Jul 5, 2012 | The Economy
Friday morning, the Bureau of Labor Statistics will release its Non-Farm Payrolls report. More commonly called “the jobs report”, Non-Farm Payrolls is a monthly market-mover.
Depending on the strength — or weakness — of the data, mortgage rates will change. Perhaps sharply. Unfortunately, we can’t know in which direction.
If you’re actively shopping for a mortgage in Worcester County area , therefore, today may be a prudent day to lock a mortgage.
The job report’s connection to mortgage rates is straight-forward. As the number of U.S. citizens earning paychecks increases, reverberations are felt through the economy.
First, higher levels of income are tied to higher levels of consumer spending and consumer spending accounts for the majority of the U.S. economy. More working citizens, therefore, builds a larger overall economic base.
Next, as the overall economic base grows, businesses produce and sell more goods, necessitating the hiring of additional personnel and the purchase of more raw materials — both positives for the economy.
And, lastly, as more paychecks are written, more taxes are paid to local, state and federal governments. These taxes are often used to fund projects and purchase goods and services which, in turn, grow the economy as well.
Tying it all together, the health of the U.S. economy is a major factor is setting day-to-day mortgage rates across Worcester County area. This is why rate shoppers face risk with tomorrow’s Non-Farm Payrolls report.
Between 2008 and 2009, the economy shed 7 million jobs. It has since recovered 3.9 million of them and, Friday, analysts expect to see another 100,000 jobs created in June. If the actual number of jobs created exceeds this estimate, look for mortgage rates to rise.
If the actual number of jobs created falls short of 100,000, mortgage rates may fall.
The government releases Non-Farm Payrolls data at 8:30 AM ET Friday.
Jul 3, 2012 | Housing Analysis
Homes are going under contract at a quickening pace.
In May, for the second time in 3 months, the Pending Home Sales Index crossed the 100 barrier, stretching to 101.1. A “pending home sale” is a home under contract to sell, but not yet sold.
Statistically, the Pending Home Sales Index reading is significant for two reasons.
First, the index’s reading is at its highest since April 2010. From this, we infer that today’s pace of home buying in Massachusetts and nationwide is approaching the “stimulated” levels of two years ago — but without the federal stimulus.
This is a positive signal for the housing market.
Second, because the Pending Home Sales Index is a relative index; and, because it was assigned a value of 100 upon its inception in 2001, readings higher than 100 imply that the housing market is performing better than it did during the index’s first year.
2001 happened to be a strong year for housing. 2012, it seems, is shaping up to be a better one.
And, there’s another reason why the Pending Home Sales Index matters so much to buyer and sellers of Massachusetts — the Pending Home Sales Index is among the few “forward-looking” housing market indicators.
Rather than report on how the housing market looked 30-60 days in the past, as the Case-Shiller Index does; or the Existing Home Sales report, the Pending Home Sales Index looks 30-60 days to the future.
80% of homes under contract sell within 2 months so, as the Pending Home Sales Index goes, so goes housing. Based on May’s data, therefore, we can assume that home sale figures will rise through the summer.
If you’re shopping for homes right now, consider going under contract while the market remains somewhat soft. Mortgage rates are low and so are home prices. It makes for good home-buying conditions.
Jun 29, 2012 | Housing Analysis
The Federal Home Finance Agency’s Home Price Index shows home values up 0.8% in April on a monthly, seasonally-adjusted basis.
April marks the third consecutive month during which home values increased and the index is now up 3 percent from last year at this time.
As a home buyer in Worcester County area , it’s easy to look at the Home Price Index and believe that its recent, sustained climb is proof of a broader housing market recovery. Ultimately, that may prove true. However, we cannot base our buy-or-sell decisions on the HPI because, like the private-sector Case-Shiller Index, the Home Price Index is flawed.
There are three main flaws in the FHFA’s Home Price Index. They cannot be ignored.
First, the FHFA Home Price Index’s sample set is limited to homes with mortgages backed by Fannie Mae or Freddie Mac. By definition, therefore, the index excludes homes with mortgages insured by the FHA. (more…)
Jun 28, 2012 | Real Estate Definitions
As part of the federal Truth-in-Lending Act, refinancing homeowners are granted a 3-day “cooling off” period post-closing during which they retain the right to rescind, or “cancel”, their recent refinance without penalty or cost.
The Right To Cancel is protection against surprises at closing and/or a change of heart. It’s also a safety valve for homeowners signing paperwork under duress. With 3 days to revisit and rethink the terms of a loan, a homeowner can maintain tighter control of his/her financial situation.
If you ever have the wish (or need) to execute (more…)
Jun 27, 2012 | Housing Analysis
The new construction market continues to improve.
As reported by the Census Bureau, 369,000 new homes were sold last month on a seasonally-adjusted, annualized basis. A “new home” is a home that is considered new construction.
May’s data marks the highest number of new homes sold since April 2010, the last month of that year’s federal home buyer tax credit.
It’s also a 14% increase over the rolling 12-month average.
The news was somewhat expected based on the most recent Homebuilder Confidence survey, which rose to a 5-year high. Home builders have been reporting higher sales volume and rising buyer foot traffic since October of last year.
The May New Home Sales report confirms (more…)
