For anyone looking at the
Houston real estate market, following is a great update on the most recent changes in mortgage rates, as originally distributed by Shane Price with Houston Capital Mortgage.
At times it doesn't feel like it, but the economy in general (and the housing market in particular) continues to improve.
On the former, orders for durable goods rose 1.8% in May to a seasonally adjusted
$163.9 billion, posting the third monthly gain in the past four months.
Meanwhile, a key gauge of business investment – orders for capital goods – surged 4.8% in May, posting its biggest monthly gain in nearly five years. The increase in orders for both durable goods and capital goods indicates businesses are more optimistic about the outlook for the economy.
As for the housing market, the Commerce Department reported sales of new homes dipped 0.6% in May, to an annual rate of 342,000.
Prices, however, proved surprisingly firm, as the median sales price rose to $221,600, the highest since November 2008. The backlog of unsold new homes also shrank to a 10-month supply, which is still relatively high, but it suggests improvement nonetheless.
Even more improvement was found in existing home sales, which rose 2.4% in May. It was the first back-to-back monthly gain since September 2005.
What's more, there should have been even more improvement, according to the National Association of Realtors, which cites poor appraisals as a growing problem.
While pending sales of existing homes indicate stronger activity, some contracts are falling through from faulty valuations that keep buyers from getting a loan. The NAR calls the appraisal problem “serious,” and says complaints about faulty appraisals have been “snowballing” across the country.
The most encouraging news was offered by Radar Logic's RPX index, a composite housing price index, which showed the largest monthly increase since June 2007, posting a 1.2% increase in April. Boston posted the largest monthly gain, rising 8.1%, followed by Milwaukee 's 7.8% gain.
Mortgage rates and unemployment are the two wild cards in keeping the momentum going forward. Fortunately, the rate of increase in mortgage rates is abating, with the 30-year fixed-rate mortgage averaging 5.8% last week, according to Bankrate.com's national survey.
The employment situation is a little iffier. Unemployment has been growing, but at a slowing pace. What we really need is for the unemployment rate to start dropping.
We're Getting the Job Done
Conservatives will say government has done too much, while liberals will say government has done too little. No sense in debating the argument; the differences are irreconcilable.
But what isn't debatable is the recovery, which will fully bloom because of the efforts of the private section.
Former junk-bond king Michael Milken noted as much in the Wall Street Journal.
One of the more pervasive myths is that money is in short supply, but it's really not.
Milken noted that corporations worldwide have raised nearly $2 trillion in public and private markets this year, a clear sign the economy is improving.
The fact that non-investment-grade companies, such as Harrah's Entertainment, Warner Music Group, MGM Mirage, and Rite Aid, are now paying down bank debt with newly raised funds shows the capacity of our financial markets to re-capitalize, thanks mostly to the efforts of private financiers.
More money flowing into capital markets isn't headline-making news, but it is important news.
It reveals just how far along our economy is in the recovery process. Dour pundits have been comparing our economic situation to Japan , circa 1990, when that country was thrown into a decades' long funk.
There is no comparison. Unlike Japan , we have been aggressively working our problems by raising capital and de-leveraging, and doing both successfully.
A full recovery will take time, but as with people, the tincture of time is often the best medicine for an ailing economy.
