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CCL Market Update: New Home Sales, Mortgage Application, FHFA House Price Index, Jobless Claims, Pending Home Sales, GDP, Existing Home Sales, Janet Yellen

New Home Sales

New US single-family home sales surged to a more than 8 year high in April, prices hit a record high as well offering further evidence of a pick-up in economic growth early in the second quarter. April’s annualized rate came in at 619,000, the highest rate since January of 2008.The data includes a large 39,000 net upward revision to the two months prior. The monthly gain of 16.6 percent is the largest monthly increase since January 1992. Prices also had a large upturn, increasing by 7.8 percent in the month to a record median price of $321,100, and up a plus 9.7 percent from last year. This surge in sales is a negative for supply as supply relative to sales fell sharply to 4.7 months from 5.5 months. The total number of new homes for sale was down only by 1,000 to 243,000. Year on year total sales are up 23.8 percent and the median price is now well above the 6 percent rate where housing appreciation has been trending.

Mortgage Applications

Total mortgage application volume increased by 2.3 percent on a seasonally adjusted basis compared to the previous week. Year on year total applications are nearly 24 percent higher. Purchase applications increased by 5 percent from the prior week and were the driving factor in total volume this week. Refinancing activity managed to post a gain of 0.4 percent despite slightly higher rates. Purchase applications were 17 percent higher than they were a year ago, a gain that points to continuing strength of a very strong housing market.

FHFA House Price Index

After a strong new home sales report and the FHFA house price report the home price appreciation, which has been flat, now appears to be trending higher. The FHFA index for March rose a higher than expected 0.7 percent, for the best reading since September. The year on year rate jumped over the 6 percent line to 6.1 percent for the best reading since October. This report points to consumer strength in the market.

Jobless Claims

Initial jobless claims fell sizably in the week of May 21st, down 10,000 to a lower than expected 268,000. The 4-week average, however, reflects the prior three weeks of gains and is still rising up 2,750 to 278,500. This is more than 20,000 above the rate a month ago, this points to trouble for the May employment report. Indications from continuing claims are flat. In the lagging data for continuing claims in the week of May 14th, claims rose 10,000 to 2.163 million. The 4-week average was up 8,000 to 2.151 million. The unemployment rate for insured workers remains unchanged at a low level of 1.6 percent.

Pending Home Sales

After a very positive new home sales report, which showed new home sales surging in the month of April, the pending home sales index experienced a similar surge. Up for a third straight monthly gain, pending home sales increased by 5.1 percent in April to a level of 116.3. The index is up now 4.6% from April of 2015, and has had a year over year increase for 20 consecutive months. Gains in the South and West helped to propel pending sales in April to their highest levels since February of 2006 when they were at a level of 117.4. These positive reports point to greater acceleration for final sales of existing homes. This report has turned the housing outlook from modest to sharp growth, in the latest indication of household strength.

GDP         

The first quarter GDP is now revised slightly higher to an annualized growth rate of plus 0.8 percent for a 3 tenths gain from the initial estimate. An upward revision to residential investments and exports are behind the small gain along with an unwanted upward revision to inventories. Nonresidential investments remain weak, personal consumption was soft unrevised at a plus 1.9 percent rate. Final demand is revised slightly higher by one tenth to a very soft 1.2 percent. Inflation data is weak with the GDP price index revised 1 tenth lower to an annualized plus 0.6 percent. Residential investment, boosted by home improvements, is the standout in this report of an otherwise  soft opening to 2016.

Consumer Sentiment

Consumer sentiment came in at 94.7 for the month of May, down 1.1 points from mid-May but up a very strong 5.7 points from April. The final result for May is the best since June of last year and among the very strongest of the whole economic cycle. The expectations component, the standout in the report, was up 7.3 points from April to 84.9 for the sharpest monthly gain since May 2013. Strength in this segment reflects the strength in the jobs outlook. The current conditions component also helped add to May’s strength, up 3.2 points from April to a level of 109.9. The current conditions reading is the best in the whole cycle, since January 2007, it is a strong indication for current spending.  A negative in the report is the inflation outlook where 1 year expectations are down another 1 tenth from the mid-month reading of 2.4 percent. This is a major decline from April, down 4 tenths. The 5-year expectations component is showing little change, down only 1 tenth from the mid-month reading of 2.5 percent which was unchanged from the previous month of April. This report is a positive indication for consumer spending which is showing resilience despite the concerns of slowing economic growth.

Existing Home Sales

The housing market is at its strongest in a decade. More than 6 million homes changed hands last year, marking the first time that’s happened since 2006. Three factors stand out as to why there has been a surge in rising home sales: rising US rents, loosening mortgage guidelines nationwide and historically low mortgage rates. The April 2016 Existing Home Sales report shows 5.45 million homes sold on a seasonally-adjusted annualized basis, a 6% increase from the year prior and the highest reading for an April since last decade. Demand for homes has been high; there are now just over 2 million homes for sale nationwide, this supply cannot keep up with the demand. At this current pace of sales, the entire stock of homes for sale would be sold out by September. In April, the report for median days on the market reached a total of only 39 days; this marks the lowest number of days for an April since this report has been tracking such data. The April Existing Home Sales report showed a 17% decrease of days on the market from the prior month.

Janet Yellen

Janet Yellen did not signal exactly when the FOMC will raise rates during her speech at a Harvard awards ceremony. She did, however, state that a rate increase will probably be appropriate in the upcoming months. Employment continues to be the strong suit of the economy, as Yellen described it as really improved and noted the gains in the participation rate. She warned that the unemployment rate is closing in on the Fed’s full employment goal, in a comment that points to an upcoming rate hike. A major negative in the economy is the ongoing struggle in productivity; she described the pace as a “serious negative” and “really miserable.” As for her overall outlook, she sees the economy continuing to improve and inflation to move back to its 2 percent goal over the next couple of years.

Written by Central Coast Lending - Go to Central Coast Lending's Website/Profile
805.543.LOAN info@centralcoastlending.com
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New Listing! Historic Carriage District Home

1067099_01
Step back in time in the Historic Carriage District in this amazingly maintained home built in 1929. Over 4,000 sq ft of original features, arched niches, hand forged wrought iron and hand painted tiles.. This home received the Historical Merit Award and is sure not to disappoint. One bedroom and bath are situated downstairs off the oversized living room with Douglas Fir beams and railings. The formal dining room has arched glass doors, original hard wood flooring and original light fixtures. Enjoy two entertaining areas – one downstairs and another upstairs complete with wet bar, dining area, fireplace and family room with a sweeping staircase entry. Upstairs you’ll find two master suites, one with its own balcony and mezzanine over looking the family room. Original french doors and skeletal key door locks, too. There’s just too many amenities to list. This is an incredible home.
Wendy Teixeira 805.310.3505

Written by Patterson Realty - Go to Patterson's Website/Profile

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New Listing! 2 Bedroom Meadowbrook Park home!

1067185

This beautiful home boasts an open concept floor plan with lots of natural light and a nicely landscaped yard. Located in the pristine Meadowbrook park, this 2 bedroom, 2 bathroom home has many modern amenities including new laminate flooring, new ceiling fans, stainless steel appliances in the kitchen which also includes a fantastic double oven. There is a delightful patio out back perfect for summer BBQ’s and entertaining and plenty of storage spaces including two sheds and a nice sized garage. Easy distance to downtown Templeton and close to shopping and restaurants! Don’t miss out on this wonderfully upgraded, affordable home!
Jessica Depper 805.242.8002

Written by Patterson Realty - Go to Patterson's Website/Profile

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USDA Home Loans

The USDA loan offers a low rate and flexible qualification for for middle- to low-income buyers in rural areas

The United States Department of Agriculture’s Rural Development Administration offers 30-year home loans (Section 502 loan) to improve the quality of life and economy in rural areas. This USDA program offers the best terms for new and mid-to-low income buyers.

Much of San Luis Obispo County counts as “rural” and is eligible for USDA financing. Qualifying households may have up to 115 percent of the median income in the area. Call us at 805.543.LOAN or send us an email here to learn if you qualify.

USDA Loan (Section 502)

The USDA loan targets rural, middle- to low-income borrowers that don’t have the means to make a down payment and pay large mortgage insurance premiums.  The primary two qualification standards are location (rural) and income (up to 115% of area’s median).

In San Luis Obispo County, families of 1-4 people can make a maximum of $86,700 to qualify and families of 5-8 people can make a maximum of $114,450.

The Basics:

  • Down payment: as low as 0%
  • Credit score: as low as 550
  • Debt-to-income ratio: as high as 31% housing ratio and 43% total debt ratio
  • Gift payments: allowed; gifts, grants, and seller concessions
  • Rate and Term: fixed (30-year)
  • Ceiling: no purchase maximum, but must be “modest in size, design, and cost”
  • Occupancy: owner-occupied, primary residence only
  • Mortgage Insurance: yes; up front and monthly fees apply

More About USDA Home Loans

Written by Central Coast Lending - Go to Central Coast Lending's Website/Profile
805.543.LOAN info@centralcoastlending.com
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New Listing! Beautiful 4 Bdrm Home Paso Robles

1066940

Largest floor plan in the development. Upstairs loft was enclosed to make another room, would be great for office, den, 4th bedroom. This one is immaculate. Wired for TV above the fireplace. Water softener included. Nicely done backyard waiting for new homeowner’s finishing touches. Garage has extra electrical, including 240, 40amp, used for charging electric cars. This one sits back off the street offering a private setting. Beautifully done!
Kim Bankston 805.674.2298

Written by Patterson Realty - Go to Patterson's Website/Profile

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New Listing! 2 Bedroom 1 Bath Santa Maria Home

1066875
2 Bedroom 1 Bath home and a 2 car detached garage. Property sits on a large flag lot at 495 C. Newlove with approximately 12,632 Square Feet. This property was approved for building 2 additional units ( 2bd, 1 ba and a 3 bd, 2 ba) in 2005. Building Permits were valid until April 2006 and have since expired. Buyer will receive a full set of construction drawings and can revive the permit with minor revisions to the plans to accommodate latest building code.
Shea Hutchinson 805.260.6322

Written by Patterson Realty - Go to Patterson's Website/Profile

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New Listing! Beautiful 4 Bedroom Home

1066841
Just off of East Betteravia Road, you’ll find over 3 acres of usable property! This two story home features 4 bedrooms and the master suite and guest bedroom/bath are downstairs! Great rustic and western feel perfect for entertaining. Enjoy the in ground pool, two stall barn and tack room along with an additional large shop/barn with an additional two car garage area and fenced pastures for horses. Beautiful views out the back yard.
Wendy Teixeira 805.310.3505

Written by Patterson Realty - Go to Patterson's Website/Profile

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New Listing! Stunning Views Surrounded by Trees & Nature

1066881
This custom built, passive solar home boasts breathtaking views of mountain scenery and countryside. Surrounded by trees and nature and located on over 2.5 acres, this 2 bedroom, 2 bathroom home was recently remodeled opening up the floor plan for a more modern feel. The kitchen flows nicely into the living room and there is a delightful patio out back perfect for Summer BBQ’s! Easy distance to downtown and close to parks and hiking trails. Come see the stunning 360 degree views from the upstairs loft for yourself!
Jessica Depper 805.242.8002

Written by Patterson Realty - Go to Patterson's Website/Profile