What Happened? The First Coincident Events in the Stock Market After a Strong Inflationary Comeback and the Fed’s Decline
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Markets plunged on Thursday morning after red-hot inflation data raised fears on Wall Street that the Federal Reserve would continue hiking interest rates aggressively. Then, something strange happened.
Stocks staged a massive comeback. The Dow Jones Industrial Average surged 1,500 points from peak to trough and the S&P 500 posted its widest trading range since March 2020, ending the day up more than 2%.
What’s happening: The consumer price index rose 0.4% in September, twice the amount expected by analysts. On an annual basis, inflation was up 8.2%.
The Fed is expected to raise rates 25 basis point increment, a less aggressive tightening than in the past, according to Ratiu. The central bank acknowledges that it sees monetary actions having an effect on inflation. The CPI data out this week seems to confirm the bank’s views.”
What causes the divergence in markets and inflation data? The stronger-than- expected inflation report could mean that price increases are close to their peak. The rollercoaster market illustrates how investors are desperately grasping for clues about what the Fed will do next.
The Big Picture of Household Wealth: An Allianz Study of the Rise and Fall of the Gross Domestic Assets in the 2022-2022 Period
The big picture: Household wealth is on track for its first significant reduction since the financial crisis in 2008, according to a new report by financial services company Allianz.
Global assets are set to decline by more than 2% in 2022, Allianz reports. Average households will lose about a tenth of their wealth this year.
The report paints a bleak picture. The 2008 financial crisis marked a quick rebound, but the current outlook shows stagnant growth in the future. The average growth of financial assets is expected to be around 4.6% until 2025, compared with 10.4% over the last three years.
Russia’s war on Ukraine has obstructed the potential for a post-pandemic economic recovery, and increased food and energy scarcity. The world’s central banks are raising borrowing costs due to inflation. Stock markets are likely to end the year in the red– 2021 “might have been the last year of the old ‘new normal’, with low interest rates and bullish stock markets,” wrote Allianz researchers.
Household debt, meanwhile, has been on the rise globally. The rising cost of living could pose a risk to the household balance sheets.
The changes will take years to recover from and will be atonic shift in global wealth. The release of US retail sales for September will likely shed more light on the state of the consumer, as will the earnings reports from some of the country’s largest banks.
On Mortgage Rates in the Coming Year: Freddie Mac’s Tale of Two Economy Inflationary Expansions Revisited
The 30-year fixed-rate mortgage averaged more than 6 percent in the week ending January 5, according to Freddie Mac. A year ago, the 30-year fixed rate was 3.22%.
The mortgage rates went up for the second week in a row. With inflation running hotter and the expectation that it will move in the 6% to 7% range over the next few weeks, rates are more volatile.
“We continue to see a tale of two economies in the data,” said Sam Khater, Freddie Mac’s chief economist. Strong job and wage growth are keeping consumers’ balance sheets positive, while recession fears and housing affordability are driving housing demand down.
Doing the math: A year ago, a buyer who put 20% down on a $390,000 home and financed the rest with a 30-year, fixed-rate mortgage at an average interest rate of 3.05% had a monthly mortgage payment of $1,324, according to calculations from Freddie Mac.
The researchers at Wells Fargo wrote that the main driver behind the housing market correction to date has been sharply higher mortgage rates. If our forecast is realized, mortgage rates will fall just as inflation goes down because of real income growth. A modest improvement in sales activity should then follow, which will reignite home price appreciation heading into 2024.”
The Streaming Housing Market: Can It Be Caused by Speculators? A Brief Look at the Costs of a Breakup in the 2008-2009 Real Estate Market
The new option will have much of what is available with its current $9.99 a month Basic plan, but will include an average of four to five minutes of commercials per hour. There will be ads in the TV series and movies that are 15 or 30 seconds in length.
The company’s stock price plummeted and it lost billions in market cap. Hundreds of employees were laid off, and the platform’s future was the subject of many questions about the viability of the streaming marketplace.
▸ Third quarter earnings from Bank of America
(BAC), Goldman Sachs
(GS), Johnson & Johnson
(JNJ), United Airlines
(UAL), American Airlines
(AAL), Tesla
(TSLA), AT&T
(T), Verizon
(VZ) and Netflix
(NFLX).
The economists think that the median home price will fall to $364,000. The median price is predicted to rise to 376,000 by the end of the year, and then rebound and go up again in the year 2024.
To what extent can the affordable housing crisis — and incipient hopes for and fears of a “rent revolution” — really be blamed on corporate speculators? Here’s a look at the debate.
“It was different in 2008, 2009 because that drop in prices was because of a push from sellers,” said Jeff Tucker, senior economist at Zillow. There were a lot of extremely motivated sellers who were willing to take a loss on their homes because of foreclosures and short sales.
And even as prices dropped 10% from the summer peak nationally, home values were still up by double digits from last year in 79 out of the top 150 largest metropolitan areas during November, according to Realtor.com.
He said a flattening of rates in the 5.5% to 6.0% range in 2023 would offer improved foundations for housing markets, since a return to the 3.0% range is not likely in the near future.
At the same time, he said, many companies expect the economy will enter a recession as a result of the Fed’s rate hikes, even in the face of data pointing to continued resilience.
The purchase market will support it’s growth when rates decrease more significantly, as buyers wait for a good job market and large demographic of renters to come on board. If rates continue to decline, borrowers who bought in the last year will be able to refinancing into lower rates.
“Mortgage application activity sunk to a quarter-century low this week as high mortgage rates continue to weaken the housing market,” said Sam Khater, Freddie Mac’s chief economist. inflationary pressures are easing and it is likely that mortgage rates will be lowered in the coming years.
Walsh said that origination volumes have declined, revenues have dropped, and expenses have risen. “Lenders have started to shrink excess capacity by reducing staffing levels, exiting less profitable channels or exiting the business entirely.”
MBA estimates that a 25% to 30% decrease in mortgage industry employment from peak to trough will need to occur, given the decrease in production volume from the record levels in 2020 and 2021.
The Ages of First-Time Homebuyers and Their Repeat Buyers in the United States Rise Over the Past 12 Months: Results from a NAR Survey
The age of a first-time homebuyer also rose, with the typical age reaching 36 years old, up from 33 last year. The typical repeat buyer’s age also climbed, reaching 59 years old, up from 56. Both are all-time highs.
The median household income for first-time buyers slipped to $71,000 during the year ended in June, down from $86,500 in the previous 12-month period. The median income for repeat buyers was $96,000, down from $112,500 the previous year.
The majority of buyers in the year that ended in June were White, up from the previous year. Of all home buyers, 8% were Hispanic, up from 7%. Meanwhile, 3% were Black and 2% were Asian, both dropping from 6% a year ago.
Lautz said that prior NAR research has shown that would-be Black homebuyers have lower incomes, higher debt and less likelihood of family support for a down payment than other groups. The data also showed that Black renters are also more squeezed, with a larger share paying more than 30% of their income to their landlord.
A Study of the Distance between a Buyer’s Home and a New Home During the Term 2022-2020 Real Estate Cycle
In the area where they are currently residing, homebuyers were less interested in buying because of the affordability crunch. The median distance was between the buyer’s current home and the new house they purchased during the course of a year. For the year ending in June of 2022, the average distance was 50 miles.
The typical home purchased was 1,800 square feet, had three bedrooms and two bathrooms, and was built in 1986, the NAR report found. The home is smaller and older than in the past.
Ms. Elmer, who works in private aviation and had to delay her wedding because of the Pandemic, said it feels like it is never our time. Other people have been able to progress because I am stuck at the starting line. I know we will eventually get there one day, but it’s hard to look to the future.”
When a person spends a lot of time renting, they have fewer years to build equity in their home and pass it on to the next generation. A renter is forever in the care of the rental market, unsure of their cost over the course of one year to the next.
The Real Estate Bubble: How Real Estate Markets and Mortgage Rates Have Blowed Over the Last Ten-Year Run Since the 2008 Financial Crisis
The Conference Board has a principal economist named Erik Lundh. The opinions are of his own. CNN has more opinion.
The bubble in the 2000s was underpinned by predatory lending, poor underwriting and rampant speculation. Americans believed that housing could be a great short-term investment and that prices would continue to rise. This was not the case.
New regulations were put in place after the 2008 financial crisis. Banks now have to be better capitalized, lending is more rigorous, and most homes are fixed-rate. This makes sure the financial system can weather another housing downturn.
Other helpful trends include the spike in refinancing activity over the last few years associated with ultra-low interest rates. Monthly payments were pushed down for many homeowners.
Americans have more equity in their houses now than they did before the last financial crisis. Indeed, loan-to-value ratios, which measure the amount of a mortgage relative to the value of a home, for US mortgages have fallen to just 42% – a 12-year low. The cushion will be created more by this for prices to decline before home values fall below the loans that underpin them. Thus, if a home is sold at a loss, it’ll likely hit homeowners before it hits the banks.
Grant Sykes is a manager at Barfoot & Thompson. He told CNN Business that agents were gobsmacked when they saw the prices being achieved.
In New Zealand the average time to sell a property has increased by 10 days over the last year. Sales and median house prices have fallen over the past year.
It was in May 2021, when the sales attracted so much interest. Since then, the clearance rate at auction has plummeted, prolonging sales times and sending prices lower.
Inflationary driven downturn: mortgage rates, buyer inquiries and mortgage asymmetry in the UK and the global housing market (review)
Rising interest rates are driving the dramatic change. Central banks on a warpath against inflation have taken rates to levels not seen for more than a decade, with ripple effects on the cost of borrowing.
Modeling of past house price crashes by Oxford Economics shows that employment is the decisive factor in determining the severity of a downturn, because a spike in joblessness raises the number of forced sellers.
If the housing market does not increase activity in other sectors of the economy, it could be a sign of things to come.
Data lags might mean that most markets are seeing falling prices. “We’re in the early period in quite a clear downturn now and the only real question is how steep and how long it’s going to be.”
The official statistics show that the prices for new homes in China fell at an accelerated pace in October, reflecting a market slump that is weighing heavily on the economy. Home sales have fallen this year by over 40% according to a research firm.
In order to protect themselves from higher borrowing costs and a bad economic outlook, banks are taking a more cautious approach to lending, which has led to a decrease in sales elsewhere.
Official figures show that house sales in Britain were 32% less in September than in the previous year. A closely watched survey showed that new buyer inquiries fell for the sixth successive month in October to the lowest level since 2008, excluding the early months of 2020 when the market was largely shut because of the pandemic.
Mortgage rates in 25 major cities around the world tracked by UBS have almost doubled on average since last year, making house purchases much less affordable.
A skilled service sector worker who works for a company can not afford as much house as before the swine Flu, according to the real estate bubble index.
In Britain, more than 4 million mortgages have been issued to first-time buyers since 2009, when rates were near zero. Tom Bill, head of UK residential research at broker Knight Frank, said that a lot of people don’t appreciate how much their outgoings increase.
In countries with a lot of variable rate mortgages, the shock will be immediate and could cause forced sales that will cause prices to go down faster.
But even in places where a large proportion of mortgages are fixed, such as New Zealand and the United Kingdom, the average maturity of these mortgages is quite short.
The Rise of Wall Street Rates in a Global Housing Crisis: Insights from Oxford Economics on the Economic Situation in the Light of the ILO
“This means much more debt will be subject to (often significantly) higher rates over the next year or so than might first appear to be the case,” Slater wrote in a report last month.
According to Innes McFee of Oxford Economics, the chances of a more benign correction are higher if labor markets remain strong.
Employment levels in many advanced economies have recovered since falling at the start of the pandemic. Weak economic growth is hitting demand for workers, and early signs show that labor markets are cooling.
The number of hours worked was 1.6% below its pre-pandemic levels in the third quarter, which resulted in a deficit of 40 million jobs according to estimates by the International Labour Organization.
The ILO said that the outlook for labour markets in the world has worsened in recent months and that job vacancies will decline and employment growth will weaken in the last quarter of the year.
Most market watchers are not expecting a repeat of the 2008 housing market crash. Banks are in better shape and housing supply in some countries is tight.
In a worst-case scenario in which house prices fall more than expected, and residential investment and lending are restrained, Oxford Economics predicts that world GDP will grow by just 0.6% in the next five years.
“An additional negative factor, compared to the [global financial crisis], is that the Chinese housing market is also in a downturn,” according to Slater. “So rather than offsetting the impact on world output of a global housing downturn, as was the case after the GFC, the Chinese housing sector is contributing to the slump.”
Inflation and Homebuying: The Case for Mortgage Rate Increases, Mortgage Rates, and Construction Permittations in the Post-Inflation Era
Inflation cooled considerably in November, and was at its lowest level in over a year, according to the Bureau of Labor Statistics.
The average mortgage rate is computed from thousands of mortgage applications that Freddie Mac gets. The survey includes only borrowers who put 20% down and have excellent credit. Many buyers who put down less money upfront will pay more than the average rate.
The Fed does not set the interest rates that borrowers pay on mortgages directly, but its actions influence them. Mortgage rates tend to track the yield on 10-year US Treasury bonds, which move based on a combination of anticipation about the Fed’s actions, what the Fed actually does and investors’ reactions. When Treasury yields go up, so do mortgage rates; when they go down, they follow.
Fed Chair Jerome Powell mentioned in his remarks that with prices still rising at a high rate, more rate increases are needed and the central bank remains committed to rate hikes until the pace of inflation notches a noticeable slowdown, Ratiu said.
What this means for real estate markets is that the continued cooling in inflation measures should ease the upward pressure on mortgage rates, said Ratiu.
As a result, the search for affordability is leading many would-be homebuyers toward lower-priced metro areas where the cost of a house can fit within more families’ budgets, said George Ratiu, manager of economic research at Realtor.com.
After a month of declines, mortgage applications ticked up last week as buyers looked to take advantage of several weeks of slightly lower rates, according to the Mortgage Bankers Association.
Increased purchase and refinance activity drove increased applications, according to the vice president and deputy chief economist. Purchase and refinance applications are still behind their pace from a year ago with rates more than three points higher.
There is a lot of data on the table. The Census Bureau will reveal housing starts and building permits for November on Tuesday, followed by the release of new home sales data on Friday. In between that will be the November existing home sales numbers from the National Association of Realtors on Wednesday, as well as weekly data on mortgage rates and applications on Thursday.
Still, there are some promising signs that the worst could soon be over. The share price of one of the largest homebuilders in the US jumped after reporting earnings last week. Revenue was above forecasts, the company was higher than analysts had estimated, and it expects to deliver more homes next year.
Kenneth Leon of CFRA Research says investors may be looking ahead to 2023, perhaps crossing the valley from recession to recovery.
Data from the investment firm that buys single- family homes to rent out is important in terms of the recent slide in prices.
On the one side, investors have been expecting the economy to fall into a recession after the Fed raises its rates, if borrowing costs will make it more difficult for consumers to spend money on credit. “On the other hand, the combination of a strong job market and pandemic savings mean that Americans have maintained a steady consumption pace even as they switched their focus from goods to services.”
The good news is that most homeowners are still paying their mortgage on time even though housing sales may be weak due to high home prices and higher mortgage rates.
Again, that’s a stark contrast from 2008 when many people with subprime loans or borrowers with poor credit histories were unable to keep up with their mortgage payments.
An Overview of General Mills, CarMax, P&M, and other Companies Earning During the Fourth-Year Funnel
There isn’t a lot of companies reporting their earnings this week. Some of the few that are could yield clues about the current financial health of the public and private sectors.
General Mills will release their earnings on Tuesday. Analysts are expecting a slight increase in both sales and profit. Consumers may be growing increasingly wary about inflation and the broader economy, but they’re still eating their Wheaties. General Mills shares have increased in value this year.
Analysts are less optimistic about the outlooks for sneaker king and Dow component Nike
(NKE), used car retailer CarMax
(KMX) and memory chip maker Micron
(MU), whose semiconductors are used in devices ranging from cell phones and computers to cars.
According to data from FactSet, fourth-quarter earnings for S&P 500 companies are expected to decline 2.8% from a year ago. Analysts have been cutting their forecasts. According to a report by FactSet, fourth-quarter profits were expected to rise 4.3% as recently as September 30.
“Odds of a recession are pretty high,” said Vincent Reinhart, chief economist and macro strategist at Dreyfus & Mellon. “That will have a knock-on effect for corporate earnings. Higher rates and weaker earnings suggest more pain for stocks.”
Wednesday: US existing home sales; Germany consumer confidence; earnings from Rite Aid
(RAD), Carnival
(CCL), Cintas
(CTAS), Toro
(TTC) and Micron
The Real Estate Markets of Manhattan: A Year-over-Year Dropoff and a New Rate of Homebuying in the Second Half of the Cold War
“We just kind of got to that place in our lives where we were financially very stable, we wanted to start having kids and we wanted to just kind of settle down,” says Paul, 34.
The Fed’s interest rates kept going up. After a few months, with mortgage rates climbing, the Pauls could no longer afford the homes they’d been looking at.
“You know, there would be over two dozen other offers and they would all be over asking,” says Paul. “We had to wait until the weekend to open the house because it was gone before we could even look at it.”
“Even with a projected reduction in home sales this year, prices are expected to remain stable in the vast majority of the markets due to extremely limited supply,” said Yun.
At an open house for a charming starter home in Hollywood one recent weekend, agent Elijah Shin didn’t see many people swing through like he did a year ago.
In the fourth quarter of 2007, the median price of all apartments in Manhattan was $1,100,500, a decrease of 5.6% from the year before. This is the first time in the pandemic era that the year-over-year price has dropped. Even so, the median cost of an apartment remains above pre-pandemic prices.
Prices dropped 4.7% between the third and fourth quarters, as mortgage rates really surged, ultimately reaching as high as an average of 7.08% for a 30-year, fixed-rate loan in October and November, according to Freddie Mac.
The largest share of condos sold were one-bedrooms with a median price of $1,140,000. The median price for a two-bedroom condo was $2,150,000. The median price for a one-bedroom was $710,000 and the price for a two-bedroom was $1,325,000.
Pre-pandemic Homebuyers in the Fourth Quarter of 2019: A Survey of Real Estate Sales and Prices in the State of the City of Manhattan
At the end of the fourth quarter, there were over 6,700 listings in Manhattan. That’s 5% higher than the fourth quarter of 2021, but 15.7% less than the third quarter of 2022.
Looking at the market metrics of prices, sales and inventory, both prices and sales are going up from their pre-pandemic levels at a modest pace, with prices rising 10% above 2019 levels and sales 6% higher.
“The would-be buyers that stepped back from the market in late 2022 can’t and won’t stay away forever, especially given the competing demands from first-time buyers looking to get into the market and retirees looking to move or downsize,” Steinberg said.
It remains to be seen what further actions by the Federal Reserve will mean for homebuyers who were just getting their heads around rates at the lower 6% level that may bounce higher.
The homeowners who have locked themselves out of the market would be able to find some more inventory from the past couple of years.
“Half of the country may experience small price gains, while the other half may see slight price declines,” said Lawrence Yun, NAR chief economist. “However, markets in California may be the exception, with San Francisco, for example, likely to register price drops of 10%-15%.”
Some markets like Manchester, New Hampshire, Columbus, Ohio, Fort Wayne, Indiana, Hartford, Connecticut, and Lancaster, Pennsylvania, are still seeing homes change hands as buyers from more expensive locations choose to live in areas with a solid local economy.
In November, as mortgage rates started a six-week tumble, the median monthly mortgage payment fell by 1.8% to $1,977 from $2,012 in October, according to the Mortgage Bankers Association.
The 30-year fixed mortgage rate will likely go to 5.6% in the near term as the Fed slows the pace of rate hikes due to slowing inflation.
A Mirror Image of 2023 for Buyers and Builders: Implications for the Real Estate Market and the Workforce of the Industrial Complexity
In 2023, we may see a mirror image of 2022 — a somewhat trying first half that gives way to a surprisingly strong back half of the year for buyers, said Leonard Steinberg, corporate broker at Compass in New York.
Chronic under-building of new homes is likely to remain a challenge for builders as they try to balance the short-term decline in demand with long-term need for more new housing.
It may be necessary to wait until the start of the spring shopping season for more clarity on the direction of the housing market, as both buyers and sellers are pulling back from the marketplace.
Tucker says the market will be busy in the spring but will calm down in the next two months.
“The big surprise for a lot of people might be that the market has a really boring year,” said Tucker. “It would be a great change of pace. The year in the housing market would be boring and boring.
He said that it is becoming more apparent that companies are resorting to layoffs as a hedge against a potential economic slowdown. “People who are laid off pull back on spending, and even those who are still employed may begin to do the same due to worries about losing their job, thus potentially sending consumer spending into a downward spiral.”
The labor market would need to experience a huge drop in demand to make up for the 10 million open jobs that are not being filled. “This scenario is more likely if corporate executives overreact to the recession chatter and preemptively cut payrolls, which would create a self-fulfilling downward spiral.”
The U.S. Home Price Index Sliding 0.3% through November 3, with an Interest Rate Increase of 2.6% by the End of the First Quarter
But traditional seasonal norms are expected to kick in come March as more inventory becomes available and more buyers starting to look at what’s available — as long as buyers can stomach the current rates and sellers are willing to give up the ultra-low rates they enjoyed in the past couple years.
Last July marked the first month-over-month decrease for the national index since February 2012 and that continued through November, with seasonally adjusted prices falling 0.3% month over month.
All cities in the 20-city index reported declines before seasonal adjustments. 19 cities still reported declines after adjusting for seasonal changes.
Home prices rose 7.7% in November from the year before, a smaller jump than the 9.2% growth seen in October, according to the latest S&P CoreLogic Case-Shiller US National Home Price Index, released Tuesday.
Farmington, New Mexico, saw the biggest price increase in the fourth quarter, up 20.3% from a year ago. It was followed by Sarasota, Florida, up 19.5%; Naples, Florida, up 17.2%; Greensboro, North Carolina, up 17.0%; Myrtle Beach, South Carolina, up 16.2%; Oshkosh, Wisconsin, up 16.0%; Winston-Salem, North Carolina, up 15.7%; El Paso, Texas, up 15.2%; Punta Gorda, Florida, up 15.2%; and Daytona Beach, Florida, up 14.5%.
The November report provides evidence of the slowing housing market during the fall, said Lisa Sturtevant, Bright MLS chief economist, but it may not show the worst yet of the housing market.
“This one percentage point reduction in rates can allow as many as three million more mortgage-ready consumers to qualify and afford a $400,000 loan, which is the median home price,” said Sam Khater, Freddie Mac’s chief economist.
The Fed approved a quarter-point interest rate hike on Wednesday, the smallest since March. It’s clear that the central bank is making progress in its battle against inflation by slowing the pace of increases.
The effect of the Fed’s actions are keeping a floor under mortgage rates for the short term, he said, adding that he expects rates to stay around 6% for the next few weeks.
But last week the Bureau of Labor Statistics said the US economy added an astonishing 517,000 jobs in January, showing that the labor market is still robust. They were expecting more than 185,000 jobs. The Fed’s efforts to reduce the labor market and bring inflation down is more complex because of the surprising number.
Housing economists and those in the mortgage market are looking to the next report on inflation, set to be released February 14, to see if the pace of price hikes continues to slow.
“For today’s buyer of a median-priced home, the down payment amount is lower than it would have been last summer,” said Ratiu. Affordability remains a challenge for first-time buyers, although that is positive news.
Real Estate Prices in Anaheim, Los Angeles and Boulder, Colorado: Predictions from the 2002 Central Bank Mortgage Rates and Housing Markets
Powell said the central bank may have done more and raised rates more than they were priced in, because of the economy’s resilience.
George Ratiu, the manager of economic research at www.realty.com, says that the tension between expectations and data will continue for several more months.
Affordability is a challenge for most families, but the MBA believes that demand for homes will recover in the spring.
Among the most expensive cities that saw prices falling are Anaheim, California, with the median price of $1,132,000, down 1.6% from a year ago; Los Angeles, with the median price of $829,100, down 1.3%; and Boulder, Colorado, with the median price of $759,500, down 2.0%.
San Francisco had the biggest price drop in the country, year over year, last quarter, with the median price of $1,230,000 — down 6.1% from a year ago. The median price of a San Francisco home in the fourth quarter is down 21% from the peak in the second quarter.
The good news for buyers looking for price relief is that the 4% median price hike in the fourth quarter is less than the 8.6% increase in the third quarter. In the fourth quarter, there were not as many double-digit price gains as in the third quarter.
In the previous quarter there were 17 markets that a family needed a minimum income of $50,000 to afford a home. Some of those included Peoria, Illinois, where a family can qualify for a loan with an income of $33,660; Waterloo, Iowa, with an income of $40,639; and Montgomery, Alabama, with an income of $48,172.
First-time buyers were evidently pushed to a breaking point on affordability. They typically spent 39.5% of their family income on mortgage payments, up from 37.8% in the previous quarter. A mortgage is considered unaffordable if the monthly payment, including principal and interest, amounts to more than 25% of the family’s income. You should not spend more than 30% of your income on housing costs.
The Pending-Sales Index Rises in the Third Quarter of the Year-to-Five Years, but the Economic Recession Slows Down
The pending sales index, which is based on signed contracts to buy rather than the final sales that are accounted for in existing homes sales, rose by 8.1% from December to January, beating the predictions of economists. In December there was a downwardly revised 1.1% rise.
While home sales were down by 24.1% from the still-hot market of a year ago, activity appears to be bottoming out in the first quarter of this year, before incremental improvements will occur, Yun said.
All regions saw a month-to-month increase in pending home sales, with the Northeast up 6%, the Midwest up 7.9%, the South up 8.3% and the West up 10.1%.
“An extra bump occurred in the West region because of lower home prices, while gains in the South were due to stronger job growth in that region,” Yun said.