Bellevue Real Estate, Mortgage, and Economy 11/8/10
Posted on 08 November 2010
Here is the Bellevue Real Estate Report for November 8, 2010.
Last Friday the National Association of Realtors (NAR) reported that their gauge of Pending Home Sales dropped 1.8% in September from an upwardly revised August reading. The pending sales index reflects signed contracts. Since it typically takes a few months to get from contract to closing, this reading forecasts actual existing home sales toward the end of this year.
The NAR’s chief economist made an insightful point: “We’ve added 30 million people to the U.S. population over the past ten years, but sales are where they were in 2000, so there appears to be a sizable pent-up demand that could come to the market once the economy gathers momentum.” Other analysts commented that “decade low mortgage rates and near record highs in affordability should help stabilize sales in the near term, however it will take meaningful improvement in the labor market to drive housing going forward.”
UP WE GO AGAIN… Stock market investors pushed the Dow UP to its highest level since September 8, 2008, which was just before the economy headed south. In fact, all the major market indexes registered two year highs last week, as Wall Street reacted to the midterm elections on Tuesday, the Federal Reserve’s announcement on Wednesday, and the October Jobs report on Friday. For the week, the Dow was UP 2.9%, to 11444.08; the S&P 500 ended UP 3.6%, at 1225.85; and the Nasdaq was UP 2.9%, to 2578.98.
The week began on a bit of a sour note, with September Personal Income down 0.1% and Personal Spending up only 0.2%, both missing expectations. But consumer inflation was up just 0.1% for the month and up 1.4% over a year ago. Core inflation, excluding food and energy, was up only 1.2% from a year ago, well within Fed guidelines. October ISM Manufacturing and ISM Services indexes were both UP, beating expectations and showing business growth.
Tuesday’s election results were expected, with Republicans taking the House and Democrats keeping control of the Senate despite losing six seats to Republicans. Wednesday the Fed announced their second round of quantitative easing (QE 2). The Fed will be purchasing $600 billion in long-term Treasury securities from now till the middle of next year to help further stimulate the economy. The big upside surprise was Friday’s employment report. 151,000 new jobs were created in October, versus the mere 60,000 expected. The private payroll gain was 159,000, which puts the private sector up by more than 100,000 jobs for each of the last four months. Unfortunately, the workforce increase kept the unemployment rate at 9.6%.
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