Rate Update

After leading the US out of seven of the last eight recessions, the housing sector is poised to kill the current economic recovery. The impact of the expired federal home buyer tax credit alarmed investors and highlighted a week of dismal economic data. Existing Home Sales plunged by a record 27% in July, the biggest one-month decrease going back to 1968. Purchases fell to a 3.37 million annual pace, the lowest since May 1995. Supply of single-family homes swelled to 11.9 months, the highest since 1983. New Home Sales fell 12% to an annual pace of 276,000, the weakest since data began in 1963. The outlook for the overall economy is just as bleak. Gross Domestic Product estimates were cut to a 1.6% annual pace for the second quarter, after a strong 3.7% growth-rate in the first three months of this year, signaling a stalling recovery without government stimulus. Demand for Durable Goods, items made to last at least three years, fell nearly 4%, the most in more than a year. And while there was some good news with the first decrease in Jobless Claims in a month, the figure is still too high and expected to get worse. Economists fear that foreclosures will continue until the employment rate recovers. For the eighth time in nine weeks, mortgage rates have fallen to the lowest level on record, with the 30-Year Fixed briefly touching 3.875% (4.035% APR) on Thursday!! Currently, the 30-Year Fixed is at 4.000% (4.141% APR) and the 15-Year Fixed is at 3.500% (3.749% APR). This week will feature the employment report on Friday. We will also see Consumer Confidence, Pending Home Sales and manufacturing data.