Pending Home Sales Increase 8.2 Percent In May

For the first time since April 2010, pending home sales are above year-ago levels. According to The National Association of Realtors’ Pending Home Sales Index, contract signings rose 8.2 percent in May from April and were 13.4 percent above May 2010. The Pending Home Sales Index is a forward-looking indicator which reflects contracts but not closings. Lawrence Yun, NAR’s chief economist, said the improvement bodes well for home prices, as the faster inventory is absorbed, the quicker prices will stabilize. Pending sales have risen in seven of the past 11 months. More here and here.

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Average Mortgage Rate Falls To 4.46 Percent

According to The Mortgage Bankers Association’s Weekly Applications Survey, the average contract interest rate for 30-year fixed-rate mortgages fell to 4.46 percent last week from 4.57 percent the week before. It is the lowest 30-year rate since the middle of November 2010. Despite the rate drop, total mortgage loan application volume fell 2.7 percent from one week earlier. The four-week moving average for total loan demand is up 0.7 percent, with the refinance index up 1.5 percent. More here and here.

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Freddie Mac Economist Sees Housing Forecast Brightening

Freddie Mac’s chief economist Frank Nothaft sees better days ahead for the economy and housing market, according to his mid-year economic update. Nothaft writes that economic growth will pick up in the second half of the year despite near-term concerns restraining consumer spending. He believes the unemployment rate will end the year near 8.6 percent and, with job gains and high housing affordability, homebuyers will return to the market with a high degree of purchasing power. Cautious consumers with the means to buy a home may be waiting for clear indication that housing has stabilized but, with a strengthening rental market, low financing costs, and less economic uncertainty, Nothaft believes growth will continue to accelerate this year and lead to an improvement in housing activity. More here.

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Rising Rent, Housing Affordability Makes Buying A Better Deal

With rents rising across the country, buying a home becomes increasingly more affordable. According to National Association of Realtors’ chief economist Lawrence Yun, buying a home is more affordable now than it has been at any time in the past 40 years. A family earning the national median of $62,000 would pay 13.5 percent of their monthly income on a median priced home, according to the NAR. Jim Glassman, senior economist at J.P. Morgan Chase, says the correction in house prices and home building is really the cure for the housing market’s problems and, as supply and demand become more balanced, the pace of the recovery will accelerate. More here.

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New Home Sales Up 13.5 Percent Over Last Year

The U.S. Census Bureau and the Department of Housing and Urban Development’s New Residential Sales Report for May shows sales of new single-family homes up 13.5 percent above last year’s estimates, despite dipping 2.1 percent from April. And though sales declined month-over-month, the seasonally adjusted annual rate of 319,000 homes was above economists’ expectations of 305,000. Also, the median sales price for a new home rose 2.6 percent in May to $222,600. The seasonally adjusted estimate of new houses for sale at the end of May was 166,000, which represents a supply of 6.2 months at the current sales rate. More here and here.

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New Price Data Finds More Evidence Of Rising Values

Despite recent price volatility, new data shows home values rising in April. The FNC Residential Price Index showed a 0.5 percent increase in April, the first positive uptick since the end of the homebuyer tax credit last year. The results are contrary to what others believe is continuing price deterioration and evidence that, despite downward pressure from high volumes of foreclosure sales, home prices are gaining traction, FNC said. According to the Federal Housing Finance Agency’s latest price index, home values were up 0.8 percent between March and April, though the FHFA report only measures prices on mortgages owned by government agencies. These reports follow a recent CoreLogic report that found values up 0.7 percent in April.

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Mortgage Rates Rise, Remain Near Historic Lows

According to The Mortgage Bankers Association’s Weekly Applications Survey, the average contract interest rate for 30-year fixed-rate mortgages increased to 4.57 percent from 4.51 percent the week before. The rise in rates led to a 5.9 percent drop in the Market Composite Index, which measures total loan application volume. Still, the four-week moving average for the seasonally adjusted Market Index is up 0.4 percent, despite recent volatility. The decline in loan demand follows a 13.0 percent surge the week before. More here.

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Existing Home Sales Slowed By Temporary Conditions

Higher gas prices and severe weather lead to a slow sales month for previously owned homes in May. According to the National Association of Realtors, existing-home sales fell 3.8 percent, though economists expected a deeper drop. Lawrence Yun, NAR’s chief economist, said temporary factors held the market back in May but the pace of sales activity in the second half of the year is expected to be stronger than the first half, and much stronger than the second half of last year. Total housing inventory at the end of May was down 1.0 percent to 3.72 million existing homes. More here and here.

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Jobs Are Key To Housing, Economic Recovery

In their most-recent monthly economic outlook, Fannie Mae’s Doug Duncan and Orawin T. Velz write that, though the current economic expansion has been disappointing, they believe the likelihood that the economy will slip into another downturn is still quite low. According to Duncan and Velz, employment remains key to the outlook for the economy and housing market and only a faltering labor market could jeopardize the projected rebound in home sales later this year. Evidence of declining shadow inventory and distressed sales, along with high housing affordability and low mortgage rates, offer positive signs for a housing market that has, so far this year, been volatile. More here.

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Foreclosure Activity Falls, Default Notices At 53 Month Low

Foreclosure filings, which include default notices, scheduled auctions, and bank repossessions, were reported on 214,927 properties in May, according to RealtyTrac’s U.S. Foreclosure Market Report. It was the eighth-straight month of declines and a 33 percent drop from last year. James Saccacio, RealtyTrac’s CEO, said processing delays are partly responsible for the improvements, though there have been 16 consecutive months of year-over-year declines in default notices, which has led to a declining inventory of properties in the foreclosure process. Default notices fell 7.0 percent from the previous month and are 39 percent below May 2010. May’s total number of monthly defaults was the lowest its been since December 2006. More here.

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