Today, the NAR reported that sales jumped 7.2% to an annual rate of 5.24 million homes, the highest since August 2007. Consensus expectations were for a 5 million unit pace. Compared to July last year, sales rose 5.0%.
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Since our 2Q housing call, all of the housing data points continue to indicate the housing market is turning after three years of continued pressure. The one sticking point continues to be high unemployment, which continues to put real consumer demand into question. It should not be forgotten with today’s good news that yesterday the Mortgage Bankers Association reported that LATE mortgage payments jumped to a record high in 2Q09, with almost one in eight homeowners delinquent or in the process of foreclosure.
Where do we go from here and can it get much better? Here are my thoughts on that question!
(1) THE PEAK SEASON - For those consumers with “need based” moves, it’s August and the kids will in school soon, if they aren’t already.
(2) INTEREST RATES - Interest rates are headed higher in Q4. See Keith McCullough’s note on “Bernanke Pandering” and you will get the picture.
(3) THE GOVERNMENT - The Government home buyer stimulant is going to end. The deadline to close a home purchase is November 30, 2009. The process of buying a new home is not quick and easy - finding a home, lining up financing and getting inspections and closing, all takes time to accomplish.
Howard W. Penney