STATE OF AFFAIRS...THE HOUSING MARKET

REAL ESTATE TRENDS

After a slowdown during the spring, housing seemed to be making a comeback this summer. New Home Sales surged in August to an annualized rate of 504,000 units, up 18 percent over July. This was the first gain since May and the highest level since 2008. And the National Association of Home Builders reported that its Housing Market Index rose by four points in September to 59, its highest level since November 2005. The index measures home builder confidence in the newly built single home sector of the market, so this looked like a good sign for the housing industry. But other reports have disappointed, and economists have been worried about the erratic performance of the housing market. Housing Starts, measuring new residential construction, dropped 14.4 percent from July to August. Building Permits, which are a sign of future construction, declined nearly 6 percent, while Existing Home Sales fell nearly 2 percent (more about Existing Home Sales below). In other important news this fall, the Fed announced further tapering of its big Bond-purchase program. The Fed will now purchase $5 billion in Mortgage Bonds and $10 billion in Treasury securities each month, well below the $85 billion a month when the program first began. The Fed is expected to fully wind down the program at the end of October, and this is significant because home loan rates are tied to the performance of Mortgage Bonds. The question remains: Will the end of the program be a trick or a treat for Mortgage Bonds and home loan rates? Interested in becoming a Califorina Real Estate Agent? Click logo for more information. While the latest Existing Home Sales report showed signs of slippage, it could be great news for house hunters. What is the Existing Home Sales report? Reported monthly by the National Association of REALTORS®(NAR), the Existing Home Sales report is a measure of the selling rate of pre-owned single-family homes, which account for roughly 84 percent of all houses sold. What's happened recently? August Existing Home Sales declined by nearly 2 percent from July to an annual rate of 5.05 million units. Most economists were expecting sales to increase to 5.2 million units from July's reading of 5.14 million. This was the first decline in five months. What's the bottom line? According to NAR's Chief Economist Lawrence Yun, the decline was due in large part to the withdrawal of all-cash sales from investors. The silver lining is that first-time buyers now have a better chance of purchasing a home due to the corresponding reduction of bidding wars and supply constraints.