Market Studies

With a nod to the report the nation’s economy had contracted in the fourth quarter, the Federal Open Market Committee (FOMC) voted Wednesday to continue its program of purchasing $40 million a month of mortgage-backed securities (MBS) and to maintain the target Fed Funds rate at 0 to 0.25 percent.

In general, the most popular times of year for online home searches are at the start of the year and in the summer, according to the Trulia Real Estate Search Report released Wednesday. However, Trulia reveals some fluctuation across the country with a major tendency for online searches to peak when the weather is warm and dry. Overall, December is the slowest state for online searches, according to Trulia's data. Understanding these statewide trends can benefit both buyers and sellers, according to Jed Kolko, chief economist for Trulia.

Lincoln, Nebraska recorded a best-in-the-nation 3.4 percent unemployment rate in December as unemployment rates dropped in 290 of the 372 metropolitan areas in the county, the Bureau of Labor Statistics (BLS) reported Wednesday. Three other metro areas reported unemployment rates of 4.0 percent or below: Lafayette and Lake Charles, Louisiana, at 3.7 percent each, and Sioux Falls, South Dakota, at 4.0 percent. The highest unemployment rates in the country, according to the BLS report, were in Yuma, Arizona, and El Centro, California, at 27.3 percent and 25.5 percent, respectively.

Battered by storms and droughts, real gross domestic product (GDP) fell 0.1 percent in the fourth quarter, the Bureau of Economic Analysis reported Wednesday. The decrease marks the first ""negative growth"" since the end of the Great Recession in mid-2009. Economists had expected a weak 1.0 percent growth compared with the 3.1 percent annualized growth rate in the third quarter. The GDP downturn does not automatically signal a return to recession, which is loosely defined as two consecutive quarters of negative growth.

After experiencing a downturn, spending on home improvement may finally register an increase in 2012, with the market appearing to be ""poised for a solid rebound,"" according to a recent report from the Harvard Joint Center for Housing Studies. The Joint Center estimates spending on home improvement rose 9 percent in 2012 after falling in previous years. The study found that as the housing market improves, the homes that burdened the economy are now being renovated.

Following S&P's calculation of a 0.1 percent decrease in prices in November, according to the Case-Shiller 20-city composite, analysis on home price trends remained positive. ""[A]fter accounting for the normal slowdown in the housing market over the winter months, this actually looks like another 0.6 percent [month-over-month] gain,"" stated Capital Economics Tuesday. Similarly IHS Global Insight's Stephanie Karol noted both Case-Shiller indices, when seasonally adjusted, posted increases for the 10th consecutive month.

A lot of homes can use a facelift, especially properties in distress, but some projects may not be worth the sweat and dollars when considering the return on investment (ROI). Based on results from the 2013 Remodeling Cost vs. Value Report, the National Association of Realtors (NAR) revealed exterior projects will typically yield the highest ROI. ""Projects such as siding, window and door replacements can recoup more than 70 percent of their cost at resale,"" said NAR president Gary Thomas.

The nation's homeownership rate (seasonally adjusted) dipped to 65.4 percent in the fourth quarter from 65.5 percent in the third quarter, the Census Bureau reported Tuesday. At 65.4 percent--the same level as the first quarter--the homeownership rate is at its lowest level since the first quarter of 1997 when the rate was also 65.4 percent. The homeownership rate peaked at 69.2 percent in Q2 2004. The Census Bureau also reported the homeowner vacancy rate remained at 1.9 percent in the fourth quarter.

Despite seeing a month-over-month drop, the 10- and 20-city Case-Shiller Home Price Indexes registered their strongest year-over-year improvement in two and a half years on a non-seasonally adjusted basis, Standard & Poor's, which publishes the indexes, reported Tuesday. The 10-city index fell 0.2 percent, and the 20-city index dropped 0.1 percent from October to November. On an annual basis, however, the 10-city index was up 4.5 percent, and the 20-city index rose 5.5 percent.

Home prices continued to inch up in November, according to Lender Processing Services' (LPS) Home Price Index (HPI) for the month. LPS' data showed home prices increased to an average $207,000 in November, an increase of 0.5 percent from $206,000 in October. On a year-over-year basis, prices were up 5.1 percent from November 2011's $197,000. Florida topped the list of states to see the largest price gains in November, posting a 1.5 percent month-over-month improvement.