In a recent report by the Bureau of Labor Statistics, real hourly compensation increased by 2.5 in the second quarter of 2019, on a year-over-year basis. This is the largest increase since the third quarter of 2015. Output increased by 2.6 percent during the same period, and the amount of hours worked increased by 0.9 percent. Productivity went up by 1.8 percent and is calculated by dividing the output by the number of hours worked. You can read the full report here. Not only did workers get paid more, but more jobs were gained, too. In another report, also from the Bureau of Labor Statistics, 130,000 payroll jobs were added in August. The industries that added the most jobs were professional/business services, education/health services, and government work. More here.
According to the Mortgage Bankers Association’s (MBA) Weekly Applications Survey, average mortgage rates fell last week across all loan categories, including 30-year fixed-rate mortgages with both conforming and jumbo balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate loans. The decline means that rates remain near three-year lows. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says falling rates led to a spike in demand for home purchase loans. “Purchase activity was 9 percent higher than last year, continuing the trend of solid year-over-year gains,” Kan said. Buyers may be responding to falling mortgage rates or trying to wrap up their home search before the summer season comes to a close. Whatever their motivation, they definitely returned to the market last week. In fact, the MBA’s Purchase Index shows the number of Americans requesting applications for loans to buy homes was up 5 percent since last week. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.
Much like the weather, the housing market’s hottest season is summer. Buyer activity begins to accelerate in the spring and typically reaches its peak right before the end of the summer. After the kids go back to school, the air begins to cool and so does the market. Fall brings with it fewer buyers, slowing prices, and less competition for available homes. However, newly released data shows the seasonal slowdown began earlier than usual this year. For example, according to a new release from the National Association of Realtor’s® consumer website, home prices fell 1.8 percent between July and August. The timing and size of the decline is a good indication that the summer sales season is coming to an early close. Why did the seasonal slowdown come early this year? One explanation is that – though slowing prices and low mortgage rates are good for affordability – economic uncertainty has potential buyers and sellers feeling cautious. More here.
According to a recent report by the U.S. Census Bureau and the U.S. Bureau of Economic Analysis, the goods and services deficit dropped by $1.5 billion. It’s now at $54.0 billion, and was at $55.5 billion the month before. In July, exports increased by $1.2 billion and imports decreased by $0.4 billion. In other words, the U.S. is selling more goods and buying less compared to the previous month, which caused the drop in the deficit. The services surplus was relatively unchanged. Of the exported goods, the amount of pharmaceutical preparations, capital goods, and automotive vehicles increased, while industrial supplies/materials decreased. Of the imported goods, computers decreased and industrial supplies/materials increased. The increase in pharmaceutical exports (by $1.2 billion) and the decrease in imported computers (by $1.4 billion) were the biggest contributors to the change in deficit. More here.
Recent worries about a potential recession have made news, but according to Freddie Mac’s newest housing market forecast, homebuyers and sellers shouldn’t be too concerned. That’s because there are a number of positive trends that will help keep the real estate market healthy through the fall. For one, the job market continues to show strength. Combined with mortgage rates hovering at three-year lows, things will likely be moving in the right direction. Sam Khater, Freddie Mac’s chief economist, says he expects the fall market to continue to improve. “Despite fears of an economic slowdown, the U.S. labor market stands firm. Specifically, jobless claims are near historic lows. This strong labor market, along with mortgage rates at three-year lows and consumer confidence holding strong, will set the stage for continued improvement in the housing market heading into fall.” In short, despite news of trade tensions and economic uncertainty, the housing market looks steady and poised for continued gains. More here.
When you think about where Americans move once they’ve retired, you probably think of sunny cities in states like Florida or Arizona. However, according to one recent analysis by SmartAsset, there are some less obvious spots that should be added to the list of places that retirees should consider moving to. Cities like Plano, Pittsburgh, Lexington, Louisville, and Fort Wayne were included among the top 10 best places to retire – along with sun-drenched cities like St. Petersburg, Mesa, Chandler, and Las Vegas. How did cities in Pennsylvania, Kentucky, and Indiana make a list of retirement destinations? The main reason is because of their affordability. The analysis looked at things like taxes, health insurance rates, and housing to determine where costs were low so you could stretch your retirement savings the furthest. For example, the number one city named was Henderson, Nevada, where the annual cost of living is just $20,672 and social security and pensions aren’t taxed. More here.
Money is an issue when deciding if it’s a good time to buy a house. Your savings, income, and monthly budget will all play a role in determining what you can afford, but your personal finances aren’t the only variable dictating how much house you can buy. Current market conditions will also be a factor, and whether home prices and mortgage rates are up or down will affect how far your money will go. That’s why recent data from Black Knight Financial is encouraging for anyone considering buying a home. According to their newest Home Price Index, affordability conditions eased in July, marking the first improvement in over a year. One reason why conditions have improved is declining mortgage rates. After spiking at the end of last year, interest rates have steadily declined and are once again hovering just above historic lows. The other end of the affordability equation is home prices. Prices, though still rising, are increasing at a slower rate than before. In fact, Black Knight’s data shows prices are up only 3.8 percent from last year, which marks 13 straight months of home price deceleration. More here.
Living close to a grocery store is a plus. It may not be your top priority when you’re out shopping for a house, but there’s no denying that the convenience of having a good store in the neighborhood is appealing. That’s why a recent analysis from ATTOM Data Solutions looked at zip codes that had at least one Whole Foods, Trader Joe’s, or ALDI location to see which was best for area home values. Though it didn’t definitively prove the stores had a direct impact on prices, it did have some interesting findings. For example, according to the results homes near a Trader Joe’s brought the biggest return on investment when sold. In fact, the average home seller ROI was 51 percent, compared to Whole Foods which saw a 41 percent return and ALDI at 34 percent. On the other hand, when looking at home price appreciation over the past five years, zip codes with an ALDI were the clear winners, having the fastest growing values of the three. Homes in neighborhoods near an ALDI saw an average price appreciation of 42 percent, while home prices near a Whole Foods rose 31 percent and areas with a Trader Joe’s increased […]
According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates fell last week for 30-year fixed-rate mortgages with conforming loan balances. However, the drop failed to move homebuyers, despite having rates almost the lowest they’ve ever been. In fact, demand for loans to buy homes fell from the week before. So why haven’t favorable rates spurred a buying boom? Though low mortgage rates are good for buyers and help ease affordability conditions, they aren’t the only factor affecting how many buyers are active in the market. For example, high home prices and a lack of affordable homes for sale are currently playing a role in limiting sales. The good news is that Demand for purchase loans isn’t as responsive to mortgage rate fluctuations as refinance activity – which is now at a three-year high, and is 180 percent higher than it was last year at the same time. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. Read More
Since the memory of the 2008 recession and housing crash is still fresh, it’s natural that prospective homebuyers and sellers worry when they hear that another recession could be on the way. However, according to a recent Zillow survey of housing experts and economists, that worry may be overblown. Since 1997, states have been in recession 1,039 times during a given month. 81 percent of those times, home price appreciation remained positive, which is roughly the same as during periods of economic growth. In other words, home prices are mostly immune to a recession, with the most recent recession being a very rare exception. Since today’s market suffers from too little inventory rather than too much, there is much less risk than there was during the last recession. While recessions aren’t necessarily good for the housing market, there’s little reason to worry that the next one will cause another home price collapse. Read More