Market Studies

Builders lowered prices and buyers responded in August, pushing new home sales up 7.9 percent to 421,000, reversing almost half of July’s 64,000 drop in sales, the Census Bureau and Department of Housing and Urban Development reported Wednesday. Economists surveyed by Bloomberg expected June sales to rise to 425,000 from July’s originally reported 394,000.

Consumer confidence dipped in September as Americans expressed doubt over the current direction of economic conditions. The Conference Board’s Consumer Confidence Index, which picked up to 81.8 in August following a drop the month prior, fell to 79.

Home prices rose in July by less than two percent for the first time since March but still reached their highest level since August 2008, according to the Case Shiller Home Price Indexes released Tuesday. The 20-city index was up 1.8 percent in July 12.4 percent in the last year — while the companion 10-city index was up 1.9 percent.

With home prices continuing to rise at accelerated rates, John Burns Real Estate Consulting is warning clients in certain areas--particularly in California and Florida--to be mindful of the artificial price boosts home flippers can bring to the market. In a recent report, one of the firm's analysts said the popularity of home flipping in the media is fueling exaggerated expectations of returns from amateur investors.

What's up with the Fed? The venerable, usually media-shy central bank came in for more than its share of attention in the past week and has no one to blame but itself. It started with the withdrawal of Larry Summers as a candidate to replace Fed Chairman Ben Bernanke who, by the way, has not said he's leaving. Then came the conclusion of a two-day, closed-door policy meeting that defied all market expectations.

Even though both home prices and mortgage interest rates have been steadily rising, owning a home remains significantly cheaper than renting at the national level and in most major markets, according to Trulia. While the gap is closing between renting and owning, the company's Summer 2013 Rent vs. Buy Report indicates overall, owning is still 35 percent cheaper than renting.

While many in the industry laud the recent changes the Consumer Financial Protection Bureau (CFPB) made to the proposed Qualified Residential Mortgage (QRM) rule, one economist says the new proposed rule sets the stage for another housing crisis.

Existing home sales rose an unexpected 6.5 percent in to an annual sales rate of 5.48 million, the highest level since August 2007 ten months before the onset of the Great Recession -- the National Association of Realtors reported Thursday. Economists surveyed by Bloomberg expected existing home sales to drop to 5.

Following a sharp drop in first time claims for unemployment insurance a week earlier, initial filings rose 15,000 for the week ended September 14 to 309,000, the Labor Department reported Thursday. Economists had expected the number of claims to jump 49,000 to 341,000, from the 292,000 originally reported for the week ended September 7.

While noting improvement in economic activity and labor market conditions, the Federal Open Market Committee voted Wednesday to continue its policy of near-zero interest rates and its $85-billion-per-month bond-buying program. At the same time, the Fed’s own economic projections suggested the economy might not grow this year as fast as it expected just three months ago.