Existing home sales rose by 6.5 percent in July from June and are up 17.2 percent since this time last year

August 28, 2013

Table Source: Mortgage Success Source

 

 

 

Existing home sales rose by 6.5 percent in July from June and are up 17.2 percent since this time last year. In addition, the Federal Housing Finance Agency reported that home prices rose 7.7 percent in the year ended in June. From May to June, prices rose by 0.7 percent. However, new home sales dropped 13.4 percent in July from June, below expectations, and June’s numbers were also revised lower.

 

Also of note last week, the minutes from the Fed’s July meeting of the Federal Open Market Committee were released and they offered no clarity as to when the Fed will begin tapering its bond purchases. Remember that the Fed has been buying $85 billion of bonds every month to help stimulate the economy and housing market. This includes mortgage bonds, to which home loan rates are tied, and these purchases have helped home loan rates remain attractive.

 

The Fed has said the rate of its purchases will continue to depend on economic data, and could be increased or decreased accordingly. Jobs data is one area the Fed will be watching especially closely. Last week, there was an increase in weekly Initial Jobless Claims, which rose by 13,000 to 336,000. Though this was in line with estimates and the figure remains near post-recession lows, it is the highest level in a month. However, the 4-week average, which evens out seasonal abnormalities, fell to 330,500, near 6-year lows.

 

What does this mean for home loan rates? Economic data in the coming weeks will be a key factor in whether the Fed begins tapering its bond purchases as early as its meeting in mid-September, or if it waits until later in the year or even 2014. This timing could pay a big role in the direction bonds and home loan rates move in the months ahead.

 

Now remains a great time to consider a home purchase or refinance, as home loan rates remain attractive compared to historical levels.

 

Forecast for the week

 

Important news to watch this week:

 

  • The S&P/Case-Shiller Home Price Index

  • Durable Goods Orders report, which are orders for items that last for an extended period of time

  • Consumer Confidence

  • Consumer Sentiment Index

  • Weekly Initial Jobless Claims as claims hover near six-year lows.

  • Gross Domestic Product for the second quarter will be closely watched for any signs of an uptick in economic growth. The initial reading was a rather weak 1.7 percent.

  • Ending the week, we’ll see Personal Consumption Expenditures, the Fed’s favorite read on inflation, along with Personal Income,Personal Spending, and  Chicago PMI data.

 

As you can see in the chart below, 28 states and the District of Columbia had unemployment rate increases, 8 states had decreases, and 14 states had no change in July.

 

Chart: State-by-State Unemployment July 2013

 

Table Source: Mortgage Success Source

 

In the news this week (August 26 - 30, 2013)

 

Table Source: Mortgage Success Source

 

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