Market Update
For the week of March 25, 2013
INFO THAT HITS US WHERE WE LIVE... The U.S. real estate market is certainly putting some boldness into its recovery, as indicated by recent reports. February Existing Home Sales shot up 10.2% from a year ago, the fastest sales pace since the homebuyer tax credit boost in November 2009. The median existing home price is UP 11.6% versus a year ago and has now posted year-over-year increases 12 months in a row! And the FHFA index of prices for homes financed with conforming mortgages is UP 6.5% the past year.
Home builders are showing some boldness too, as February Housing Starts came close to a 5-year high, at a 917,000 annual rate, 27.7% higher than a year ago. Building permits were UP 4.6% in February, to a 946,000 yearly pace. But builders aren't celebrating just yet. The National Association of Home Builders chairman explained, "... (builders') enthusiasm is being tempered by frustrating bottlenecks in the supply chain for developed lots, along with rising costs for building materials and labor." Hopefully, these issues will dissipate.
Our stream of good news began with housing starts, existing home sales, and home prices all ahead of estimates. The Philadelphia Fed Index also surprised to the upside, registering positive growth for manufacturing activity in that region after a month of contraction. Even the policy statement coming out of the FOMC meeting showed the Fed is a bit more optimistic about the economy, citing "a return to moderate economic growth." The statement also acknowledged that "labor market conditions have shown signs of improvement in recent months" and "the housing sector has strengthened further."
The week ended with the Dow a fraction lower, at 14512; the S&P 500 down 0.2%, to 1557; and the Nasdaq down 0.1%, to 3245.
Looking ahead in real estate, February Pending Homes Sales are predicted up, but by less than the month before. This measure of contracts signed on existing homes indicates a moderate improvement in sales a couple of months out. The Core PCE Prices inflation reading should stay well within the Fed's acceptable range.
Source Bill Wetzel, Guild Mortgage Company
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