Existing Home Sales for March

INFO THAT HITS US WHERE WE LIVE  March Existing Home Sales came in last week down slightly, to a 4.57 million annual rate. But the number of homes sold was still 1.8% above January's lows. With the sales level in the same range for the past five months, many say sales have now stabilized and probably bottomed. In addition, the median sale price increased in March for the second month in a row – the biggest monthly jump since June 2005 (not seasonally adjusted). The months' supply edged up to 9.8 from 9.7, but that was all from the slightly slower sales pace for single-family homes. The raw inventory actually declined for all types of homes.

The Federal Housing Finance Agency (FHFA) also reported home purchase prices rose 0.7% in February for houses financed by conforming mortgages. This was the second month in a row prices rose, putting them up 1.7% for the last two months, the biggest gain since 2005.

Friday saw March New Home Sales come in better than expected, at a 356,000 annual rate. This was a small decline from February, but that was all because of the upward revision to February numbers, not any March slowing. Inventories continue falling, to 308,000, down 46.0% from their mid-2006 peak and at the lowest level since 2002.

>> Review of Last Week

MIXED MESSAGES… After six weeks on the rise, the major stock market indexes ended last week mixed, with the Dow and the S&P 500 down a tad but the NASDAQ still on the upswing, to the tune of 1.3%. These mixed performances were due to the mixed messages coming from both corporate and economic data.

Overall, the week's Q1 earnings reports weren't terrific, although many beat estimates – 80 S&P 500 companies came in better than expected, 40 were worse. The good guys included IBM, DuPont, Caterpillar, AT&T, Microsoft, Apple, eBay, Amazon.com and Ford. Investors were happy to see tech hanging in and some life left in the American auto industry. Those missing earnings forecasts included 3M, Boeing , Merck and Morgan Stanley, which had a larger than expected Q1 loss and cut its dividend. Another major bank announced better than expected earnings, but also rising credit loss provisions.

Then we got preliminary reports about the Treasury's stress tests of 19 big banks. It seems most should be considered well-capitalized, but there are no details yet, such as whether any of them failed. The results will be made public next Monday. New unemployment claims came in a little higher for the week, although they're averaging below March levels, which is hopeful. Finally, software giant Oracle said it would buy Sun Microsystems and PepsiCo will buy up some major bottlers. The week ended with a 119-point jump in the Dow on Friday, but that wasn't quite enough to give us a seventh straight week of gains in the index.

The Dow ended the week off just 0.7%, at 8076.29; the S&P 500 slid an even smaller 0.4%, to 866.23; but the NASDAQ actually ended UP 1.3%, to 1694.29.

The bond market saw our closely-watched Treasuries trading lower most of the week, thanks to excess supply and some inflation concerns. The benchmark 10-year Treasury's yield, which runs counter to price, inched up to 3.007%. Let's see if the Fed starts buying to get the price back up and the yield down. Fortunat ely, mortgage rates on average remain at historically low levels.

>> This Week’s Forecast

LISTENING TO THE FED… The Fed meets again this week and, while no one expects any change in their rock-bottom rate, we'll be eager to hear the policy statement on Wednesday. We'll also watch the advanced reading on Q1 GDP, March Personal Spending (PCE) and the Chicago PMI and ISM takes on manufacturing.

Corporate Q1 earnings reports will be energized by Chevron and Exxon Mobil, along with Pfizer, Procter & Gamble and Verizon.

This post information was provided by: Greg Brooks southwest area manager San Diego Mortgage Network (800) 287-8292 x 225              San Diego real estate