Market Studies

One of the most interesting results of poring through economic data reports is that the details often tell a different story than the headline. The recent report on retail sales is a case in point. While the vast majority of commentators were impressed with a strong 1.1 percent month-over-month increase in overall sales, those who scratched the surface were rewarded for their efforts by learning more than half of the month-over-month increase came from an increase in gasoline station sales as prices. In addition, coverage of the recent report on housing permits and starts was dominated by the increase in both permits and starts. A closer look at the permit-starts data revealed another important phenomenon: a shift from single-family to multifamily construction.

Connecticut home sales at the start of the year rose 14 percent to 1,519, the highest level since January 2008 when there were 1,653 recorded sales. The gain also marks the 13th straight month of increases.

Home prices rose another 0.6 percent in January, according to the Federal Housing Finance Agency's (FHFA's) House Price Index, which measures the prices of homes owned or guaranteed by Fannie Mae and Freddie Mac. January's gain continues a persistent monthly trend of rising prices started in January 2012. The past 12 months of rising prices have resulted in a total gain of 6.5 percent. While prices continue their upward trend nationally, one-third of the nine U.S. Census Divisions recorded price declines in January--the East South Central Division, the New England Division, and the Middle Atlantic Division.

While a few stumbling blocks remain, Freddie Mac insists the economy is finally headed from gloom to bloom this spring. The GSE's U.S. Economic and Housing Market Outlook for March shows low mortgage rates, rising prices, and gradually improving consumer confidence will bolster home sales as the homebuying season starts. Compared to 2012, experts at Freddie Mac expect home sales to increase 8 to 10 percent this year, coming to about 5.4 million units sold by year's end.

After spiking last week, mortgage rates took a dive this week as tension broke out in Europe over the financial crisis in the island country of Cyprus. According to Freddie Mac's Primary Mortgage Market Survey, the 30-year fixed-rate mortgage (FRM) averaged 3.54 percent (0.8 point) for the week ending March 21, down from 3.63 percent last week. Last year at this time, the 30-year FRM averaged 4.08 percent; it has remained below the 4.00 percent mark for a full year now.

Home values maintained their upward trajectory in February after climbing for the 16th straight month, according to Zillow's Home Value Index. The index registered a national value of $158,100 last month, which represents a slight 0.1 percent increase from January and a 5.8 percent jump from February 2012, Zillow reported. The yearly gain is the second largest increase since August 2006. In January, the year-over-year gain was 6 percent. At the same time, all 30 of the largest metros tracked by the online real estate marketplace saw monthly and yearly price growth.

Existing-home sales rose 0.8 percent in February to a seasonally adjusted annual rate of 4.98 million, the National Association of Realtors reported Thursday. Economists had expected the sales pace to climb to 5.01 million from January's originally reported 4.92 million. January sales were revised up to 4.94 million. The inventory of homes for sale rose for the first time since last July, up 9.6 percent to 1,940,000. At the reported sales pace, that represents a 4.7-month supply of homes for sale, up from the 4.3-month supply reported for January.

First-time claims for unemployment insurance increased 2,000 to 336,000 for the week ending March 16--the first increase in a month--the Labor Department reported Thursday. Economists expected claims to rise to 340,000. Initial jobless claims for the week ending March 9 were revised up to 334,000 from the initially reported 332,000. The slight increase in first-time claims was driven largely by seasonal adjustment factors and as such masks the sharp improvement in the jobs market.

With an upbeat assessment of the economy, the Federal Open Market Committee voted 11-1 Wednesday to leave interest rates unchanged and to continue its program of purchasing agency mortgage backed securities and longer term Treasury securities ""to maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.""

Home price gains may be outpacing increases in rent, but the cost of being a homeowner is still much less than that of a renter, according to Trulia’s Winter 2013 Rent vs. Buy report. After factoring all cost components, Trulia found buying a home is 44 percent cheaper than renting, down slightly from 46 percent a year ago. Yet, in the last year, asking home prices showed a 7 percent gain compared to a 3.2 percent increase in rents during the same time period, according to data from the real estate site.