Market Studies

Lingering worries about the European debt crisis continue to drive investors to U.S. government bonds, sending fixed mortgage rates down to another record low. According to Freddie Mac's Primary Mortgage Market Survey (PMMS), the 30-year fixed-rate mortgage (FRM) averaged 3.49 percent (0.7 point) for the week ending July 26, down from 3.53 percent the previous week. At the same time in 2011, the 30-year FRM averaged 4.55 percent.

In another sign the housing sector may be languishing again —the Pending Home Sales Index (PHSI) dipped 1.4 percent in June to 99.3 from a downwardly revised 100.7 in May, the National Association of Realtors reported Thursday. Economists had expected a 0.9 percent increase to 101.6. Prior to the recent drops, the PHSI had been rising steadily until April. Lawrence Yun, NAR chief economist, blamed a lack of inventory for the drop in the index.

First-time claims for unemployment insurance fell 35,000 for the week ended July 21 to 353,000, the Labor Department reported Thursday. Economists surveyed by Bloomberg had expected 380,000 initial claims. The prior week’s total was revised up to 388,000 from the originally reported 386,000.

With foreclosure starts up in the second quarter of 2012, RealtyTrac listed the top 10 metros to buy or invest in foreclosures for the remainder of 2012. Overall, 132 out of 212 metropolitan areas with a population of 200,000 or more posted increases in foreclosure starts from the previous quarter, according to RealtyTrac. The bump in starts marks a 60 percent gain and means more foreclosure inventory for those markets. RealtyTrac's list includes metros where the average foreclosure sales price is increasing on an annual basis, average foreclosure sale discounts are still 15 percent or higher, and the unsold inventory of REOs represents a supply of 20 months or fewer.

Lender Processing Services (LPS) released Wednesday its first look month-end mortgage performance data for June, revealing that the loan delinquency rate fell year-over-year. According to statistics from LPS' loan-level database, loan delinquency fell from June 2011 by 7.3 percent. However, delinquency increased month-over-month, with June's numbers being 3.4 percent higher than May's. LPS' data also revealed an estimated 5,663,000 properties are 30 days or more overdue or in foreclosure.

Compared to the two-year high for new home sales in May, June's figures were met with disappointment. On Wednesday, the Census Bureau reported new home sales dropped 8.4 percent month-over-month. In an IHS Global Insight commentary, economists Patrick Newport and Michele Valverde pointed out that figures for March, April, and May were all revised up, and that sales were up in the Midwest and West, but down in the Northeast and South.Thus, IHS described the report as mixed. Also, unless June ends up breaking the trend for upward revisions, a Capital Economics report said June's sales would have actually been 383,000 if the adjustments seen in previous months are added.

Data in Barclays' newest Securitization Products Weekly suggests that distressed markets are outperforming others in home appreciation and paving the way for a broad-based housing recovery. Barclays waved off concerns about shadow inventory, saying it is more of a symptom than a cause of depreciation and speculated that the share of distressed homes is a more significant factor keeping home prices down. An increased REO stock should actually be taken as a positive sign for non-distressed prices, Barclays said.

New home sales fell to a five-month low, 350,000, in June, the Census Bureau and Department of Housing and Urban Development reported jointly Wednesday. Economists had expected sales to inch up slightly from the preliminary sales report in May. May sales were revised up to 382,000 from the originally reported 369,000.

Radar Logic's composite to measure home prices may show monthly and yearly gains, but contrary to other reports, the analytics company argues that the increases don't mean prices have hit bottom. Radar Logic's CEO Michael Feder said people who look at current results and call a bottom are being dangerously short-sighted. The company contends the increases are due to temporary forces, such as the warm winter weather, and appreciation may not be consistent for the entire year based on previous trends.

Limited inventory and increased competition helped push June's average home sales-to-listing price ratio above 95 percent, according to the Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. HousingPulse attributed the boost to increased competition for the falling inventory of non-distressed property listings, as well as particularly strong home purchase activity in California, Nevada, and Arizona.