This past Wednesday the Mortgage Bankers Association issued its weekly report on mortgage applications. As can be seen in the first table in the above graphic, all of the MBA’s metrics were down for the week ending 5/17/13, and the numbers follow equally large declines for the previous week. However, the report released on Thursday by the U.S. Census Bureau showed an increase in home sales of 454 K for the month of April.
NEW RESIDENTIAL SALES IN APRIL 2013
Sales of new single-family houses in April 2013 were at a seasonally adjusted annual rate of 454,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 2.3 percent (±12.8%)* above the revised March rate of 444,000 and is 29.0 percent (±20.7%) above the April 2012 estimate of 352,000.
The median sales price of new houses sold in April 2013 was $271,600; the average sales price was $330,800. The seasonally adjusted estimate of new houses for sale at the end of April was 156,000. This represents a supply of 4.1 months at the current sales rate.
Also interesting was the Federal Housing and Finance Agency’s report of a 1.9 percent QoQ increase in house prices for the first quarter of 2013. On a MoM basis (February to March), the index saw a 1.3 percent increase, and a 7.2 percent increase on a YoY basis.
Washington, DC – Upward momentum in U.S. house prices remained strong in the first quarter of this year, rising 1.9 percent from the previous quarter, according to the Federal Housing Finance Agency (FHFA) House Price Index (HPI). This is the seventh consecutive quarterly price rise in the purchase-only, seasonally adjusted index.
“The housing market has stabilized in many areas and homebuilding activity has strengthened in recent quarters,” said FHFA Principal Economist Andrew Leventis. “That said, labor market weakness and still-elevated foreclosure pipelines remain hindrances to a more robust recovery.”
The FHFA data in the above table would certainly seem to indicate that the housing market is on the mend — BUT, there are still many obstacles that must be overcome for the economy to truly improve.
For starters, the unemployment and the underemployment rates need to come down. For quite some time now the “official” and unofficial (i.e. the U-6) measurements for unemployment have remained uncomfortably high. The second part of the equation is that consumers need to start spending again; but, if people are out of work, it becomes rather difficult, rather quickly, for them to “spend.”
Though there are indications that the economy is improving, much of that improvement appears (at least to this author) to be virtual (i.e. not really real). The U.S. stock market has been on a tear, thanks in large part to the actions of the FED, and the housing market has been showing signs of life. However, as I mentioned in a previous article, much of the activity in the housing market has been due to large investor activity. In fact, as I sit here to type this article, I can see five young lads (employed by a “flipper”) working to renovate the house of a former neighbor in preparation for an upcoming sale. Our former neighbor is an elderly woman in her early nineties who was forced to move to an assisted living community after suffering a stroke. She was unable to sell her home and, ultimately, resorted to selling it to an investor who was interested in “flipping” the house.
Another neighbor, who owns an appliance store, resorted to flipping houses when his business softened during the housing market collapse. It is my understanding, however, that many flippers are now becoming landlords because of their inability to sell a house once the renovations are completed. Many banks are still hesitant to lend, and many would-be home buyers are not creditworthy. This is a situation that could end very badly for many people, and for the economy overall.
So, the market gives the appearance that it is healing (and, to some degree, maybe it is — albeit quite slowly, and certainly not strongly enough to sound an all clear signal), but, unfortunately, much of it may only be an illusion.
