Home sales revised 14 percent downward over last three years.
The National Association of Realtors overestimated sales for the past three years and made a downward revision of its already depressed sales numbers. Specifically, sales were about 14 percent worse than previously thought, which comes out to 3.5 million units that were “double counted”. You can read about the nuts and bolts of the mistake HERE, but the general explanation is that the numbers were “drifting” due to a big shift away from For Sale By Owner sales to Realtor sales. Homes sold by owners are not counted by the listing services tracked by the National Association of Realtors, so when a greater share of home sellers began using realtors (who use such listing services), that artificially increased home sale numbers.
CNBC’s Diana Olick reported on the revision, and made a number of good points about the “meaning” of the lower numbers. She points out, rightly, that although fewer homes were in actuality sold, this doesn’t change all that much, including:
– General sales rates were already low to begin with and at all-time lows.
– The estimates of home prices and their drop since 2006 won’t change.
– The inventory of unsold homes in month’s supply is still below average.
– New homes built are not affected.
Even more important for the health of the housing market, the number doesn’t touch foreclosures or the number of borrowers behind on mortgage payments. Distressed borrowers and foreclosures are the main impediment to recovery.
All of this is a way of saying… don’t worry too much about the news. The number could hurt perceptions of the housing market, but doesn’t change the fundamentals of the crash, or the recovery we are starting to see today.
Jobless claims fall to a 3-year low.
Last week, unemployment claims dropped to the lowest level since April 2008. Claims fell by 4,000 to 364,000 for their third straight weekly drop. The number adds to the trend we have seen lately of positive job statistics.
A recovering economy?
Last week, the Associated Press ran an article detailing some of the positive economic metrics that suggest the probability of another recession is extremely low. The article stated that “most analysts now rule out another recession…” and that the “economy will grow at an annual rate of more than 3 percent from October through December.” The article points to fewer unemployment benefit applications, more jobs added, more consumer spending, more consumer confidence, falling gas prices, and restocked inventories.
Interest rates continue to fall.
Last week, the 30-year fixed interest rate fell to 3.91 percent nationally, which is the lowest average rate for this fixed term since the 1950s. Many economists suggest that this rate could continue to fall. Central Coast Lending is able to beat this rate (we bring down the national average). We go as low as 3.5 percent for the 30 year fixed (3.612 percent APR) and 3 percent for the 15 year fixed (3.258 percent APR). Give us a call to discuss the points associated with those rates. Now that you are done with the shopping and gift giving of the holiday season, take advantage of these low rates to refinance and save on monthly payments.