My Mortgage Blog

Mortgage Market Update 07-30-20012

July 30th, 2012 10:10 AM by Nick Rapplean

We have a bunch of numbers this past week that, taken together, dont make a great deal of sense.

First, there are the figures for New Home Sales, which manyincluding myselfhad expected a bit of convincing growth from. No such luck. Total sales in June declined by a startling 8.4%. But if you add in other data, things get confusing. Mays sales were revised up by 13,000; and Aprils sales were revised up by 15,000. These are big revisions.

The fact is, the collection and crunching of new home sales data have never qualified as good mathematics. The numbers are very often revised, and not be small amounts. And they result from somewhat unreliable estimates, rather than by a consistently defined sampling from month to month.

To add to the carnage, there was an estimated 60% decline in the number of new home sales in the northeast. Part, but not all of this can be attributed to very bad weather. But part will very likely be attributed eventually to very poor number-crunching.

So we wont rely on this months new home sales dataassuming weve relied on any months new home sales data.

That said, we must confess that the economic ocean in which we are currently swimming is not the friendliest place weve ever experienced. Its the sort of water in which perverse tides take back most of our forward motion, leaving us paddling in place exhausted.

The Pending Home Sale Indexdesigned by the National Association of Realtors to tell us what the near-term future for existing home sales looks like, rather than concentrating on where weve already beengave us a grumpy 1.4% decline in June, meaning that 1.4% fewer new purchase contracts had been signed in June than in May. Or maybeto be more accuratenot meaning a great deal at all.

You see, new purchases easily fall out of escrow these days, especially if they involve short sales. At the same time, a buyer may have two contracts simultaneously on two different homes, since he lacks confidence that they will go through to a closing. This is all a leftover from the worst days of qualification tightening, foreclosing and short selling that seems, we hope, to be gradually passing. It has made the Pending Home Sale Index far less reliable than it used to be. (Compare, for example, pending home sales and the number of nearly simultaneous mortgage applications over the past year or two. They seem to come from different universes.)

Lastly, and certainly as dismaying as any of these numbers, is the Gross Domestic Product figure. The first estimate of 2nd quarter growth came in at a dismal 1.5%. This really doesnt count as a recovery number; it is, truly, a paddling-to-stay-in-the-same-place kind of number. And predictable, economic analysts responded to it by saying that the recovery is slowing.

What is confusing for the likes of this observer, though, is that the real estate recovery seems to be sending its roots deeper and deeper into the soil. The numbers, particularly in California (where a jobs recovery is swelling the populations of the Silicon Valley), are compelling.

And what shall we make of this, a national indicator? The number of new claims for unemployment insurance seems to have fallen from 388,000 to 353,000 in the week before last. Even better, the 4-week moving average was down by 20,000. That sort of thing could breed a good July employment report (published August 3). Intriguing contradictions.

Posted in:General

Posted by Nick Rapplean on July 30th, 2012 10:10 AM

My Mortgage Blog

Mortgage Market Update 07-30-20012

Recent Posts:

Archives:

Categories:

My Favorite Blogs:

Sites That Link to This Blog: