Housing Possibly on the Rebounds

Housing: The Best Indicators Of A Rebound Has the home market hit bottom? That is the key question for the U.S. economy in 2007. According to some housing indicators, there is some light at the end of the tunnel for homebuilders, but that cautious optimism comes with caveats. To get the most reliable signal that the housing recession is over, keep an eye on the average monthly supply of new homes for sale and the average mortgage rate each quarter. Analysis by Goldman Sachs U.S. economist Edward McKelvey of eight pieces of housing data widely used as leading indicators of the housing cycle showed those two series are better than quarterly averages of new and existing home sales, housing starts, mortgage applications, housing affordability, and homebuilder confidence.In housing market upturns, all eight indicators do a good job of forecasting market peaks by two to five quarters. However, "a contraction is swifter and more cathartic," says McKelvey. That places a premium on indicators that give a more consistent signal.The monthly supply of homes--a ratio of new home inventories and home sales--has peaked one quarter before residential investment bottomed every time since 1961. Mortgage rates are nearly as consistent over that same period and have a similar lead time.The supply of new homes for sale in the fourth quarter should decline after a November reading of 6.3 months, from 6.7 in October and the recent peak of 7.2 months last July. Mortgage rates also fell in both the third and fourth quarters of 2006.But homebuilders are not out of the woods yet. The Census Bureau doesn't track cancellations, which stood around 7% of total sales contracts in 2006, vs. less than 4% in 2005, according to the National Association of Home Builders. As a result, reported sales are too high, inventories are too low, and changes in the monthly supply may be skewed. Investors also expect the Federal Reserve to cut interest rates in 2007. If the Fed raises rates, or even stands pat, mortgage rates are likely to rise, putting more stress on builders

Mortgage Rates Inch Up

Mortgage rates up for first time in 7 weeks

10:18 12/14/2006, CNNMoney.com
Mortgage rates turned slightly higher from mixed economic signals after reaching near their lowest level of the year last week and rallying from a decline for six weeks in a row, a survey said Thursday.

Rates to (Possibly) Stay Put

This news release was sent from the Associated Press on the 'hint' (its always a hint) that the Fed would not be lowering their short term rates. Predictions were that they would either maintain current rates or possible reduce them next month. Looks like we're looking at steady as she goes for the moment...but don't hold your breath.

AP - Even with the economy in a slowdown mode, Federal Reserve Chairman Ben Bernanke made clear Tuesday that policymakers want to see inflation continue to recede, suggesting the Fed probably won't be cutting interest rates any time soon.

Carbon Monoxide Mandate

Carbon Monoxide Required in 2007

Illinois state legislation has just approved this mandate requiring Carbon Monoxide detectors in all Illinois residences beginning January 1. That goes for rental units as well.

Here is the IAR blurb on the topic with a few links as well. Tell your clients to get them in now (if they are not already installed).

Beginning Jan. 1, 2007, Illinois law (Public Act 94-741) mandates that every dwelling unit in Illinois must be equipped with at least one carbon monoxide alarm within 15 feet of every room used for sleeping purposes. A dwelling unit would include a single-family residence as well as each living unit of a multiple-family residence and each living unit in a mixed use building. Here are some resources developed via the IAR Advocacy Initiative to help you communicate this information to your clients:

Big Mortgage Rate Decline Last Night

CNN.com just published this market report on the 30 year rates which are now at 6.18% BELOW last years average (6.28%).

Long term rates hit lowest level since first of the year; 30 year fixed hits 6.18%.

November 22 2006: 12:09 PM EST

NEW YORK (CNNMoney.com) -- Mortgage rates continued its downward slide reaching its lowest since the first of the year on slower growth in the market, according to a survey released Wednesday.
The 30-year fixed-rate mortgage averaged 6.18 percent for the week ending Nov. 22, down from 6.24 percent, according to Freddie Mac's (Charts) Primary Mortgage Market Survey. A year ago, the 30-year averaged 6.28 percent

The 15-year fixed-rate mortgage averaged 5.91 percent this week, down from 5.94 percent last week. A year ago, it averaged 5.81 percent. This is the lowest the 15-year has been since the week ending March 2, 2006 when it averaged 5.89 percent.
Rates for five-year adjustable-rate mortgages (ARMs) came in at 5.99 percent this week, down from 6.04 percent last week. A year ago, they averaged 5.75 percent.
One-year ARMs averaged 5.49 percent, down from 5.54 percent last week. A year ago, the one-year ARM averaged 5.14 percent.

"Housing starts in October were down more than expected, which the market saw as an indication housing would be a bigger drag on the economy than had previously been thought," said Frank Nothaft, Freddie Mac vice president and chief economist, in a statement. "Slower growth usually means less inflation and less inflation means lower interest rates. Hence, the drop in mortgage rates this week."