(08/27/2010) Erate Exclusive - Mortgage interest rates for 30-year, conforming,
fixed-rate mortgages (FRMs), for the week ending August 26, averaged 4.36
percent, another record low for Freddie Mac's weekly Primary Mortgage
Market Survey, which began in 1971.
Yet, in July, existing or resale home sales came in at the lowest level
they've been since the National Association of Realtors began tracking them in
1999. Resales of single-family homes, which account for the bulk of resales,
are at the lowest level since May of 1995.
July's new home sales eclipsed an even older record -- for the
month, the annualized new home sales rate of 276,000 units was the lowest
since the government began keeping track in 1963, according to Commerce Department numbers.
For many housing consumers, especially those in areas hardest hit by
economic turmoil, mortgage rates at 40 year lows don't amount to a hill of
beans when unemployment rates are in double digits.
"Concerns about business conditions and the labor market are casting a
dark cloud over consumers that is not likely to lift until the job market
improves," said Lynn Franco, director of the Conference Board Consumer
Research Center which produces the Consumer Confidence Index a consumer
assessment of economic conditions. The index declined sharply in June and
retreated further in July to 50.4 (1985=100), down from 54.3 in June.
"Consumer confidence faded further in July as consumers
continue to grow increasingly more pessimistic about the short-term outlook.
Concerns about business conditions and the labor market are casting a dark
cloud over consumers that is not likely to lift until the job market
improves," said Lynn Franco, director of the Conference Board Consumer Research Center.
Existing-home sales -- completed transactions that include single-family,
townhomes, condominiums and co-ops are 25.5 percent below levels in July
2009 and new home sales are a whopping 32.4 percent less than they were a
year ago, according to NAR and the Commerce Department.
Along with the weak job market, the housing market suffered the April 30
expiration of the $8,000 buyer's federal tax credit.
"Much of the slowdown in sales, however, was expected due to the recently
expired homebuyer tax programs, which pulled through future home purchases
into the first half of the year. For instance, average existing home sales
over the first seven months of 2010 were nearly 8 percent higher than over
the same period a year ago," said Amy Crews Cutts, deputy chief economist at
Freddie Mac.
There is one positive housing market note. Home prices appear to be
increasing.
"Moreover, house prices still appear to be stabilizing. Nationally, house
prices rose 0.9 percent on a seasonally-adjusted basis during the second
quarter of this year this year after 11 consecutive quarterly declines,
according to the Federal Housing Finance Agency's purchase only index. Eight
of the nine census regions experienced positive gains, compared to none in
the first quarter," Cutts said.
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