housing continues to shine as rates move lower again
November 25, 2009 by admin
Heading into the holidays, mortgage rates continue moving lower and home sales continue to surge, a welcome recipe for a beleaguered real estate market. This has been a fabulous week of news for the housing markets which are looking for any positive news as it tries to gain momentum into 2010. The headline reports for the week have been a key factor in lifting the stock market to high levels for the year. The stock market has been front page news for the last two months, surpassing the 10,000 point level and bringing with it speculation that the economic recovery would be in full swing next year.
The housing market numbers for October were better than many experts were initially predicting, but should not be a total surprise to anyone who follows the real estate industry. The market has been setting the stage for a move up as the governments homebuyer tax rebate hung in the balance. Consumers were facing a potential $8,000 tax rebate shortfall if they missed on closing prior to the end of November, under previous terms of the new home buyer tax credit. Real estate firms and mortgage companies have been aggressively marketing the deadline for the last two months in hopes of getting buyers on the fence to move forward. The collective efforts were a big win in the past month. Existing home sales surged over ten percent last month, notching their highest percentage increase this year. Today a report on new home sales also surpassed expectations. The new home sales report showed a six percent increase for the month of October, as buyers looked to close out purchases of newly built homes.
The mortgage industry has benefitted greatly from the governments influence on the free markets this year. The push to get buyers moving has been aimed at both stimulus (tax rebates) and subsidization of the MBS markets. Interest rates continue to defy historic market trends and move lower. The yield on the ten year Treasury bond dropped back down to 3.3% this past week, sending fixed rate thirty year home loans down to five percent with major national mortgage lenders. Freddie Mac, today announced rates have dropped to a six month lows, news that could provide further momentum to both home purchasing and refinancing over the next few weeks. The real estate market is still struggling with home foreclosures and bank repos, as they closely align with increased unemployment. Foreclosed properties could gain additional government intervention beyond the Hope for Homeowners and Making Home Affordable programs. The inability for lenders and loan servicers to proactively slow the rate of delinquencies has never been more apparent as one in four homeowners is now over thirty days late with their mortgage payment.
The retail markets will gain center stage for the economy over the next thirty days. Analysts will focus heavily on consumer confidence and retail spending to gauge the economies ability to rebound. The stock market will look to carry momentum into 2010, but will face year end selling pressure from investors who look to lock in tax losses and profits. Housing should continue to accelerate with low interest rates and a renewed tax credit helping push more buyers to purchase housing inventory at depleted price levels.