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Home sales and home prices continued to rise around much of the country heading into summer.
The National Association of REALTORS® reported that June Existing Home Sales rose by 1.1 percent from May, coming in above expectations at 5.57 million units. Existing Home Sales also were up 3 percent from June of 2015 and remain at their highest annual pace since February 2007. New Home Sales in June also jumped, according to the Commerce Department, rising 3.5 percent from May to an annual rate of 592,000 units, which was above expectations. New Home Sales experienced a 25.4 percent gain from June 2015, the highest level since February 2008.
Future housing inventory may also get a boost in the months ahead. Building Permits, which signal future construction, came in above expectations in June from May, with an increase of 1.5 percent.
June Housing Starts, which measure when excavation begins on a home, rose 4.89 percent from May, also above expectations. Single-family starts, the largest segment of housing starts, increased 4.4 percent.
Home prices continue to rise, according to research firm CoreLogic. Home prices, including distressed sales, rose 5.9 percent from May 2015 to May 2016 and 1.3 percent from April to May 2016. Increases are forecast to continue, with home prices rising 5.3 percent year-over-year in May 2017.
While increased home prices are great for home sellers, homebuyers are also benefitting from continued historically low home loan rates.
Other Economic News
Stagnant job and wage growth continue to cast a shadow over the overall U.S. economic outlook.
The Bureau of Labor Statistics reported that 287,000 jobs were created in June, well above expectations. However, the better-than-expected number was somewhat offset by May's revision lower to just 11,000 jobs created. From April to June, job growth averaged 147,000 per month, below the five-year high of 282,000 new jobs per month in the fourth quarter of 2015.
Rounding out the report, the Unemployment Rate ticked up to 4.9 percent while average hourly earnings rose by just 0.1 percent. On a positive note, hourly earnings did increase 2.6 percent year-over-year, matching the highest level of the recovery since 2009. While June's report was largely positive after May's dismal reading, low wage growth shows the labor sector still isn't as strong as it needs to be.
Why are these economic measures important to homebuyers?
The bottom line is, when economic data is weak or there is uncertainty overseas like Britain's recent vote to leave the European Union, investors tend to move money out of riskier investments like Stocks and into Bonds. Home loan rates are tied to Mortgage Bonds, so when Mortgage Bonds improve home loan rates tend to as well.
The reverse is also true. Strong economic news often benefits Stocks at the expense of Mortgage Bonds and home loan rates.
For now, home loan rates remain near historic lows. If you have any questions about loan rates or products, please contact me.