After a week off for Thanksgiving I have plenty of good news to report since my last update. Last week, the National Association of Realtors reported that, for the month of October, existing home sales surged 10.1% to a seasonally adjusted annual rate of 6.1 million units – far exceeding the 5.7 million units most economists expected. Also last week, the S&P Case/Schiller Home Price Index showed that home prices nationwide rose 3.1% in the third quarter, matching a 3.1% increase in the second quarter and marking the second consecutive quarter prices have risen. In a similar report of local interest – the Florida Association of Realtors reported that Panama City Beach condo prices actually rose 3% in October over 2008, the first increase this year, and sales of condos were up 88% in October ’09 over ’08.
On Tuesday, The National Association of Realtors reported what is possibly the most encouraging housing report I’ve seen in some time. NAR reported that pending home sales skyrocketed 32% in October marking the ninth month of consecutive increases in new contracts which is considered a leading indicator of where the housing market is headed. Pent up demand coupled with the first-time homebuyer tax credit and rock bottom prices all contributed to NAR’s highest Pending Home Sales Index to its highest level since March 2006.
If all this wasn’t enough, mortgage rates have fallen since my last update to below 5%. The thirty-year conforming fixed-rate now stands at 4.75% – a full .25% lower than two weeks ago and approaching record lows once again. Rates have fallen in reaction to a rally in US Treasuries sparked by the Dubai World debt crisis last week. In a sign that the US Dollar and US bonds are still considered the safest bet, investors around the world dumped foreign currencies for fear of the Dubai situation having a global domino effect and gobbled up dollars and US Treasury bonds like so much leftover turkey. Though the Dubai situation was largely diffused by the beginning of this week, bonds held onto their gains and rates remain low as a result. As we close out the year, barring another unforeseen financial crisis or geo-political incident, I expect we will see less volatility in the coming weeks and mortgage rates to hover right at or slightly higher than current levels.