This week marks a turnaround in real esate with reports uniformly showing strength. Job growth and relatively low mortgage rates are making buyers feel optimistic at model homes from coast to coast.
New home sales activity picked up:
Interest rates continue to be favorable. 30-year fixed rates have moved up slightly, but have been holding beneath 4%, which has increased buyer purchasing power, blunting some of the impact from rising home prices.
Loosening mortgage guidelines, relatively low interest rates, and the seasoning out of many mortgage defaults from the financial crisis mean that credit issues are weighing less on sales activity in the housing sector. Affordability however, continues to be a factor, especially as the Fed eyes rate increases later in 2015.
Q1 economic activity was dismal. The Commerce Department revised GDP down -.7%. Note that the first quarters of 2011 and 2014 also witnessed contractions. Consumers and businesses were clearly cautious, but we hesitate to read too much into the quarterly data because we know that the economy is subject to enormous seasonal variation. But it looks like the winter blues are behind us as durable goods orders strongly increased in April. This is good news for factories and workers and indicates some economic momentum.
New home sales activity picked up:
- Sales increased 6.8% in April
- Sales for the first 4 months of 2015 increased 23.7% over the same period in 2014
- Supply is down relative to sales – now at 4.8%
- Median sales price is up 8.3% year on year due to decreased supply
- Homes going under contract were up 3.4% in April; March results were revised up by 1.2%
- This indicator has increased every month in 2015 to the highest level since May, 2006
- The year-on-year gain is a very healthy 14%
Interest rates continue to be favorable. 30-year fixed rates have moved up slightly, but have been holding beneath 4%, which has increased buyer purchasing power, blunting some of the impact from rising home prices.
Loosening mortgage guidelines, relatively low interest rates, and the seasoning out of many mortgage defaults from the financial crisis mean that credit issues are weighing less on sales activity in the housing sector. Affordability however, continues to be a factor, especially as the Fed eyes rate increases later in 2015.
Q1 economic activity was dismal. The Commerce Department revised GDP down -.7%. Note that the first quarters of 2011 and 2014 also witnessed contractions. Consumers and businesses were clearly cautious, but we hesitate to read too much into the quarterly data because we know that the economy is subject to enormous seasonal variation. But it looks like the winter blues are behind us as durable goods orders strongly increased in April. This is good news for factories and workers and indicates some economic momentum.