“I’m on my way…just set me free…home sweet home.” The lyrics from Motley Crue’s Home Sweet Home sound like a tune the housing market could be singing, as the news shows that the housing sector continues to recover–for the most part.
Existing Home Sales rose by 6.5 percent in July from June and are up 17.2 percent since this time last year. In addition, the Federal Housing Finance Agency reported that home prices rose 7.7 percent in the year ended in June. From May to June, prices rose by 0.7 percent. However, New Home Sales dropped 13.4 percent in July from June, below expectations, and June’s numbers were also revised lower.
Also of note last week, the minutes from the Fed’s July meeting of the Federal Open Market Committee were released–and they offered no clarity as to when the Fed will begin tapering its Bond purchases. Remember that the Fed has been buying $85 billion of Bonds a month to help stimulate the economy and housing market. This includes Mortgage Bonds, to which home loan rates are tied, and these purchases have helped home loan rates remain attractive.
The Fed has said the rate of its purchases will continue to depend on economic data, and could be increased or decreased accordingly. Jobs data is one area the Fed will be watching especially closely. And last week, there was a jump in weekly Initial Jobless Claims, which rose by 13,000 to 336,000. Though this was in line with estimates and the figure remains near post-recession lows, it is the highest level in a month. However, the 4-week average, which evens out seasonal abnormalities, fell to 330,500, near 6-year lows.
What does this mean for home loan rates? Economic data in the coming weeks will be a key factor in whether the Fed begins tapering its Bond purchases as early as its meeting in mid-September, or if it waits until later in the year or even 2014. This timing could pay a big role in the direction Bonds and home loan rates move in the months ahead.
The bottom line is that home loan rates remain attractive compared to historical levels and now remains a great time to consider a home purchase or refinance.
Seth Gallaher, Owner
American Liberty Mortgage, inc.