Jul 11 2020 38376 1

Dated: July 11 2020

Views: 82

HOUSING NEWS                                                                                    JULY 11, 2020

Contracts to Buy Homes Skyrocket in May

The National Association of Realtors® (NAR) monthly Pending Home Sales Index has tracked the number of signed contracts to buy homes since January 2001. In May, the index set an all-time record for month-over-month gains, with a 44.3 percent increase. After the improvement, pending sales are now just 5.1 percent lower than they were last year at the same time.

Lawrence Yun, NAR's chief economist, says the rebound is a good sign for the housing market and the overall economy. "This has been a spectacular recovery for contract signings, and goes to show the resiliency of American consumers and their Evergreen desire for homeownership," Yun said. "This bounce back also speaks to how the housing sector could lead the way for a broader economic recovery."
Every region of the country saw double-digit increases, led by a 56.2 percent gain in the West. Yun says the recovery has significantly improved the outlook for home sales this year. In fact, the NAR now expects total sales to suffer a less than 10 percent decline, despite the typical spring sales season being disrupted by the coronavirus pandemic.


Home Prices Remain Stable

Naturally, home prices are very important to potential home buyers and sellers. Before mortgage rates, inventory, time on market, or any other measure, buyers and sellers want to know where prices are and where they're headed. If you're selling or buying a house, you want to get the best price.
That's why the S&P Case-Shiller Indices are closely followed. Considered the leading measure of U.S. home prices, the index has been keeping records for more than 27 years. According to the most recent release, prices remain steady, with small increases seen both month-over-month and annually. Craig J. Lazzara, managing director and global head of index investment strategy at S&P, says that home values have been solid, despite the economic turmoil caused by the coronavirus.
"April's housing price data continue to be remarkably stable," Lazzara said. "The National Composite Index rose by 4.7 percent in April 2020, with comparable growth in the 10- and 20-City Composites (up 3.4 percent and 4 percent, respectively). In all three cases, April's year-over-year gains were ahead of March's, continuing a trend of gently accelerating home prices that began last fall."


Mortgage Rates Fall to Another Record Low

According to the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey, average mortgage rates fell to another record low last week. But despite favorable rates, demand for mortgage applications dropped 1.8 percent.
Joel Kan, MBA's associate vice president of economic and industry forecasting, said it was the second consecutive week purchase application demand declined. "After two months of strong growth, purchase applications declined for the second week in a row," Kan said. "The weakening in activity is potentially a signal that pent-up demand is starting to wane and that low housing supply is limiting prospective buyers' options."
While demand was down week-over-week, refinance and purchase activity are both still up from last year. In fact, refinance demand is 74 percent higher than it was a year ago, while demand for loans to buy homes is up 15 percent. The MBA's weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications.


Unemployment Rate Falls Again in June

The national unemployment rate fell yet again in June, according to the U.S. Bureau of Labor statistics. It's down to 11.1 percent, which is still high, but a vast improvement from the month earlier. It's also a sign that the economy is returning to normal as quarantine orders are slowly lifted.
The industry most responsible for the increase in employment was leisure and hospitality, which added a staggering 2.1 million jobs in June. However, employment in these areas still haven't reached their pre-coronavirus levels as they're still operating at partial capacity. Other industries that added a significant amount of jobs included retail trade, education and health services, and manufacturing.
Average hourly earnings fell by 35 cents in June. However, this is mainly due to the fact that many low-earning jobs returned to the economy after having been lost in the previous months. This had caused average hourly earnings to skew upwards in May, even though people with jobs weren't actually getting raises.

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