Multiple reports on home sales were released over the past week, bringing many positives to the housing market. Existing home sales rose 5.1% in May to a 5.35 million rate, with the year-over-year rate up 9.2%. This is the strongest year-over-year rate in nearly two years, with the exception of the 11.9% increase in March. Existing home prices are also on the rise, up 7.9% in May for a median price of $228,700. This forward motion in existing home sales is largely due to the increasing number of first-time buyers entering the market. First-time buyers made up 32% of the sales. That was up from 30% in April and 27% from May 2014 and was the largest contribution since September 2012. All-cash sales accounted for 24% of transactions for the third straight month. Sales to individual investors remained at 14% for a second consecutive month. New home sales also displayed upward movement in May, rising 2.2% to an annual rate of 546,000, a 7-year high. There is still a lack of supply for both new and existing homes, which may speed up further construction activity. In general, May’s progressive home sales numbers are helping to place housing at the top of the economy as of late.
The number of jobless claims, although continuing to be near historic lows, did increase slightly in the past couple of weeks. In the week ending June 20, initial claims inched 3,000 higher to 271,000. The 4-week average, however, displayed a decrease of 3,250 to a 273,750 level, trending slightly lower than a month ago.
The final reading of first quarter growth was negative 0.2%, about as expected. Several upward revisions made growth look better, but GDP still declined for the first time since Q1 2014.
Consumers seem to be displaying more confidence in the economy lately. The Bloomberg Consumer Comfort Index rose 1.7 points to 42.6 in the week of June 21, which is supported by the 0.5% rise in personal income in May, and the 0.9% surge in personal outlays. Consumer sentiment came in at 96.1 for the month a June, a 5-month high. The expectations component has an index of 97.8, displaying a 13.6 surge from May, the largest monthly gain since March 1991. The current conditions component shows a strong gain to 108.9, up from 100.8 at the end of May.
Mortgage applications inched higher in the week of June 19, with an increase of 1% for purchase applications and 2% for refinancing applications. Year-on-year, purchase applications displayed a very strong increase of 18%.
More recently, many loan programs saw little-to-no change. Over the past week, Manufactured (Conventional), 30-Year Fixed VA, and 30-Year Fixed USDA all displayed price improvements, the largest being a nearly 1/8 point improvement in the VA loan program. The 30-year fixed rate displayed an increase of 10.9 basis points, and remains above 4.00%. All other loan programs remained unchanged.
Sean Becketti, chief economist for Freddie Mac, released a statement regarding current rates: “Mortgage rates were little changed this week… Economic releases confirmed increasing strength in housing. Existing home sales increased 5.1 percent in May to an annual pace of 5.35 million units and new home sales increased 2.2 percent to an annual pace of 546,000 units. Buyers appear anxious to purchase homes before the expected increase in interest rates later this year. Given the tight inventory of homes for sale, a 5.1-month supply at the current sales pace, home prices are being bid up.”
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