In a quiet week for housing data, we’re reflecting on an interesting statistic that we are able to put together using Housing Intelligence Pro.  In looking at the annualized share of all home sales captured by different types of transactions, there are a few interesting turning points that stand out.  Back in 2005, your garden variety resale transaction accounted for more than 80% of all home sales.  By November of 2006 that had slipped slightly to 78% while New Homes accounted for nearly 20% of all transactions (a peak share).   Just over 2 years later in January of 2009, the new home share had slumped to 14%, and starting in that month there were more REO sales in the preceding 12 month period than new homes sold.  So for the last year and a half, banks have sold more houses than home builders have.  To see the trend, check out our chart below.

 

In broader economic news, stocks rebounded this past week driven by optimism over corporate earnings while buyers took advantage of recent lows as a buying opportunity.  The blue-chip Dow Jones Industrial Index closed with its seventh straight positive session on Wednesday while the broader S&P 500 Index declined slightly to snap a six-session win winning streak.  However, the market took a breather on Thursday with all three major indices near flat.

The Economy
In the week ending July 10, first-time jobless claims fell by 29,000 from the previous week to a seasonally-adjusted figure of 454,000.  This is the second straight week that initial unemployment claims have declined while reaching their lowest levels since August 2008.  While first-time jobless claims still remain relatively high, declines in recent weeks despite the loss of thousands of temporary Census jobs is a positive sign.

Fed meeting minutes released on Wednesday showed that expectations for economic growth may be slower than previously anticipated.  Nevertheless, the Fed still expects the economy to expand by 3.0%-3.5% in 2010 and 3.5%-4.2% next year.  There were some concerns regarding inflation going forward due to the size of the Federal Reserve’s balance sheet.  However, concern was also voiced about the risk of deflation given the effects of the recent woes in Europe along with the sustained high levels of unemployment domestically.

Housing Market
National average mortgage rates remained unchanged from the previous week at an all-time low of 4.57% in the latest Primary Mortgage Market Survey released weekly by Freddie Mac on July 15th.  Mortgage rates have not posted a weekly increase in the past four weeks.

In the week ending July 9th, the MBA’s seasonally-adjusted purchase index declined 3.14% from the previous week and was down 36.9% compared to the same time last year.  This is the fourth straight week that the purchase index has declined.  The purchase index is now at its lowest levels since December 1996.  The index has also posted declines in nine out of the past ten weeks following the expiration of the federal homebuyer tax credit.

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