by the Federal Reserve and Federal Home Loan Banks, mortgage rates are at their lowest point this year!

If you have been on the fence about buying or refinancing a home, now is the time to act.

Interest rates are extremely low and home prices in some areas are at 2003-2004 levels. Add to that recent declines in energy prices and lower consumer interest rates, and you have a great holiday recipe for success.

Don’t wait until next week. Call me today and get pre-approved. Rates have been very volatile and this great opportunity might not survive the holidays!

In many markets, falling prices are bringing out buyers who have been waiting patiently to buy, and now they are scooping up great bargains and hot properties.

Whether you are looking to buy or refinance, I am here to help.

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Last Week in the News (December 1, 2008)

On Monday, November 24, the National Association of Realtors said existing home sales declined 3.1% to a seasonally adjusted annual rate of 4.98 million units in October from a downwardly revised pace of 5.14 million in September.

On Tuesday, the Standard & Poor’s/Case-Shiller home price index showed that home prices declined a record 16.6% during the third quarter from the same period a year ago. That eclipsed the previous record of 15.1%, set during the second quarter.

In an effort to loosen credit and get more loans flowing, the Federal Reserve rolled out two new programs that would provide up to $800 billion. The allocated funds will be broken out as follows: $200 billion to buy credit card loans, auto loans, student loans and loans to small businesses; $500 billion to buy mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac; and another $100 billion to directly purchase mortgages held by Fannie, Freddie and the Federal Home Loan Banks.

The Commerce Department reported Wednesday that new home sales fell 5.3% in October to a seasonally adjusted annual rate of 433,000, the lowest level since January 1991. The drop was larger than had been expected. In September, new home sales gained 0.7%.

Also on Wednesday, the Commerce Department reported that consumer spending fell by 1% in October, after declining 0.3% in September. It was the biggest decline since September 2001.

Orders for durable goods decreased 6.2% to $193 billion in October, more than double the decline economists expected. It was the biggest decrease since October 2006, when orders fell 8.3%. Orders for durable goods have now fallen for three straight months.

Upcoming on the economic calendar are reports on construction spending on December 1 and factory orders on December 4.