Last week we received real estate data that included the Case-Shiller 20 and 10-City Index reports, Pending Home Sales by the National Association of Realtors® and the post-meeting statement of the Federal Reserve’s Federal Open Market Committee.
The Case-Shiller 20-City Home Price index for May reported that year-over-year home prices grew by 4.40 percent year-over-year. The index supports that home prices are increasing at a moderate rate of four to five percent a year as compared to double-digit percentages seen back in 2013. As we move further into 2015 home prices are expected to slow through 2016 as home prices have been growing at approximately twice the rate of wage growth and inflation, which simply is sustainable.
Denver, Colorado led cities included in the 20-City Index with a 10 percent year-over-year growth rate year over year. San Francisco, California followed closely behind with a year-over-year gain of 9.70 percent and off its 2013 peak of 23.5 percent year over year gains. Dallas, Texas posted a year-over-year gain of 8.40 percent.
Fastest month-to-month home price growth in May was tied by Boston, Massachusetts, Cleveland, Ohio and Las Vegas, Nevada with each posting a monthly gain of 1.50 percent, but home prices remain about 13 percent below their 2006 housing bubble peak.
The National Association of Realtors®, provide its Pending Home Sales index and it showed a drop by 1.80 percent in June as compared to May’s reading. The index reading for June home sales was 110.3 as compared to May’s index reading of 112.3 and we can expect fewer closing in the coming month as the index is a forward looking report. June’s reading represented the first decrease in pending home sales in six months and it appears that would-be buyers’ decisions about whether to hold out for more available or to buy sooner than later is and will affect future readings for pending home sales. Current supplies of available home have been running much lower than needed for a balanced market. On average, we need a six month supply of homes and we’ve only been able to create a four and a half month supply of available homes, which is creating a shortage in housing, as Millennials from new family structures.
Nothing unexpected came from the Fed’s FOMC statement at the conclusion of its meeting on Wednesday. Fed policymakers remain cautious about economic conditions and are not prepared to raise the federal funds rate yet. The FOMC statement did not provide any prospective dates for raising the target federal funds rate, which is currently at 0.00 to 0.25 percent, but the Fed continues to watch employment figures and the inflation rate.
Freddie Mac reported that mortgage rates fell last week and due largely in part by the news of the Fed’s decision not to raise rates. Average mortgage rates fell across the board with the rate for a 30-year fixed rate mortgage dropping by six basis points to 3.98 percent; the rate for a 15-year fixed rate mortgage dropped by four basis points to 3.17 percent and the average rate for a 5/1 adjustable rate mortgage fell by two basis points to 2.95 percent. Average discount points remained the same for fixed rate mortgages at 0.60 percent and fell from 0.50 percent to 0.40 percent for 5/1 adjustable rate mortgages.
What’s Ahead for the Week?
This week’s we’ll get reports on Consumer Spending, Core Inflation, July readings on Non-Farm Payrolls and the National Unemployment Rate, along with the regularly scheduled Weekly New Jobless Claims and FHLMC Mortgage Rate Survey.
A SIMPLE HOME SHOPPING INSPECTION TOOL
Organizing your home shopping experience affords a wise decision making process. This simple home inspection tool makes your ultimate buying decision a smart one. To print this document click on “Open in New Window” located at the lower right corner; click on “File”; then click on “Print”. In the center of the screen you will have the option to “Create A Printable PDF of the Presentation”.