10.2%!
When the number is that large, there is not much else to say in the headline. We could tell you that the number is not all that important, but there is no way to sugarcoat the fact that more than 10% of Americans are out of work. The number is even higher when considering those who are no longer looking for employment. If we are to look for positives, then we can say that the employment report is typically a lagging indicator. In a recovery, the last thing employers do is start hiring workers. There was an uptick in temporary hires. Hiring temps is the first step for many companies before they bring on permanent workers. Also, the pace of monthly layoffs continued to decline and thus we are moving in the right direction, albeit very slowly.
As the markets should not have been too excited by the 3.5% quarterly growth rate, the employment numbers were not unexpected either. The positive growth for the quarter does not show we are permanently out of the recession and the employment numbers do not prove that the recovery is not continuing. It shows that there is still a lot of pain out there and any recovery is going to continue to be slow. Though the markets may not like this slow and tedious recovery, there is some good news to report. Congress extended and expanded the tax credit to include move-up buyers. This move will help the recovery continue. We know now that our economy can’t grow without a healthy real estate market and the government is doing everything it can to make this happen.
The Markets. Rates moved down in the past week. Freddie Mac announced that for the week ending November 5, 30-year fixed rates averaged 4.98%, down from 5.03% the week before. The average for 15-year fixed fell to 4.40%. Adjustables were also down with the average for one-year adjustables falling to 4.47% and five-year adjustables decreasing to 4.35%. A year ago 30-year fixed rates were at 6.20%. “Rates fell back this week pulling interest rates on 30-year fixed loans under 5 percent,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Lower rates should help homeowners decrease their payments and feed the ongoing recovery in the housing market. For instance, the Federal Housing Finance Agency reported that Freddie Mac and Fannie Mae have financed more than 3.5 million refi loans during the first nine months of 2009. Freddie Mac estimates that borrowers who redid their conventional loan during the third quarter reduced their rate by a median of 1.1 percentage points, which will save these borrowers an aggregate of $3 billion in payments over the next 12 months. Further, pending sales for existing homes rose for the eighth straight month in September to the strongest pace since December 2006, while spending on private residential construction jumped 3.9 percent and represented the largest gain since July 2003.” Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.
Current Indices For Adjustable Rate Mortgages
Updated November 6, 2009
| Daily Value | Monthly Value | |
| Nov 5 | October | |
| 6-month Treasury Security | 0.16% | 0.16% |
| 1-year Treasury Security | 0.36% | 0.37% |
| 3-year Treasury Security | 1.44% | 1.46% |
| 5-year Treasury Security | 2.35% | 2.33% |
| 10-year Treasury Security | 3.57% | 3.39% |
| 12-month LIBOR | 1.234% (Oct) | |
| 12-month MTA | 0.544% (Oct) | |
| 11th District Cost of Funds | 1.272% (Sept) | |
| Prime Rate | 3.25% (Dec) |
Congress passed legislation that extends the $8,000 homebuyer tax credit to contracts signed by April 30 and closed by June 30. The credit, which many say has boosted home sales in recent months, was set to expire after Nov. 30. The bill also creates a $6,500 credit for those who buy a home after living in their current house at least five years. That measure would apply to contracts signed by April 30 and closed by June 30. The current credit defines a first-time homebuyer as someone who has not owned a residence within the past three years. The credit would be available only for the purchase of principal residences priced at $800,000 or less. The bill would raise the adjusted gross income cap to $125,000 for single filers and $225,000 for joint filers. The amount of the credit currently begins to phase out for taxpayers whose adjusted gross income is more than $75,000, or $150,000 for joint filers. “It’s gonna put people back to work, the home builders, put people in the real estate business,” said Sen. Chris Dodd, D-Conn. “The kind of jobs that can make a difference. “The extension will cost $10.8 billion over 10 years, according to the Joint Committee on Taxation. Source: CNN/Money
Remodeling costs are down an average of 5 percent to 10 percent nationwide with some areas down 20 percent, the remodeling industry reports. In the 12 months that ended in March 2009, the most recent data available, $118.2 billion was spent on home-improvement projects, down from $146 billion in the 12 months ending in March 2007, the national peak of remodeling activity, according to a report from the Harvard Joint Center for Housing Studies. One of the reasons for the price decline is competition. Most home buyers spend the most on remodeling within the first two years after purchasing a home. Not only are there fewer home sales, but also strapped home builders are seeking remodeling work, confirms David Crowe, chief economist for the National Association of Home Builders. Source: The Wall Street Journal
The number of signed sales contracts to buy homes rose in September for the eighth straight month, according to a real estate industry report released last week. The September Pending Home Sales Index from the National Association of Realtors (NAR) spiked 6.1% to 110.1, consolidating a 6.4% gain in August. It was the index’s highest level since December 2006, when it stood at 112.8. The leap was far better than expected. A panel of analysts surveyed by Briefing.com had forecast a 1.2% rise. Analysts, including Lawrence Yun, NAR’s chief economist, have traced much of the improvement to the government’s first-time homebuyer tax credit program which gives an up to $8,000 tax break to new homebuyers. It’s estimated that between 200,000 and 400,000 additional sales will have been made because of the credit. “What we’re witnessing is a rush of first-time buyers trying to beat the expiration of the tax credit at the end of this month,” said Yun. Source: CNN/Money
