MetroIntelligence Economic Update by P. DUFFY
Pending home sales rose another 16.6 percent in June, up 6.3 percent year-on-year
The Pending Home Sales Index rose 16.6% to 116.1 in June. Year-over-year, contract signings rose 6.3%. In light of the apparent housing market turnaround, NAR has raised its forecast for the market. For all of 2020, existing-home sales are expected to decline by only 3%, with sales ramping up to 5.6 million by the fourth quarter. New home sales are projected to rise by 3%.
Purchase loans fall 2 percent from previous week, but up 21 percent year-on-year
The Market Composite Index decreased 0.8 percent on a seasonally adjusted basis from one week earlier, with purchase loans falling 2 percent (but up 21 percent year-on-year) and refinance activity falling 0.4 percent (but up 121 percent year-on-year). Still, given a larger drop in purchase application volume for FHA, VA, and USDA loans and higher loan amounts, prospective first-time buyers are potentially being impacted more by the rising economic stress caused by the resurgence in COVID-19 cases, as well as the uncertainty on how the next round of government support will take shape. The average contract interest rate for 30-year fixed-rate mortgages remained unchanged at 3.20 percent.
Homeownership rate rises to highest level in almost 12 years
The homeownership rate of 67.9 percent was 3.8 percentage points higher than the rate in the second quarter 2019 (64.1 percent) and 2.6 percentage points higher than the rate in the first quarter 2020 (65.3 percent). It’s also the highest rate since the third quarter of 2008.
Case Shiller: May annual home price gain slips to 4.5%
Paired home prices reported a 4.5 percent annual gain in May, down from 4.6 percent in the previous month. After seasonal adjustment, the National Index posted a month-over-month increase of 0.1 percent.
July Consumer Confidence Index falls back 5.7 points to 92.6
Consumer Confidence declined in July following a large gain in June, falling 5.7 points to 92.6. The Present Situation Index improved, but the Expectations Index retreated. Large declines were experienced in Michigan, Florida, Texas and California, no doubt a result of the resurgence of COVID-19. Looking ahead, consumers have grown less optimistic about the short-term outlook for the economy and labor market and remain subdued about their financial prospects.