Last week’s economic news was fairly positive with both new and existing home sales beating expectations. The FHFA reported that home price growth held steady in May, while weekly jobless claims edged up, but were lower than expected.
The Commerce Department’s new home sales reached 546,000 on an annual basis for May, which was greater than expectations at 525,000 new homes sold and April’s revised reading of 534,000 new homes sold. Housing Analyst expectations were based on the Commerce Department’s original reading of 517,000 new homes sold in April.
Existing home sales rose last month by 5.10 percent to a seasonally-adjusted annual reading of 5.35 million sales and were the highest level in five and a half years. The National Association of Realtors reported that it was the fastest pace of sales for previously-owned homes since November 2009. Expectations by housing analysts’ were based on an April’s original reading of 5.04 million sales, which was revised to 5.09 million.
A larger supply of available homes was also cited as driving sales of existing homes higher, but we still have a significant shortage. Total housing inventory increased 3.2 percent for April to 2.29 million homes for sale and up 1.8 percent from a year ago, but the total supply is only at a 4.5 month supply and we need a 6.0 month supply to see a balanced market to reduce pressure on home price increase.
The Federal Finance Housing Agency (FHFA), the agency that oversees Fannie Mae and Freddie Mac, reported that home prices related to mortgages owned by Fannie Mae and Freddie Mac held steady with a growth rate of 5.30 percent year-over-year reported in May. This was the same year-over-year home price growth rate that the agency posted in April.
Freddie Mac’s mortgage rate survey was mixed last week. The average rate for a 30-year fixed rate mortgage rose by two basis points to 4.02 percent; the average rate for a 15-year fixed rate mortgage fell by two basis points to 3.21 percent and the average rate for a 5/1 adjustable rate mortgage also fell by two basis points to 2.98 percent. Average discount points were 0.70 for the 30 year, 0.60 for the 15 year and 0.40 percent for the 5/1 ARM respectively.
June’s Consumer Sentiment Index reporting gave us a reading of 96.1 as compared to expectations of 94.6 and May’s reading of 94.6. The reading is a five-month high and retail economist had forecast a reading of 94.6, unchanged from the flash reading and up from a final reading of 90.7 in May. Consumers voiced in the first half of 2015 the largest and most sustained increase in economic optimism since 2004.
Overall, last week’s economic news provided more indications of stronger economic conditions and the likelihood of rates will continue to rise, so if you’ve been thinking about purchasing a home you’re better off finding one now than waiting.
What’s Ahead for the Week?
We’ll get Pending Home Sales, Case-Shiller’s Home Price Index and Construction Spending. The Bureau of Labor Statistics will also release the monthly Non-Farm Payrolls report and National Unemployment reports.
Happy Independence Day Everyone!
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