Doing the Charleston!

Above information courtesy of Melissa Breeland with Residential Mortgage of SC

It is noted that falling home prices helped fuel home sales, and nationally, the median sales price (the point at which half of all homes sold for more, and half sold for less) was $175,400, down $32,000 from last year. However, the most important part of December's Existing Home Sales report isn't what the media is choosing to put into the headlines.  

December's sales report indicates it would now take 9.3 months to exhaust the existing home supply.  In November it was 11.2 months.  This means home inventory has decreased, and that buyers are competing to purchase fewer homes, which in turn should move home prices upward. 

This is Supply and Demand at its most basic definition.

Economists have long said that the keystone of housing's recovery will be a rebalancing in home supply.  Coupled with the all-time low in housing starts, December's Existing Home Sales data signals future strength.

Above commentary used information compiled from The New York Times, Bloomberg.com, the National Association of Realtors, and Melissa Breeland

*** Due to market fluctuations, interest rates are subject to change at any time and without notice. Interest rates are also subject to credit and property approval based on secondary market guidelines. The rates shown are based on average rates for the best qualified customers. Your individual rate may vary. Loan programs and rates listed here are the most popular, but many more are available.

Information above is courtesy of Melissa Breeland of Residential Mortgage of SC

In 2009's first full week of trading, mortgage bond markets traded back-and-forth, eventually closing the week improved overall; and weekly mortgage rates fell for the first time since mid-December. Despite the barrage of negative economic news, mortgage rates remain low.

The most anticipated news of last week was Friday's jobs report. The press loves to remind us that with December's job loss report, 2008 had the largest number of annual job losses since 1945 blah, blah, blah......BUT look beyond the headlines ....today's workforce is THREE TIMES AS LARGE. They could have pointed that out, to give our nation's citizens some perspective, but that would have made the newstory a little less sensational, and they wouldn't want that. I'm not saying we don't have problems, but please, give us all sides of the story.

Below are the economic reports due to be released this week:

Economic Indicator	Release Date and Time	Consensus Estimate	Analysis
International Trade (November)	Tues, Jan 13, 8:30 am, et	$54.5 Billion (Deficit)	Moderately Important. The trade deficit continues to contract on lower oil prices.
Mortgage Applications	Wed, Jan 14, 7:00 am, et	None	Important. Lower rates continue to stimulate borrowing activity.
Retail Sales (December)	Wed, Jan 14, 8:30 am, et	1.2% (Decrease)	Important. Sales struggle on a pessimistic economic outlook.
Import Prices (December)	Wed, Jan 14, 8:30 am, et	0.5% (Decrease)	Moderately Important. Lower prices will keep any inflation pressure in check.
Beige Book	Wed, Jan 14, 2:00 pm, et	None	Moderately Important. Expect more Federal Reserve lamentations on the state of the economy.
Producer Price Index (December)	Thurs, Jan 15, 8:30 am, et	Finished Goods:1.8% (Decrease) Core: 0.1% (Increase)	Important. Falling producer prices gives the Fed more room to lower interest rates.
Consumer Price Index (December)	Fri, Jan. 16, 8:30 am, et	Finished Goods:0.5% (Decrease) Core: 0.1% (Increase)	Very Important. Consumer prices that fall too much could be a sign of deflation.
Consumer Sentiment (January)	Fri, Jan. 16, 10:00 am, et	60 Index	Moderately Important. Consumers appear less worried than the pundits

Are the Pundits Forecasts Accurate? Here's another example of doom and gloom economic news that can be clarified for us with some addtional information. The Congressional Budget Office (CBO) expects the recession will continue “well into 2009? before beginning a slow recovery in 2010.  The CBO also said that “borrowers will continue to find the terms and availability of credit tight, which will increase the cost of capital and hold back the growth of investment and consumption, dampening economic activity for several years." A dire prediction on the CBO's part, to be sure, but is it an accurate one? Probably not. In fact, most economic forecasts are inaccurate, and many grossly so. Financial literature is loaded with studies demonstrating just how inaccurate the professionals are at predicting tomorrow. Consider oil prices: Last year, many of those quoted in the media were predicting $200-a-barrel oil by early 2009. Look where oil prices are now. That's not to say that the CBO is wrong or that things can't get worse. But we have to question the CBO's call on the credit markets, given the current state of the mortgage market where the prime 30-year fixed-rate mortgage is available at 5% and the prime 15-year fixed-rate mortgage is available at 4.5%. Yes, you need a strong FICO score and income-to-debt ratio to get those rates, but money is also available at good rates for people of lesser credit standing. Indeed, most home buyers can qualify for a reasonable-rate FHA-insured loan, and with a down payment as low as 3.5% to boot. Let's not forget that yesterday's news has questionable predictive power for tomorrow's markets – a fact that has been proven many times in the past. Information for the above commentary provided by Melissa Breeland of Residential Mortgage of SC.