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CCL Market Update: Housing Market, Consumer Sentiment, Gas Prices, Mortgage Rates

New home sales for January did better than expected, selling at an annual pace of 481,000. This is only slightly down from December’s 482,000, which had surged 8.1% from the month prior.

Existing home sales fell 4.9% in January to 4.82 million, the lowest annual rate since last April. According to the National Association of Realtors, homeowners are tending to stay in their homes an average of 10 years, longer than the previous long-term average of 7 years. Despite the drop, existing home sales are still up 3.2% from this time last year. The NAR forecasts that total existing home sales for 2015 will be around 5.26 million, which is about 6.4% above 2014.

Pending home sales, a leading economic indicator, rose 1.7% in January to 104.2, and was 8.4% higher than the January 2014 level of 96.1. This marks the 5th straight month of year-over-year gains for pending sales.

House prices are continuing to rise, according to data from the Federal Housing Finance Agency. FHFA house prices rose 0.8% in December driven by job growth and tight supply.

In California, total home sales increased by 2% year-over-year, while the median price of those homes increased by 6.5% to $376,000. In SLO County, the total number of homes sold decreased by 2.3% in January. Sales of existing homes actually increased 12.1%, however, new home sales were down 40%. The overall median home price for January increased 12.3% to $454,500.

Consumer confidence was at a 7-year high in January, but has since been steadily decreasing. The monthly consumer confidence index for February fell 7.4 points to 96.4, down from 103.8 in January. In a separate report, consumer sentiment saw its first decrease in 7 months, dropping to 95.4 this month from January’s 11-year high of 98.1. Recent fuel gains are likely the cause for consumer negativity, as gas prices are up 31-cents per gallon. The average cost of gas was reported to be $2.37/gallon on Thursday, up from $2.03/gallon on January 25, which was the cheapest since 2009.

This week is another busy week of potentially market-moving economic data! Some of the most notable items include a trio of manufacturing reports, the Beige Book, and the employment reports highlighted by the Unemployment Rate.

Mortgage Rates

Rates for almost all loan programs have decreased this week, with the exception of the 15-Year Conventional and 30-Year FHA programs. The largest decrease was seen for Manufactured FHA loans at 3.375% (4.966% APR), down 1/4-point from last week’s rate of 3.375% (5.179% APR). All of the Government Loan Programs returned rates similar to two weeks ago, with the exception of the 30-Year FHA, which has seen no movement in the last 7 weeks.

Loan programs remain significantly lower than this time last year: The 30-Year Conventional is 3.625% (3.812% APR) compared to 4.375% (4.421% APR) in February 2013, and the FHA 203k is 3.500% (5.060% APR) compared to 4.250% (6.242% APR) one year ago.

If you are interested in lowering your interest rate, removing mortgage insurance or shortening your loan term, call us at 805.543.LOAN or begin the process by applying online (Apply Now!). Prequalification for a refinance or purchase is always free.

Written by Central Coast Lending - Go to Central Coast Lending's Website/Profile