3 Numbers That Point to a Housing Recovery

There’s been an avalanche of economic data pouring in the past week that provides more clarity about the U.S. housing market, which seems to be improving somewhat as 2012 beckons. Here are some of the key stats:

Foreclosures down since 2010. Unemployment down.

Federal Reserve provides a mixed message for housing.

First, the Beige report characterizes the real estate market as "sluggish," but does note that, thanks to continuing low mortgage rates, refinancing activity is growing at a rapid pace (the average 30-year fixed-rate home mortgage sits at 4.16%, according to the BankingMyWay Weekly Mortgage Rate tracker – still a low rate in historical terms).
Going forward, the data should take a backseat as Christmas and the New Year grow closer. For the time being though, a quick tabulation of this week’s pluses

and minuses shows that the economy is getting a bit healthier, and the housing market – for now, at least – appears to be following suit.

Last Week: Stocks erased most of their earlier gains to finish near the flatline in thin trading Friday, as investors booked profits ahead of the weekend following a robust rally all week. Still, all three major averages posted an impressive gain of over 7 percent for the week.

This week is fairly light in terms of the number of economic releases scheduled for release. There are only three monthly or quarterly reports on the agenda that have the potential to influence mortgage rates and none of them are considered to be highly important. That means that the stock markets could be the focal point multiple days, especially the middle part of the week.On Wednesday, the Federal Reserve came out with its Beige Book, which measures economic processes in the U.S. from early October to mid-November.

What’s Ahead: Overall, Monday will probably bring us the most movement in rates as the markets digest weekend news. I don't believe we will see as much volatility in the stock markets as we saw last week though. Interestingly, despite the sizable rally in stocks last week, mortgage rates didn’t take much of a hit. Even though mortgage bonds showed resilience last week, I still think that the upward risk outweighs the likelihood of seeing noticeable improvements in rates in the immediate future.

 

The U.S. housing market depends heavily on the employment market. When unemployment is low, more money is flowing through the economy and consumers are more likely to buy and renovate their homes. Conversely, when the jobless rate is high, consumers grow anxious and put off any big housing decisions, and lenders are more inclined to snap their purses shut until the sun comes out again.

This month’s number, released this morning by the U.S. Labor Department, showed the U.S. unemployment rate officially falling to 8.6%, as the private sector added 120,000 jobs to the U.S. economy.On Thursday, Lender Processing Services released its monthly look at the U.S. foreclosure landscape, and that look reveals a healthier market, at least on a year-to-year basis. LPS says foreclosures are now down 30% from their January 2010 peak, but adds that that could be just a lull in the action. It notes that "foreclosures in process" are still high, with foreclosures comprising 4.29% of all U.S. mortgages. 
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