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Market Archive

Market

Pending-home sales at highest since June 2013: NAR

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WASHINGTON (3/31/15)--Pending-home sales doubled-down in February with a second straight month of gains, as the National Association of Realtors (NAR) reported its pending-sales index climbed 3.1% for the month to 106.9 ( Economy.com March 30).

Further, the pending-home sales index, a leading indicator for the housing market, sits 12% higher than its level in February 2013.

While the index rose to its highest level since the summer of 2013, "the bulk of the improvement in housing demand continues to be supported by investors and all-cash buyers, as evidenced by the tepid recovery in mortgage purchase applications," said Brent Campbell, Moody's analyst ( Economy.com ).

Campbell also said that first-time homebuyers remain absent from the market, as sales have been driven by households who already own homes and are interested in upgrading or downgrading.

By region, the Midwest and West posted pending-home sales increases of 11.6% and 6.6% respectively, while sales dropped by 1.4% in the South and 2.3% in the Northeast.

Pending-home sales in each region have outperformed their year-over-year paces, however, with the West climbing 18.3% above its year-ago level, the Midwest rising 13.8% and the South and Northeast jumping 10.8% and 4.1% respectively on an annual basis.

"Several markets remain highly competitive due to supply pressures, and realtors are reporting severe shortages of move-in ready and available properties in lower price ranges," said Lawrence Yun, NAR chief economist. "The return of first-time buyers this year will depend on how quickly inventory shows up in the market."

News of the Competition (3/30/15)

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  • NEW YORK (3/30/15)-- Bank of America awarded its CEO, Brian T. Moynihan, $13 million in compensation last year, according to The New York Times (March 26). That number was only eclipsed by the compensation received by the head of Bank of America's investment bank, Thomas K. Montag, who netted $14 million in take-home pay for the year. Moynihan actually received 7% less in stocks and cash than he did the prior year, The New York Times reported, likely due to the massive legal costs incurred by the big bank to settle investigations into the faulty mortgage-lending practices it participated in leading up to the financial crisis in 2008. The bank agreed to pay nearly $17 billion in August to end inquiries by federal prosecutors ...

Home prices rising faster than wages: RealtyTrac

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IRVINE, Calif. (3/30/15)--Home-price appreciation has climbed 13 times faster than wage growth over the past two years in the United States, according to recent data from Irvine, Calif.-based RealtyTrac.

In fact, home prices have risen by 17% in the two years ending in December 2014, while median wages have only inched up 1.3% over that same stretch.

"Home prices in many housing markets across the country found a floor in 2012 and since then have rapidly appreciated, particularly in markets attracting institutional investors, international buyers or some other flavor of cash buyer not constrained by income as much as traditional buyers," said Daren Blomquist, RealtyTrac vice president. "Eventually, however, those traditional buyers will need to play a bigger role in the housing market for the recovery to maintain its momentum."

Home-price appreciation outpaced wage growth in 140 of 184 U.S. metros, according to the data.

Affordability still remains intact in many places, however, as out of the 184 markets analyzed, nearly three quarters had a median home sales price that required less than 28% of median income for monthly mortgage payments.

"Those markets with the biggest disconnect between price growth and wage growth during the last two years are most likely to see plateauing home prices in 2015 until wages catch up," Blomquist said. "Meanwhile, markets where wage growth has outpaced home-price appreciation during the last two years are poised to see at least steady growth in home prices in 2015 in most cases."

The metro areas that saw the highest rates of home-price appreciation compared with wage growth for the two years ending in the fourth quarter of 2014 were Sacramento, Calif., Riverside-San Bernardino, Calif., Las Vegas and Detroit.

Jobless claims duck under 300K for 3rd straight week

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WASHINGTON (3/27/15)--Initial claims for unemployment fell by 9,000 to 282,000 for the week ending March 21, according to numbers released by the Department of Labor Thursday.

The drop, which pushes the decline over the last three weeks to 43,000, marks the third consecutive week claims have come in under 300,000 ( Economy.com March 26).

"This is welcome news as the February economic data have disappointed," said Ryan Sweet, Moody's analyst ( Economy.com ). "Our tracking estimate of first quarter GDP is only 1% at an annual rate."

The four-week moving average for jobless claims fell by 7,750 for the week to 297,000, the second decline in the last three weeks. A four-week moving average below 300,000 is historically rare, Sweet said.

Continuing claims, meanwhile, or those who filed for unemployment benefits for at least a second straight week, fell by 6,000 to 2.416 million, according to the numbers.

Though, the four-week moving average climbed by 3,000, leaving the possibility open that the unemployment rate could rise by the end of March, Moody's said.

The insured unemployment rate, at 1.8%, did not change during the week, and sits 0.3% down on a year-over-year basis.

"There are some temporary factors hurting growth this quarter, including weather and the West Coast port disruptions," Sweet said. "The good news is that claims suggest the economy has gained some momentum heading into the second quarter."

Refis drive up mid-March mortgage apps: MBA

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WASHINGTON (3/26/15)--Mortgage application activity perked up last week as the composite index for the Mortgage Bankers Association's mortgage application survey jumped 9.5% after a nearly 4% drop the prior week (Economy.com March 25).

Refinance applications, which climbed 12.3% for the week, spurred the resurgence. Though, the purchase index also marched higher by 4.9% after falling last week as well.

"Last week brought positive news regarding mortgage application activity, as both purchase and refinance applications advanced during the week ending March 20," said Michael McGrane, Moody's analyst (Economy.com). "Lower mortgage rates likely fueled much of the gain in refinance activity, but this will prove fleeting as the economy heats up and the Fed's first interest rate hike since 2006 comes into focus."

The four-week moving average for refinance applications has fallen 24.2% over the past month, but remains 19.7% higher on an annual basis. Refinancings comprised 60.5% of all applications for the week ending March 20.

Purchase applications have dropped by 3.4% over the past month, but remain 1.5% above their year-over-year pace.

As for mortgage rates, the 30-year fixed-rate mortgage rate fell by 9 basis points during the week to 3.9%, which is 9 basis points lower on a monthly basis and 66 basis points lower on an annual basis.

For 30-year fixed-rate jumbo mortgages, rates fell 5 basis points to 3.89%. The five-year adjustable-rate mortgage rate fell by 2 basis points as well.

With energy prices on mend, CPI ticks up in Feb.

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WASHINGTON (3/25/15)--The consumer price index (CPI) climbed 0.2% in February, the first increase in four months, according to numbers released by the Bureau of Labor Statistics Tuesday ( Economy.com March 24).

Energy prices began to stabilize during the month after plunging in both December and January, which helped redirect overall prices into positive territory.

Specifically, fuel oil prices climbed by 1.9% after a 9.9% tumble in January, and the gasoline CPI rose 2.4% in February after dropping by 18.7% the prior month.

"Lower oil prices' mark on the U.S. consumer price index is fading," said Ryan Sweet, Moody's analyst ( Economy.com ).

Though it could take longer than expected for oil prices to resume climbing, which, when combined with an appreciating U.S. dollar, could continue to suppress inflation, Sweet added.

The core CPI climbed by 0.2% for the month. Core CPI excludes energy and food, which rose by 0.2%.

Further, used cars and trucks saw healthy price increases for the first time since December 2013, jumping 1% in February, while new-car prices increased 0.2%.

Shelter, or the price of housing also rose, climbing 0.2% on a monthly basis in February and 3% on an annual basis.

Existing-home sales, price growth rebound in Feb.

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WASHINGTON (3/24/15)--After January's slump, existing-home sales picked back up in February, climbing 1.2% for the month and 4.7% on a year-over-year basis, according to numbers released by the National Association of Realtors (NAR) Monday ( Economy.com March 23).

Single-family home sales drove the gains, which were below analyst forecasts, while condo and co-op sales were unchanged.

"The U.S. housing market is still subdued, showing few signs of acceleration despite February's uptick in sales," said Andres Carbacho-Burgos, Moody's analyst ( Economy.com ). "Total sales volume for existing homes has been flat for over a year now as investor and second-home purchases have dried out" and not been replaced by first-time homebuyers. 

By region, single-family home sales fell in the Northeast by 5.8%, remained flat in the Midwest, climbed in the South by 1.1% and rose in the West by 7.7%.

Further, sales accelerated on a year-over-year basis in all regions, with the South leading the way at 7.5%. The West posted the weakest annual sales growth at 3.2%.

Median home prices continued to climb as well, with single-family homes experiencing the highest rate of acceleration.

The median sales price for single-family homes was $204,200 in February, an 8.2% increase on an annual basis.

"Insufficient supply appears to be hampering prospective buyers in several areas of the country and is hiking prices to near unsuitable levels," said Lawrence Yun, NAR chief economist. "Stronger price growth is a boon for homeowners looking to build additional equity, but it continues to be an obstacle for current buyers looking to close before rates rise."