One week’s worth of data does not a trend make. I say that because of renewed concern the housing rally is set to peter out because of a burst of sub-par news. The news on lower existing and new home sales was disappointing, to be sure, but hardly a foreboding omen. The news on pending home sales, which tracks contract signings for existing homes, wasn’t all that bad either. The index was down 0.5% in February, but the index has been up for the most part over the past six months. Sometimes a little perspective is needed.
Pessimism was further heightened by the S&P/Case-Shiller home price index, which showed another price decline. Month-over-month, the average price declined 0.5 percent in January. Year-over-year, the average price is down 3.8 percent. The fear properties in various stages of foreclosure and delinquency will continue to roil the market is on the rise. I am not terribly concerned though; the attenuating factor being foreclosed and delinquent properties are a well-vetted, well-understood variable. More important, it’s an improving variable. Data from CoreLogic show that faster REO-clearing rates and improving employment and low mortgage lending rates point to a sustained housing-market recovery.
In my opinion, frustratingly low appraisals and too-stringent lending standards are more pressing issues for many buyers and sellers. Loosening the tethers on both, and particularly the latter, would go a long way toward keeping the recovery on course. A strong economy would also go a long way toward sustaining the recovery. The good news is the economy continues to grow. The final number on gross domestic product shows that the economy grew 3.0 percent in the fourth quarter of 2011. This latest reported quarter was much stronger than the 1.8 percent growth reported in the third quarter of 2011.
I can’t say for sure how long rates will stay down. I have seen a marked increase in volatility in lending rates in March. I think volatility will remain high going forward, which is why I feel impelled to say that the risk of waiting for lower lending rates outweighs the benefit of substantially lower lending rates materializing.
Rates are still close to historic low levels.
Lock that rate now before it is too late!