Last week’s economic news was largely positive as both new and existing home sales beat expectations. FHFA reported that home price growth held steady in May, while weekly jobless claims edged up, but were lower than expected.
New and Existing Home Sales Exceed Expectations
According to the Commerce Department, new home sales reached 546,000 on an annual basis for May. This surpassed expectations for 525,000 new homes sold and April’s revised reading of 534,000 new homes sold. Expectations were based on the original reading of 517,000 new homes sold in April.
Existing home sales rose by 5.10 percent in May to a seasonally-adjusted annual reading of 5.35 million sales and hit their highest level in five and a half years. The National Association of Realtors reported that this was the fastest pace of sales for previously-owned homes since November 2009. Expectations were based on an April’s original reading of 5.04 million sales, which was later revised to 5.09 million existing homes sold.
With wages and hiring picking up, more first-time buyers are expected to enter the market. Economists said there are signs that mortgage credit is becoming more available as lenders gain confidence in stronger economic conditions. A larger supply of available homes was also cited as driving sales of previously owned homes higher.
FHFA: Home Prices Show Steady Growth in May; Mortgage Rates Mixed
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 reported mixed developments for mortgage rates. 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, 0.60 and 0.40 percent respectively.
Last week’s economic reports ended on a high note with June’s Consumer Sentiment Index reporting a reading of 96.1 as compared to expectations of 94.6 and May’s reading of 94.6. All in all, last week’s economic news provided further indications of stronger economic conditions that should provide the confidence to ease mortgage credit requirements and enable more first-time buyers to purchase homes.
What’s Ahead
This week’s economic reports include date on pending home sales, Case-Shiller’s Home Price Index reports and construction spending. The Bureau of Labor Statistics will also release the monthly Non-Farm Payrolls report and National Unemployment reports. No economic news is scheduled for Friday, July 3 due to the Independence Day holiday.
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About the Author:
Babak Moghaddam graduated from University of Southern California in 1985. He entered the mortgage industry as a compliance auditor at the Bank of New York in 1986 and completed his masters in Business Administration two years later. After seventeen years in the traditional mortgage banking world Babak finally transformed this vision into his own practice in 2002 when he formed Charter Pacific Lending Corp, a mortgage company that has provided over $900 Million in residential real estate loans throughout Southern California. Babak and his team do things a little differently than other mortgage providers. They work as financial advisors, because they have come to realize that a mortgage is a very powerful financial tool. And just like any other financial tool, it should be managed as part of the overall financial management plan to reach every home owner’s long and short-term financial goals much faster. You can contact Babak for a free consultation and strategy session at (800) 322-1217 X103.