Here is an article I recently read about the national market and thought I would pass it on. Enjoy?!
Housing Market Key Indicator Alert - 10/08/2007
By:
Hanley Wood
Bailout Passed, Markets Stay Volatile
Data over the past week did not paint a positive picture for housing or the economy overall. Conditions in both the new and existing home markets continued to deteriorate in August. New home sales fell to its slowest annual pace in over 17 years. Slower sales continued to pressure median prices in both new and existing homes lower as well. More jobs were lost in September as the employment report for the past month showed the economy shed another 159,000 jobs. Final estimates for GDP growth were also revised lower to 2.8% growth while the outlook for economic growth for the rest of the year is grim.
Approval of the government’s $700 billion bail-out package was not enough to restore confidence in global equity markets. The continuation of the banking crisis in Europe sparked a sell-off on Wall St. on Monday that saw the Dow Jones Industrial Average (DJIA) drop as much as 800 points to record its single-largest intraday point loss ever. However, the DJIA did recover before the end of trading but only to close at its lowest levels since October 26, 2004. Skepticism over the effects of the bail-out package along with fears that the credit crunch may spark a global recession has left investors all over the world uneasy.
The Economy
The U.S. economy lost another 159,000 jobs in September which is the largest decline since March 2003. The economy has posted job losses for every month so far this year as an estimated 760,000 jobs have been shed since the beginning of the year. Non-seasonally adjusted total non-farm employment in September was 599,000 jobs lower than in September 2007, a sizable drop from last month's year-over-year revised loss of 293,000 and extremely weak compared to the 1,169,000 jobs created over the twelve month period ending in September 2007. The unemployment rate in September held steady at 6.1%.
Final estimates for second quarter gross domestic product showed the economy growing at a weaker pace than previously estimated. Although growth was slower than preliminary estimates, the economy still expanded at a surprising rate of 2.8% for the second quarter. Most of the growth can be attributed to the effects of the government's economic stimulus package in the second quarter along with increased exports and lower imports due to the weaker U.S. dollar. Growth is expected to weaken noticeably in the final half of 2008.
Consumer confidence increased for the third straight month in September. The consumer confidence index was at its lowest levels since February 1992 in June before rebounding in the last three months. The index increased to 59.8 in September from 58.5 in August which represents a 1.3 point gain from the previous month. The consumer confidence index is now back to its highest levels since April.
Housing Market
Both new and existing home sales posted declines in August. New home sales in August dropped to their lowest levels since January 1991. Sales fell 11.5% in August to a seasonally-adjusted 460,000 homes, down from a revised July figure of 520,000. Sales for the previous three months, however, were revised higher by 3,000 units. The number of new homes for sale continued to decline as builders continue to scale back production. New home inventory declined to 405,000 which is the lowest it has been since August 2004. Weaker sales pressured new home prices in August with median new home prices experiencing its first monthly decline since May. Median new home prices now stand at $221,900 which is the lowest median price recorded since September 2004.
Annualized sales of total existing homes in August declined 2.2% from July levels to 4.91 million units. Sales of existing homes are down 10.7% from the 5.50 million units in August 2007. Median existing home prices in August declined to $203,100 from $210,300 in July. This is the second straight month that existing home prices have declined. However, inventory figures improved from last month as the number of existing homes for sale experienced its first monthly decline since May. Existing home inventory decreased 7.0% to 4.255 million units.
National average mortgage rates increased to 6.10% in the latest Primary Mortgage Market Survey released weekly by Freddie Mac on October 2nd. This is the second straight week that rates have increased. In the week ending September 26th, the MBA’s seasonally-adjusted Purchase Index fell to 304.8 from 342.2 in the previous week. This is the lowest the purchase index has been since February 2002. The latest figure reflects a 10.93 percent drop from last week and a 25.91 percent drop from the same period last year.