December 1, 2009
December 1, 2009 by admin
December is off to another stellar start for the equity markets which have cruised past their 2009 high levels on renewed optimism in the economy. The markets sell off following the crisis in the Middle East appears to be short lived as investors believe that the residual market impact will be contained to lenders outside of the U.S. and news that the management team was moving closer to restructuring a portion of this debt helped ease further concerns. Investors have been cautiously optimistic that the retail market would post improved holiday shopping figures this year.
The real estate industry continued to provide positive news for the overall market. The pending home sales report rose for the ninth consecutive month in October and posted their biggest ever one year increase as well, according to figures released today by the National Association of Realtors. Signed contracts for home sales increased by almost four percent in the month of October, despite many experts believing there could be slight decline. Comparing these figures to October 2008, pending sales were up over thirty percent, the biggest yearly increase since the NAR began tracking data in 2001. Homebuyers were anxious to lock in contracts with the potential of the tax rebate expiring at the end of November as well as historically low interest rates, fueling the rise in pending sales. The government also announced revised policies regarding mortgage modifications and a process to help homeowners streamline the process of short sales. The mortgage industry has been struggling to keep up with the rise in foreclosures and bank owned homes as unemployment continues to climb higher.
This week will be another critical test for the market rally. The non farm payroll report is due out later in the week and this has the potential to sink the markets or add further fuel to the rally. The national unemployment rate is not expected to drop lower than ten percent as there are still no signs that corporations are committed to growing into the New Year.
Mortgage rates remain very attractive to start the month. Yields on the ten year Treasury bond remain below 3.3% helping keep long term thirty year rates in the high four percent range. Fixed rates have been at or around five percent for the better part of the last thirty days as home owners and home buyers have locked in historically low rates. This week has the potential for significant market movement with the release of the non farm payroll report, so considering a float down rate lock is a good idea.