Weekly Economic Summary - June 25, 2010
OVERVIEW ~ June 14 through June 18 ~ Though the week had its share of weak indicators, the Dow Jones Industrial Average managed to rise fairly steadily from its beginning level of 9816.49 to the week-ending 10450.64. The 10-year Treasury note, reflecting apparently greater investor confidence in the world economy, rose about 10 basis points over the week and, even more tellingly, the price of a barrel of oil climbed from $71.69 to $77.35. The price of oil usually rises when investors expect the economy to improve and demand for fuel to rise. The downside of these signs of strength was a 10% decline in new housing construction in May, along with a drop in permits for future construction. This probably was behind the decline in the June National Association of Homebuilders survey of builder optimism, which fell from May’s 22 to 17.
FOCUS ~ The Mortgage Bankers Association (MBA) Mortgage Applications Index, compiled by means of a weekly survey of about 40% of the nation’s mortgage lenders, suggests an easing or ending of the decline in applications that followed the effective end (April 30) of the $8,000 and $6,500 homeowner tax credit program. Purchase money mortgage applications had fallen by more than 35% from the end of April to the present, with a sizable 27.1% decline in the week ending May 14.
After the major decline, the purchase money index continued to fall by 3% to nearly 6% for the following four weeks. The index level reached its lowest point in the recession and industry analysts worried that the real estate recovery might fall into a second major slowdown. In the week ending June 11, however, the index finally turned up, rising 7.3%.
One week does not create a trend, of course, but it does, in this case, end a downward slide. Many analysts have wondered if record low interest rates would attract more buyers. This seems to be the case because the savings a qualified homebuyer experiences based on lower interest rates are significant.
Other homeowners, meantime, are making their current homes more affordable by refinancing, as is evidenced by a recent 21.1% increase in the number of applications for refinancing loans. And the gains in refinancing applications and purchase money applications are causing many analysts to think positively about the real estate market.--
"Live the Old Florida lifestyle in Palm City, Florida".Carol Barron-Cross, Yanick Realty
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