Aug 31, 2011 | Federal Reserve, Interesting Stuff, Legislation, Mortgage Rates
The Fed publishes meeting minutes 8 times annually — three weeks after each scheduled Federal Open Market Committee get-together. The Fed Minutes summarizes the FOMC meeting.
The Federal Reserve released the minutes from its August 9, 2011 Federal Open Market Committee meeting Tuesday.
The Fed Minutes contained no surprises and, as a result, mortgage rates across Massachusetts and nationwide have idled.
Although it gets less press attention, the Fed Minutes is every bit as important as the more highly-publicized, post-meeting statement from the FOMC. With its detailed record of conversation, the Fed Minutes highlights the discussions and debates that shape our nation’s monetary policy.
For example, here is some of what was said at the Fed’s August 2011 meeting :
- On growth : Economic growth had been slower than the committee expected
- On housing : The market “remains depressed”. Underwriting standards are “tight”.
- On rates : The Fed Funds Rate will remain low until mid-2013
In addition, the Fed talked about whether a third round of asset purchases should be announced. Ultimately, that plan was rejected by consensus.
The FOMC’s next meeting is a 2-day meeting, scheduled for September 20-21. The meeting was originally scheduled for just one day, but Fed Chairman Ben Bernanke chose to extend it to two. Wall Street believes that the extension was made so Fed members could discuss new forms of economic stimulus. (more…)
Aug 30, 2011 | Housing Analysis
After 3 straight months of gains, the Pending Home Sales Index slipped 1 percent in July. The monthly report is published by the National Association of REALTORS® and measures the number of home under contract to sell nationwide.
The Pending Home Sales Index is closely watched by Wall Street and analysts because it’s a forward-looking housing market indicator. Unlike most housing market data, though, Pending Home Sales forecasts a future housing market event. In this case, the Existing Home Sales report.
In its methodology, the Pending Home Sales Index states that 80% of homes under contract close within 2 months, with most of the remaining home going to closing within Months 3 and 4.
We would expect home sales data to taper into the fall buying season, but this year, they may taper more than normal. This is because, in a separate report, the National Association of REALTORS® said that contract cancellation rates are running high.
As compared to a 4 percent contract cancellation rate in May 2011, June and July both registered 16 percent. This means that fewer homes tallied as part of July’s Pending Home Sales Index will show up as “closed sales” this fall.
Contracts can be canceled for any number of reasons including more stringent mortgage guidelines, appraisals falling short of the purchase price, and changing mortgage loan limits. (more…)
Aug 26, 2011 | Mortgage Rates
Low mortgage rates are terrific — if you can get them.
One week after posting its lowest mortgage rate in 50 years, Freddie Mac reports that the 30-year fixed rate mortgage rose by an average of 7 basis points nationwide this week to 4.22%. To get the rate, you’ll pay an average of 0.7 “points”.
This week’s rise in the 30-year fixed rate mortgage pulled rates off their all-time lows so either you locked last week’s rock-bottom rates, or you missed it.
Mortgage rates are rising.
As a refinancing homeowner or home buyer in Worcester , rising mortgage rates are something to watch. This is because, as mortgage rates rise, so do the long-term interest costs of giving a mortgage, increasing your homeownership costs. (more…)
Aug 24, 2011 | Housing Analysis
Sales of newly-built homes slipped in July, falling 1 percent as compared to June. Home buyers closed on a seasonally-adjusted, annualized 298,000 units, the lowest reading since February.
The supply of new homes, however, remained flat.
July’s 6.6 months of supply equaled June’s tally and remains near the multi-year low of 6.5 months set in May of this year. The figures suggest a new home market that’s finding its balance.
Builders are building to meet demand, and not much more.
The New Home Sales report may have read differently if not for the Northeast Region which doubled its sales units in July. The gains buoyed the broader data, re-affirming the importance of looking past national data and focusing on what’s local; the national market is not reflective of any given town
Broken down by region, July New Home Sales fared as follows:
- Northeast Region : +100.0% from June 2011
- Midwest Region : +2.4% from June 2011
- South Region : -7.4% from June 2011
- West Region : -5.9% from June 2011
However, as with most months, it’s important that we recognize the New Home Sales data’s margin of error. (more…)
Aug 23, 2011 | Housing Analysis
Home resales slipped in July.
According to the National Association of REALTORS®, Existing Home Sales nationwide fell to 4.67 million units on a seasonally-adjusted annualized basis last month. It’s the fourth straight month below the 5 million mark, and the report’s lowest reading since November 2010.
An “existing home” is a home that’s been previously occupied or owned.
In addition, the Existing Home Sales report showed home supplies rising nationwide. At the current pace of sales, in other words, the complete, national “For Sale” inventory would be exhausted in 9.4 months. This, too, is the worst reading since November 2010.
On a units basis, however, the number of homes for sale actually fell in July. As compared to June, home resale inventory dropped 65,000 units to 3.65 million.
From these figures, we can infer that, despite low mortgage rates and lagging home values, buyer activity is slowing in Massachusetts and nationwide. This may be seasonal, or it may be a long-term trend.
Either way, there’s opportunity for today’s home buyers. (more…)
