Bellevue Real Estate, Mortgage, and Economy 8/9/10
Posted on 09 August 2010
Here is the Bellevue Real Estate Report for August 9, 2010.
Tuesday we had Pending Homes Sales, which after dropping 30% in May, fell just 2.6% in June, with the push to qualify for the tax credit no longer a factor. These figures indicate there should be a drop in Existing Home Sales come July and maybe again in August. But some analysts feel that after this post-tax-credit dip, housing will come back solidly, just like auto sales did after “cash for clunkers” expired last year.
The report did include encouraging words on home pricing from the National Association of Realtors chief economist: “…since home prices have come down to fundamentally justifiable levels, there isn’t likely to be any meaningful change to national home values. Some local markets continue to show strengthening prices.” We all know you can’t time a bottom, but it looks like serious buyers might want to act now.
The Mortgage Bankers Association reported an increase in demand for purchase loans for the third week in a row. Its Weekly Mortgage Applications Survey had purchase loan demand UP 1.5% for the week ended July 30.
SUMMER RALLY LITE… Coming off July’s hot month for stocks, August began with a 208-point gain in the Dow. But before this summer rally could really take off, investor optimism cooled, sending market indexes up and down by small amounts for the rest of the week. Friday’s July jobs report came in below expectations, which drove stocks lower, though only by 21 points. All major indexes ended UP for the week, so it’s still a rally, if not a particularly strong one. For the week, the Dow ended UP 1.8%, to 10653.56; the S&P 500 was UP 1.8%, to 1121.64; and the Nasdaq was UP 1.5%, to 2288.47.
What made investors cautious included the July ISM Manufacturing Index, which fell from June’s 56.2 reading to 55.5. Wall Street ignored the fact this is still a strong number, above the 50 level that signals expansion. Then Personal Income and Consumption came in unchanged for June. But income after taxes is UP 3.2% annually the last six months and “real” (inflation-adjusted) consumer spending was UP 0.1% for June and UP 1.6% annually the last six months. PCE consumer inflation dropped for the third month in a row, but core PCE, excluding food and energy, is up 1.1% the last six months, calming fears of deflation.
Wednesday, July ISM Services climbed to 54.3 from 53.8 in June, showing continued expansion in the non-manufacturing arena. Now for the July jobs report. Private sector payrolls grew less than expected and government payrolls declined more than expected. But private payrolls are up 90,000 per month since the beginning of the year. In addition, average weekly earnings are UP 0.5% for July and UP 3.0% in the last year, which should continue to drive up consumption and the economy. The unemployment rate held at 9.5%.
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