Mortgage rates have eased since last week with the rate on the benchmark thirty-year, fixed-rate falling back below 5.50% to settle in at 5.375%. That’s a .25% improvement since last week’s spike up to 5.625%. Rate shave been benefiting form some profit taking in the stock market which has cooled a bit in August following it’s month long rally in July. This is interesting considering last Friday’s unemployment report for July showed far fewer jobs lost for the month than economists expected and an actual decline in the overall unemployment rate to 9.4%. News like this usually provides the impetus for renewing a stock rally as it indicates an economy that may be pulling out of recession and stocks did surge on the news but have since pulled back as worries that we’re not out of the woods yet continue to linger. I have felt all along that the optimism on Wall Street over the better part of this year has been premature and has put the cart well before the horse. The fact bond prices have remained high and rates low supports this theory.
After a plethora of good news on the housing front we finally received a sobering report on June home prices this week. The National Association of Realtors on Wednesday said that home prices fell a record 15.6% for the three month period ending June 30 compared with the same period in 2008. Analysts attribute much of the decline on the excess inventory of distressed properties on the market, those that are either in foreclosure or short-sales, as these properties on average sell at a 15% discount compared to non-distressed properties. Yet there was a glimmer of hope in the report as median home prices actually rose 4% and quarter-over-quarter home sales rose 3.8%. Though fairly typical of a normal spring buying season, it is yet another sign that the worst of the housing market correction may be behind us.