I admit to being concerned at the moment with the economy. Numbers are down, the mood in the markets is rather sour, and we are watching with great concern as the countries in the European Union do a careful dance around Greece's severe financial problems. (To oversimplify, the crux of the matter currently is that Greece has to come up with about $34 billion to pay off maturing bonds in the spring. It doesn't have the money to do so.)

Keep in mind: In times of confusion, people need your wisdom and your experience more than ever.

 

Please find this week’s economic update attached.  It is also copied below in case you are not able to open the attachment.

 

Conforming 30 year fixed rates are currently 4.875% with  1/8th of one point (primary residence with 20% down on a single family dwelling, excellent credit, etc.).

 

The best jumbo rates are 4.00% with no points for 5/1 ARMS for loan amounts up to $850,000 (Primary residence, SFD, 70% loan to value, Nevada, etc.).

 

March 3, 2010

 

KEY INDICATORS [3/2/10 close]

 

Gold $1133.70/ounce [up]

Crude Oil (Brent) $78.62/brl [up]

U.S. Dollar to…

    Euro .7364 [down]

    Japanese Yen 88.99 [down]

6-mo Treasury Bill Yield 0.17%

10-yr Treasury Note Yield 3.63%

[6-mo down 2 bps, 10-yr down 6 bps]

11th Dist Cost of Funds 1.786%[-]

30-yr Fixed-rate Mortgage 5.36%

15-yr Fixed-rate Mortgage 4.76%

1-yr ARM 4.55%

[HSH averages rates: 30-yr

down 6 bps,15-yr down 11 bps; 1-yr ARM down 22 bps]

 

Mortgage Bankers Association Mortgage Applications Index

week ending 2/19

  Overall

    549.5 (down 8.5%; down 2.1%

the week prior)

  Purchase Money Loans

    196.8 (down 7.3%; down 4%

            the week prior)

  Refinancing Loans

    2605.3 (down 8.9%; down 1.2%

the week prior)

 

Jobless Claims 2/20

    496,000 – prior week 473,000 – continuing claims rose to 4.617 m

 

New-Home Sales Jan

    Down 11% - median home price down by 2%

 

Existing Home Sales Jan

    Down 7% - median home price unchanged year-to-year – flat sales meant higher inventory (7.8 mos.)

 

Weekly Commentary

 

“Notwithstanding the recent weak data, affordability, support in the first part of this year from policy, and a strengthening job market in the second half of this year will help put sales back on an upward trajectory. House prices will stabilize toward the end of the year. By that time, the foreclosure wave will begin to abate and the market will have cleared out much of the excess inventory that is currently weighing it down.” [Celia Chen, Moody’s Economy.com]

 

The numbers have not been good lately. New home sales were down 9.5% in November, 3.9% in December, and 11.2% in January. Remarkably, January sales were down 35.1% in the northeast; perhaps we can boldly blame that on the weather (in part at least), but more than weather is eroding home sales figures.

 

Existing home sales fell by 16.2% in December and 7.2% in January. The effect of weather on existing home sales was apparently not as strong as it was on new homes, with a still-sizable 10.9% decline in the northeast.

 

Construction spending, meanwhile, fell by 0.6% in January, though construction of single-family residences was up moderately. Consumer confidence, at the same time, seems to have soured further, taking a 1.5 point plunge in January. And new unemployment insurance claims threw salt in the wounds already inflicted by the weak economic indicators by rising precisely when most analysts expected it to fall.

 

Though interest rates have held up well, the number of refinancing loans applied for in the week ending Feb. 19 fell by nearly 9%. The number of applications for purchase money loans declined by 7.3%. Celia Chen offered the following partial explanation: “Buyers are taking a breather from the first-time homebuyer tax credit; this is behind some of the drop-off in sales. According to the National Association of Realtors® survey, first-time homebuyers comprise only 40% of sales in January, the lowest share since July. The share had reached 51% in November.”

 

The first-time buyer, presumably, will return in solid numbers as the deadline for the $8,000 first-time homebuyer tax credit approaches. On April 30, the tax credit will no longer be available—except to those whose deals are already secured by signed purchase contracts. Surely, we will see a rising number of motivated buyers, especially first-timers, between now and April 30, therefore.